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The Texas House's recent vote to extend Chapter 313 property tax abatements by school districts to big businesses has drawn the opposition of many conservative and liberal groups.
The conservative Texas Public Policy Foundation and the liberal group Every Texan released a joint statement opposing the extension.
"These tax breaks do not deliver the promised benefits, shift school funding costs, and waste tax dollars," they said in the statement, as reported by Lone Star Standard.
Despite the opposition on both sides of the aisle, the Texas House overwhelmingly extended Chapter 313 for two years, according to the government's website. The vote was 112-29 in favor of the measure.
Mark Goloby, a concerned citizen spurred to action, told Houston Daily that although Chapter 313 has "come under increasing scrutiny, this bill was considered by many to be a kick the can down the road solution.''
He added, "It only extends the Chapter 313 to 2026 with no new changes. Rep Jim Murphy’s (R-Houston) bill, HB 1556, is so much more egregious expansion for corporations to get easy access to the Texas treasury that he had to pull it down. Chapter 313 is opposed by both Republican and Democratic parties."
Goloby said he opposes Chapter 313 for several reasons and cited the website www.chapter313.org.
"The degree of property value manipulations is obscene with some projects getting 99% reduction in the tax value for 10 years. On average it is 84%," he said.
By contrast businesses, which have been in a school district for 30 years, do not get such consideration.
"These businesses are getting 37.5% discounts on their property taxes," Goloby said. "These same businesses complain about the poor education their available workforces are getting and brag in their corporate reports that they are good corporate citizens. Why can being a good corporate citizen be just paying your school property taxes?"
Goloby added that even with 37.5% tax discounts, these businesses are telling the Texas Legislature it is "not enough." He pointed out that people are being forced to leave their homes where they've raised their families due to high taxes, and the Texas Legislature is giving billions in tax dollars away.
Chapter 313 is also contributing to inequality in school district financing, critics argue. As Texas Public Policy Foundation's Cutter Gonzalez explained on its website, "Wealthy districts negotiated significantly more agreements on average than their property-poor counterparts. The system, as designed, encourages this imbalance."
The result is that the state has to look elsewhere to find money to send to poorer districts.
Goloby said Chapter 313 also over-incentivizes school districts to give these abatements, and "un-elected school superintendents are ipso facto running Texas economic development."
"It provides for the establishment of trust funds [via the payment in lieu of taxes, supplemental payments] that seem not to have any official Texas oversight," Goloby said." It allows these school districts to burden shift their recapture (Robin Hood) payments to the school districts not granting the abatements. The school districts are allowed to waive the job creation criteria. There is little oversight or accountability by the school district to see if the conditions were adhered, and no reason for them to."
Renewable energy companies that are receiving abatements under Chapter 313 have created few jobs for Texans, critics argue. In 2019 the Texas comptroller of public accounts reported that renewables, which were mostly wind and solar farms, received 57% of Chapter 313 abatements and only provided 9.6% of the jobs created in the state.
The Texas Policy Foundation also found only 8% of job commitments and 27.6% of committed investment under Chapter 313 came from wind and solar while those renewable businesses received 37% of the tax benefits.
Goloby said he is not concerned that so many abatements go to wind and solar farms.
"There are plenty of extraneous issues to the windmills but these property value manipulations are so egregious, it matters not to or for whom they are granted," he said. "One particular absurdity to windmills is the Texas taxpayers paid for the grid [CREZ] so the windmills could sell their power. Now the taxpayers are paying for the power generators to put their windmills on the grid. Only in the Texas Legislature is that economic development."
He said that "those pilfering the Texas treasury will scream that this will end Texas economic development. That is far from the truth. There are still Chapter 312 abatements."
"There are still programs that allow a company to keep some of the sales taxes they collect," he added. "There is still the governor’s fund to attract and incentivize companies to come to Texas. Chapter 313 should be ended. There is no reason that school boards should be allowed to manipulate the property values that are used to substantiate the bonds that are issued without the voters getting a say in that abatement."
Chapter 313's effectiveness in economic development was also questioned in a report by the Washington Center for Equitable Growth and author Nathan Jensen. The report concluded only 15% of renewable energy projects would have moved their projects outside the state if they did not receive subsidies.
Jensen, a professor of government at the University of Texas at Austin, had voiced his concerns on Chapter 313 in an interview with the Houston Republic, noting "What's troubling is that this is a 10-year tax limitation with the promise that in year 11 these investments come on the tax rolls but they depreciate so fast that there is almost nothing left to tax."
Jensen's report also found that more than 80 projects had effectively made it publicly known that they were already committed to their selected locations before receiving subsidies.
"Texas can have an economic development process," Goloby said. "But it should be one plan, not two. Not one for school districts and one for all other taxing authorities. The economic development plan should not create such a prominent role for school boards and elevate unelected school superintendents as the go to for Texas statewide economic development. The comptroller would then have only one economic development program to administer. The ability to ascertain whether a new capital investment has true statewide economic value could be more clearly determined."
Charles McConnell, executive director of the Center for Carbon Management in Energy and Sustainability at the University of Houston, said Chapter 313 is one of several tools that Texas uses to "encourage the investments and the deployment of renewables — both wind and solar," Houston Republic reported. He pointed out that the way renewables often operate means that they would not be profitable without government subsidies and other handouts. Texas' reserve margin has dramatically decreased as a result of subsidizing renewable energy projects.
Will the Texas Senate block Chapter 313?
"This is very hard to say," Goloby said. "But with the bold leadership of Sen. Lois Kolkhorst (R-Brenham), the taxpayers have a fighting chance. With Senators like Bryan Hughes (R-Longview), Kelly Hancock (R-North Richland Hills), Borris Miles (D-Houston), Bob Hall (R-Rockwall), Royce West (D-Dallas) and others realizing the negative impact to their school districts by those school districts outrageously manipulating their school district property values the overall appeal of Chapter 313 as an effective economic development tool is losing ground."