Chapter 313 was one of the country’s worst examples of crony capitalism, funneling billions in Texas taxpayer dollars to out-of-state interests. The program still costs Texas taxpayers over $1 billion a year in tax breaks to major oil, gas and manufacturing companies — money that could go to educating our children.
Dallas Area Interfaith, the Texas IAF, allies and a bipartisan group of legislators killed the reauthorization of Chapter 313 in the 2021 legislative session. Rather than leaving the program in the grave, industry groups are actually proposing to resurrect Chapter 313 this legislative session and make it worse in the form of House Bill 5.
Last September, in a House Ways and Means Committee hearing, industry groups painted an apocalyptic vision of Texas’ economy without Chapter 313. Their statements were based on opinion. Fortunately, we can look to Louisiana to see if their fears are merited.
In 2016, Louisiana reformed its version of Chapter 313, the Industrial Tax Exemption Program. The reforms generated $760 million in new tax revenue for schools and other public entities with no negative impacts on jobs. In fact, capital expenditures grew after the reforms.
Louisiana’s experience mirrors studies on economic development incentives. The Upjohn Institute found that “75% to 98% of the time, the same decision would have been made without the incentive.”
Similarly, a 2017 University of Texas study of Chapter 313 estimated that between 85% and 95% of Chapter 313 projects would have been located in Texas without the incentive. These incentives matter much less than other factors such as the labor force, education, infrastructure and access to markets and materials.
[Image Credit: NewsArt.com/Chris Van Es]
Texas House Passes Plan to Bring Back Corporate Property Tax Breaks for Major Projects, Dallas Morning News [pdf]
A surprising legislative success in 2021 is on track to be undone in 2023, unless a grass roots left-right coalition can block legislation and the forces behind it that are trying to go backward....
In the name of jobs and economic development, a 2012 tax code trick called Chapter 313 essentially funneled state money, via school district property tax breaks, to private companies doing new industrial construction. The school districts that granted tax breaks under Chapter 313 were reimbursed — and many still are being reimbursed — by the state, meaning we as taxpayers reimbursed them. It was the ultimate insider game of channeling public benefit to private companies.
The [Texas] Industrial Areas Foundation cleverly brought a man dressed as Dracula to its rally to dramatize how Chapter 313 unfairly drained school districts of funds and that reviving this bad economic development deal would be akin to raising the undead.Read more
In the attached audio interview, Rosalie Tristan and Joe Hinojosa, both organizers with Valley Interfaith, Joe Higgs from IAF, and Bob Fleming, an organizer with The Metropolitan Organization of Houston, say tax breaks for large corporations should not be paid for with monies that would otherwise go to public education.
[Photos: Rosalie Tristan (left), Joe Hinojosa (holding sign in center) and Bob Fleming (right)]
Valley Interfaith: Don't Suck Money Out of Public Education to Help Large Corporations, Rio Grande Guardian [audio]
Over the years, critics argued certain requirements were whittled away and some companies were bringing few or low-paying jobs with little benefits. Some, including a coalition of interfaith leaders with The Metropolitan Organization, Central Texas Interfaith and Texas Industrial Areas Foundation Organizations, have called out the program as “corporate welfare” and for leaving the rest of the Texas taxpayers to essentially “make up the difference.”Read more
Central Texas Interfaith
[Excerpt from FOX 7 Austin]
"The Austin ISD school board has voted against a multi-million dollar tax break for NXP, a semiconductor company...
"It is not fair that those who have the greatest ability to pay are the ones who don't want to pay a dime," Rev. Minerva Camarena Skeith of Central Texas Interfaith said.
The tax break called the appraised value limitation, or 313 agreement, lets potential businesses build property and create jobs in exchange for a 10-year limit on the taxable property value for school district maintenance and operation.
"We want more dollars for AISD and for every school district in this state. We want every child to have every opportunity they need," Rev. Miles Brandon with Central Texas Interfaith said."
NXP Fails to Gain School District Tax Incentives for Possible Factory Expansion, Austin Business Journal
With Weeks to Spare, Austin ISD to Vote on NXP Incentives, Austin Business Journal
Central Texas Interfaith Commends AISD Board for Rejecting Chapter 313 Deal with NXP, Central Texas Interfaith [pdf]
Dallas Area Interfaith
[Excerpt from Dallas Morning News]
"Amid pressure from community advocates, the Dallas schools administration pulled a vote to approve a property tax break for a manufacturing company just before trustees were to weigh in on it Thursday night.
The Texas Economic Development Act – commonly referred to as Chapter 313 based on its position in the tax code – will expire at the end of the month. Companies across Texas are rushing to get deals approved with school districts and lock-in tax abatements ahead of the deadline...
“Does it make sense to continue to grant certain large corporations these huge tax breaks?” Dallas Area Interfaith leader Bill deHaas said ahead of the meeting. “We already know that we have a crunch on educational spending.”
“While we want economic development and good jobs in Central Texas, these agreements prohibit school boards from enacting high living wage and worker safety standards as part of these agreements, unlike city and county incentives, in which good job standards can be negotiated,” said Carlota Garcia of the Central Texas Interfaith organization.
Garcia said these agreements are “Texas’ largest corporate welfare program, which costs taxpayers over $1 billion annually—money that could be going to public schools and other public needs. The state must replace the revenue that the corporations get out of paying in property taxes for 10 years by collecting more taxes from all Texans.”
“We’re not anti-economic development,” said the Rev. Miles Brandon of St. Julian of Norwich Episcopal Church and member of Central Texas Interfaith. “We believe that all of the dollars we can possibly put together in this state should go to educate our children.”
-Austin Business Journal
“We are a part of the AISD community,” Brandon said. “We implore you to choose your advocates and partners over corporations. It makes certain there will be $100 million less to fight for. It is in our children’s best interest now and in the future.”
-Austin American Statesman
[Photo Credit: Community Impact]
Possible Chapter 313 Agreement Between Austin ISD, NXP Draws Criticism, Community Impact [pdf]
Austin ISD to Vote on NXP Semiconductor's $100M Tax Break, Austin Business Journal [pdf]
Time Ticking for Austin School Board to Vote on Proposed Tax Breaks for NXP Semiconductors, Austin American Statesman [pdf]
Bastrop Interfaith and Friends of the Land, a farmland preservation coalition, worked with local Elgin residents and landowners to defeat a 10-year Chapter 313 corporate tax abatement at the Elgin ISD School Board last night by a unanimous vote. Solar Proponents, a startup owned by an oil and gas hedge fund, would have clear-cut over 2,100 acres of trees bisected by Little Sandy Creek to build an industrial solar farm. While the community had been testifying monthly since May at the school board meetings against the project, last night was the first time the public got to hear from Solar Proponent about the project. Speakers argued the project endangered Greenbriar Community School and neighboring homes with water runoff in an area already prone to flooding with an already diminishing refuge for wildlife.
“In these past six months, we haven’t heard a single person speak in favor of this project. Compare that to more than 1100 signers of our petition to stop this project and all the comments here you have so patiently listened to since then,” said Skip Connett, a leader with Bastrop Interfaith and founder of Friends of the Land at last night’s school board meeting.
“We spoke for our communities and our trees. Our school board listened,” Connett said after the vote.
This past May, Bastrop Interfaith and Friends of the Land, one of its member institutions, opposed the initial Chapter 313 application which would have given the company a 10-year school property tax abatement from Elgin ISD. Chapter 313, Texas’s largest corporate welfare program, costs taxpayer $1Billion/year to fund these tax breaks, money which could be going to public schools. Chapter 313’s reauthorization was killed last legislative session by Bastrop Interfaith and the Texas IAF along with allies. However, the program doesn’t expire until this December, and there has been a rush of nearly 500 applications by companies looking to get tax breaks before the deadline.
Reverend Minerva Camarena Skeith of St. John's Episcopal Church explains to Jon Stewart how Central Texas Interfaith/Texas IAF organizations fight corporate incentives that negatively impact public budgets, including schools.
“What’s happening right here, right now, very powerful.” -- Jon Stewart
In a Behind the Scenes Cut, Rev. Minerva Camarena-Skeith describes how communities can organize.
Full episode and panel discussion streaming on Apple TV+.
Central Texas Interfaith/Texas IAF Persists in Push Against Chapter 313 Corporate Subsidies at State Legislature Hearing
The Chapter 313 program, authorized in 2001, allows Texas school districts to cap the taxable value of a property for some new projects, saving companies tens of millions of dollars in taxes, or more. It is set to expire at the end of December, after a bipartisan coalition in 2021 stopped efforts to reauthorize the program.
Critics of Chapter 313 call it corporate welfare that deprives Texas public schools of funding....
Clock is Ticking on Texas' Chapter 313 Incentives -- and Major Projects May Miss Out, Austin Business Journal [pdf]
A section of the Texas tax code that is used by local governments as lucre to attract corporate relocations but that often ends up pitting city against city and school district against school district is set to expire.
Based on hearings last week, there will likely be calls to reinstate it in the next Legislature. That would be a mistake....
In 2015, Gov. Greg Abbott complained that each job created by this program cost taxpayers $341,000. Using Abbott’s calculation, the Houston Chronicle updated the numbers last year: now every job created by a 313 incentive costs $1.1 million, the paper reported.
What’s more, a 2018 study by the W.E. Upjohn Institute for Employment Research found that 313 incentives were the deciding factor in fewer than 25% of relocations, meaning three quarters of the time, the relocation would have happened anyway. Taxing districts are leaving money on the table and cities are fighting cities in a game that actually hurts their residents and students....
in many cases, the choice is not between attracting a company to Texas or failing to do so. The choice is between attracting a company to Taylor or Round Rock; Sherman or Plano.
That highlights another problem: 313 favors districts where it’s easiest to acquire land and build facilities. In an analysis by Dallas Area Interfaith, the losers under 313 are large, urban school districts like Dallas ISD.
[Graphic: Dallas Morning News]