Texas’ Largest Corporate Welfare Program Is Leaving Companies Flush and School Districts Broke

#Chapter313 program offers steep discounts on property taxes to attract big industrial projects that are supposed to pay off over the long term.

texasobserver.org/texas-largest-… #txlege 1/9
But by the time these projects return to the tax rolls, much of that value has disappeared. #txlege created the #Chapter313 program 20 years ago in response to fears that high property taxes were preventing corporations from pursuing large-scale projects in Texas. #txed 2/9
That fear was later found to be untrue, but the #Chapter313 program has been wildly popular. As of 2019, there were 509 active deals that will deliver a total of $10.8 billion in tax breaks to corporations. #txlege #txed 3/9
Critics say that the #Chapter313 program amounts to a wasteful trough for costly corporate tax subsidies that starves the state of revenue that could be used to fund public schools, and the program will soon cost taxpayers more than $1 billion a year. #txlege #txed 4/9
We obtained data from all the #Chapter313 agreements active in 2019 that include estimates of each project’s cumulative investment and annual property value—including projections for how much a project will be worth when it returns to the rolls...#txlege #txed 5/9
Projects that are still years away from their #Chapter313 tax breaks ending—some as far out as 2035—tend to offer up rosy estimates of the value they will bring back to the rolls. The program’s track record makes those claims dubious, though. #txlege #txed 6/9
For example, data from the 200 active #Chapter313 manufacturing projects shows companies estimate that 50 percent of the projects’ total investment will return to the rolls, at an average of 70 percent of peak taxable value. #txlege #txed 7/9
Of those manufacturing projects—most of which are in the oil and gas or petrochemical sectors—16 have reached the end of their tax limitations. In the first year back on the tax rolls, those #Chapter313 projects were collectively worth $3.5 billion. #txlege #txed 8/9
That’s less than half of the $7 billion the #Chapter313 projects were worth at their peak and just 20 percent of the $18 billion in total investment.

texasobserver.org/texas-largest-… #txlege #txed 9/9

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More from @dlavine

22 May
Houston Chronicle editorial: Ordinary Texans are regularly expected to bear the burden of $billions in corporate welfare to some of America’s wealthiest companies under the false premise that we’re all benefiting somehow.

houstonchronicle.com/opinion/editor… #Chapter313 #txlege #txed 1/21
While the arrangement is sold as a way to lure new business to Texas and create well-paying jobs, a Chronicle investigation, Unfair Burden, revealed how #Chapter313, the state’s biggest tax incentive program is a wasteful boondoggle.

houstonchronicle.com/opinion/editor… #txlege #txed 2/21
The #Chapter313 program, named for the section of the Texas Tax Code that enables it, lets companies keep a portion of their property values off of school district tax rolls for a decade. #txlege #txed 3/21
Read 21 tweets
22 May
The original sales pitch for the big #Chapter313 tax breaks?

It sprang from a typo!!!

Today #txlege has a chance to reverse that 20-year-old error.

houstonchronicle.com/news/investiga… #txed 1/12
#txlege created #Chapter313 in 2001 on the premise that TX needed to compete more aggressively for manufacturing jobs. High property taxes represented a barrier to industrial investment, bill author Rep. Kim Brimer and his allies said. #txed 2/12
Their solution: Create a program that temporarily caps property values and shelters billions of dollars in investments from being fully taxed by #txed school districts. It's now called #Chapter313. #txlege 3/12
Read 12 tweets
21 May
The Texas Public Policy Foundation and Every Texan release a joint statement regarding extension of the #Chapter313 program of school property tax abatements. These tax breaks do not deliver the promised benefits, shift school funding costs, and waste tax dollars. #txlege 1/10
“Texas is fortunate to not need #Chapter313 incentives to persuade companies to locate here. Research and experience show that abatements are an unnecessary and wasteful perk and companies would have come to Texas regardless. #txlege #txed 2/10
But the #Chapter313 carve-outs do have a real impact on our ability to adequately fund all public schools and ultimately shift the responsibility for supporting them onto other businesses, homeowners, and renters. #txlege #txed 3/10
Read 10 tweets
21 May
A #Chapter313 renewal would require major revisions: The contracts should be negotiated and governed by economic development experts. Mandate more independent auditing for compliance.... expressnews.com/opinion/commen… #txlege #txed 1/6
Only approve the select few #Chapter313 agreements that truly require the tax abatement to lure them to Texas. Eliminate job-creation waivers... #txlege #txed 2/6
All #Chapter313 money must be accounted for in school funding formulas to create the most level playing field for all schools across the state... #txlege #txed 3/6
Read 6 tweets
10 May
So all this I hear about #Chapter313 payments to school districts? Who wins and who loses? #txlege #txed 1/6
If a company just paid its fair share of school taxes then, because local property tax revenue would go up, state aid would go down (or recapture increase), and the district revenue per student would be unchanged. That’s the basic rule of school finance equity. #txlege #txed 2/6
But what if a firm gets a 313 tax break, then kicks back part of its tax savings to the district? The district’s property tax revenue is unchanged, since it’s not taxing the project, so state aid (and revenue per student) is unchanged, and the district pockets the payment. 3/6
Read 6 tweets

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