Dallas Morning News Editorial Concurs with DAI: Texas Needs to Stop Paying for Subsidies
[Excerpt]
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]
Sapped by Subsidies: 313 Deals Hurt Texas Cities, Dallas Morning News [pdf]
No More Hogs at the Trough: Texas IAF Argues that Chapter 313 Tax Incentives Could Break State Bank
[Excerpt]
Come December 31, 2022, the law that had allowed [major corporations] to keep more than $10 billion in school property tax revenue off the ledgers over two decades will be no more. But companies wasted little time grieving. There was still plenty of life to live after the session ended sine die.
Since then, companies have applied for close to 500 tax break deals for projects all over the state—for everything from wind and solar farms, oil and gas processing, carbon capture, and biodiesel production. By comparison, the Texas comptroller received an average of 90 applications annually in the past decade.
“It’s like hogs at the trough,” said Bishop John Ogletree, a leader with the Houston chapter of the [Texas] Industrial Areas Foundation, a faith-based coalition that helped bring down Chapter 313. “Multi-billion-dollar oil, gas, and tech corporations asking for school districts and taxpayer dollars to bolster their profits. If these applications get approved, it will blow a hole in our state and school district budgets for a generation to come.”
Unsure whether the state will revive or replace the program in the 2023 session, companies have grown increasingly aggressive in trying to lock in future tax breaks for speculative projects that may—or may not—come to fruition many years out.
Money for Nothing and Your Chips Are Free, Texas Observer [pdf]
No More Hogs at the Trough-Containing Corporate Subsidies in Texas, Nonprofit Quarterly [pdf]
The Sun is Setting on Chapter 313 Incentives, Austin Business Journal
Companies Lining Up for Future Tax Breaks as Texas Incentive Program Nears End, Dallas Morning News [pdf]
What Could Epic Samsung Expansion Mean for Texas?, Austin Business Journal
Point Isabel School District Rejects Texas LNG Tax Abatement, Brownsville Herald [pdf]
'Smoke and Mirrors' or Long-Range Planning? Possible Samsung Tax Breaks Stir Debate, Austin American Statesman [pdf]
Report: Samsung Adding Land to $17B Semi-conductor Campus in Taylor, Considering 11 New Facilities, KVUE [pdf]
State Sees Rush of Tax Break Applications as Program Soft Deadline Approaches, KVUE [pdf]
Friends of the Land, Bastrop Interfaith, Oppose Dogwood Creek Solar 313 Application to Elgin ISD, Elgin Courier [pdf]
Austin ISD Moves Forward With Semi-Conductors Agreement, Faces Community Opposition, Community Impact [pdf]
Austin ISD Considering Proposal That Would Help Lower Recapture Payments, Faces Opposition, CBS Austin [pdf]
NXP Seeking Up To $140 Million in Tax Breaks for School Districts, Austin-American Statesman [pdf]
Chapter 313 Incentives: What They Are and Why They're Suddenly the Talk of the Town, Austin Business Journal [pdf]
Oped: Don't Ask Texas Schoolchildren to Fund Your Corporate Expansion, Austin Chronicle [pdf]
Statement on Austin ISD and Round Rock ISD Chapter 313 Votes, Central Texas Interfaith
Samsung Ask Texas Taxpayers To Foot $4.8 Billion Bill For Future School Taxes. Governor Abbott Endorses Biggest Corporate Welfare Deal in Texas History, Central Texas Interfaith
Port Isabel School District Votes Down Ch. 313 Tax Break After Valley Interfaith & Allies Speak Out
At the Point Isabel ISD Board meeting, Texas LNG sought last-minute approval for tax abatement through the expiring Chapter 313 program. Leaders from Valley Interfaith, alongside allied organizations, made the case to the board.
[Excerpt]
On a unanimous vote Tuesday night, the school district voted not to go forward with the applications.
Several Port Isabel area residents voiced opposition, both to Texas LNG on environmental grounds, and to the abatements, saying Texas LNG deserves to have to pay its fair share of taxes.
Valley Interfaith and the other objectors said Texas LNG doesn’t need the abatement because the project has been planned for years and the company has already decided to build the facility here.
“Valley Interfaith congratulates the superintendent and PIISD Board members for their willingness to look at the facts and reject this application for huge tax abatements for an LNG export terminal they
have long planned to build in the Port of Brownsville area,” said Father Kevin Collins, O.M.I. pastor of S. Eugene of Mazenod Church in Brownsville and Valley Interfaith. “They don’t need to take money from Texas school children to build a profitable LNG export facility at a time when the whole world is clamoring for liquified natural gas,” Collins said.
Point Isabel School District Rejects Texas LNG Tax Abatement, The Brownsville Herald [pdf]
Texas IAF Sounds the Alarm: Chapter 313 Loopholes Will Cost State Billions
Last year Texas IAF organizations led the charge to end Chapter 313, a program that had given away $10 billion in windfall tax breaks for corporations. However, hundreds of Chapter 313 applications are being filed in the rush to get in before the end of the program, including some with projects slated for decades from now.
[Excerpts]
“It’s like hogs at the trough,” said Bishop John Ogletree, an official with the faith-based Texas Industrial Areas Foundation, which has opposed the arrangements.
Meanwhile, lawmakers and interest groups have begun discussing how to craft a replacement during next year’s legislative session to keep the tax breaks flowing.
The Chapter 313 deals — named for their location in the state tax code — let companies slash 10 years worth of school property tax bills they otherwise would owe on newly constructed factories and energy projects.
Over the past decade the state comptroller’s office has received an average of about 90 applications annually from companies seeking the subsidy.
Since the Legislature adjourned at the end of May 2021, by comparison, records show companies have filed requests for more than 460 new tax breaks — about 400 in the past five months alone.
Typically, companies sought Chapter 313 tax breaks for projects two to four years in the future, with the occasional oil and gas facility taking six or seven years to complete. Since last May, however, companies have applied for 120 of the subsidies for facilities not scheduled to open until at least 2028. At least 10 won’t be online for a decade or more.
Despite the program’s demise, applicants “have figured out how to extend it,” said Rev. Minerva Camarena-Skeith, of Central Texas Interfaith.
Their strategy seems to be, “Just in case, let’s get 10 years of requests in in one year,” added Bob Fleming, of The Metropolitan Organization, the Houston branch of the Texas Industrial Areas Foundation. “I don’t know anybody who can forecast their needs 30 years out.”
....by slow-walking the end of a program they said was giving away too much money to corporations at the expense of Texas taxpayers, legislators have now put the state on the hook for billions of additional tax breaks that Texans will be paying off well into the middle of the century.
[Photo Credit: Mark Mulligan, Houston Chronicle]
Lawmakers Killed a Costly Corporate Tax Break Program, but Loopholes Will Still Cost Texas Billions, Houston Chronicle [pdf]
CTI Explains How Chapter 313 Harms Texas Schools & Residents
[Excerpts]
"This takes money away from children's education and gives it to corporations, and that is a nonstarter," said Mother Minerva Camarena Skeith, [Reverend of] St. John's Episcopal Church in North Austin. "The corporation was the one that would have been their responsibility as part of our community to do their fair share of investing into our children. Right? And they have abdicated that. They just don't do that. Then we have to pick up the slack."
With Chapter 313 set to expire at the end of the year, the state's comptroller office has received a record number of applications. Since Jan. 1, 2022, school districts sent in 393 company Chapter 313 applications. In any given year before this, the office received maybe 150 applications.
"If all these things get approved, like, we could bankrupt the state," Rev. Miles Brandon worried.
"Anybody who's fiscally conservative at all should have a have a real problem with the unlimited nature of 313."
State Sees Rush of Tax Break Applications as Program Soft Deadline Approaches, KVUE [pdf]
Friends of the Land, Bastrop Interfaith, Oppose Dogwood Creek Solar 313 Application to Elgin ISD, Elgin Courier [pdf]
CTI Leaders Take Hard Stand Against NXP's Corporate Welfare Request to AISD
When NXP sprung a request for a Chapter 313 tax subsidy before the Austin Independent School District, Central Texas Interfaith leaders decided to descend upon a meeting of the Board of Trustees to ask them to reject the request. Chapter 313 tax subsidies are 10 year tax breaks to major gas, oil and manufacturing corporations that drain $1 Billion from state coffers on an annual basis. In response to a barrage of 20 CTI leaders testifying over the phone and in person against the tax giveaway, NXP (the company requesting the subsidy) changed the number of promised jobs on their application during the meeting from the statutory minimum of 25 to 500 overall.
[Excerpt]
The majority of community members who provided testimony on May 19 asked the board to vote against the Chapter 313 agreement with NXP. [Twenty] speakers were members of Central Texas Interfaith, a nonpartisan coalition of congregations, schools and unions that opposes Chapter 313.
“Hardworking taxpayers don’t get this kind of giveaway. Nor do small businesses, or responsible corporations,” said Central Texas Interfaith leader Trenton Henderson. “We want our money to go to public schools, but not to pay the bills for corporations shirking their responsibility to public education. Without a Chapter 313 agreement, NXP would have to pay their full share of school taxes.”
Austin ISD Moves Forward With Semi-Conductors Agreement, Faces Community Opposition, Community Impact [pdf]
Austin ISD Considering Proposal That Would Help Lower Recapture Payments, Faces Opposition, CBS Austin [pdf]
NXP Seeking Up To $140 Million in Tax Breaks for School Districts, Austin American Statesman [pdf]
Chapter 313 Incentives: What They Are and Why They're Suddenly the Talk of the Town, Austin Business Journal [pdf]
Oped: Don't Ask Texas Schoolchildren to Fund Your Corporate Expansion, Austin Chronicle [pdf]
AISD Board Meeting Broadcast, Austin Independent School District [calls begin at -2:33:30, in person testimony at -1:52:30]
Central Texas Interfaith Opposes Chapter 313 Tax Subsidy to NXP
[Excerpt]
NXP Semiconductors, which is based in the Netherlands and has two fabrication plants in Austin, is seeking tax breaks from the Austin Independent School District under the state's Chapter 313 incentive program for proposed expansion. An initial presentation to the district's board Tuesday night didn't specify the amount, but previous incentives agreements from Texas school districts for similar Chapter 313 deals have been for tens of millions of dollars.
The Chapter 313 incentives program — which is named after a portion of the tax code — has been controversial. It's set to expire at the end of this year because state lawmakers declined to renew it during last year's legislative session, although deals struck before then won't be affected....
Under the Chapter 313 program, school districts are reimbursed by the state for the corporate tax breaks they agree to provide. That attribute has made Chapter 313 controversial among critics who say school districts have no reason not to grant them, and that the program siphons money from taxpayers statewide as handouts to corporations.
“There's no such thing as free money," said Doug Greco, lead organizer with Central Texas Interfaith, a group that opposes all Chapter 313 deals and has worked to help end the program.
“It's money that is being drained out of the state budget that could be going to schools," Greco said. "When you add these (deals) up, it's just a drain on the system that we can't sustain. Let's stop the gold rush here."
[Photo Credit: Mark Matson, Austin American Statesman]
Chipmaker NXP Considers Austin for $2.6 Billion Expansion, Up to 800 New Jobs, Austin American Statesman [pdf]
Texas IAF Calls On State Comptroller to Abandon Plan to Gut Chapter 313 Subsidy Accountability Requirements
[Excerpt]
"Lawmakers have ordered Comptroller Glenn Hegar to wrap up Texas’s biggest corporate tax break program, but he wants to give companies one last gift: an end to public accountability.
Activists, corporate relocation specialists and lawmakers are scrambling to comment on Hegar’s proposal that companies no longer report key data about their progress toward meeting the terms of their property tax abatement agreements.
....
Interfaith groups that fought the corporate giveaway that hurts Texas children demanded Hegar roll back his plan on Wednesday.
....
“What is the benefit of less accountability and less transparency?” San Antonio state Senator José Menéndez asked at a Texas Industrial Areas Foundation press conference. “The taxpayer should know how their money is going to be used and what they are getting in exchange.”"
Texas Comptroller Proposes Covering Up Corporate Welfare Program, The Houston Chronicle [pdf]
Texas IAF Blocks Billions in State Tax Giveaways to Big Oil
[Excerpts]
When organizers set out to overturn Texas’s giveaway program for the oil and gas industry, they had a long game in mind. Over 20 years, the tax exemption program known as Chapter 313 had delivered $10 billion in tax cuts to corporations operating in Texas — with petrochemical firms being the biggest winners. This year, for the first time in a decade, the program was up for reauthorization. Organizers decided to challenge it for the first time.
At the beginning of last week, as Texas’s biennial legislative session approached its end, the aims of organizers remained modest. “We thought it would be a victory if the two-year reauthorization passed so we could organize in interim,” said Doug Greco, the lead organizer for Central Texas Interfaith, one of the organizations fighting to end the subsidy program.
At 4 a.m. last Thursday, it became clear that something unexpected was happening: The deadline for reauthorization passed. “The bill never came up,” Greco told The Intercept. Organizers stayed vigilant until the legislative session officially closed on Monday at midnight, but the reauthorization did not materialize....
“No one had really questioned this program,” said Greco, of Central Texas Interfaith.
The reauthorization was a once-in-a-decade chance to challenge it. “We knew in our guts that the program was just a blank check, but we also are very sober about the realities of the Texas legislature.” ....an unlikely coalition...emerged from across the political spectrum — including the right-wing Texas Public Policy Foundation, the progressive Every Texan, and [Texas IAF], which does nonpartisan political work among religious groups.
....
The Texas Chapter 313 defeat is the second recent win against multibillion-dollar oil and gas industry subsidies in fossil fuel states. Last fall, organizers in Louisiana beat back a ballot initiative designed to counteract dramatic reforms to the state’s industry giveaway program. In a state that leans heavily Republican, people voted down the constitutional amendment by a landslide.
Broderick Bagert, who helped organize the Louisiana effort, sees what happened in Texas as part of a turning of the tides in a region where industry has long ruled. “In a lot of cases, it’s not that these battles have been lost — they just haven’t been fought,” he said. “What you’re seeing for the first time is the battles being fought.”
....Bagert noted that Louisiana and Texas are two of a handful of states whose industries will decide what our climate future will look like. “The question of these subsidies is being tied more and more with the question of whether these changes in energy production that we need to save the planet are going to be made in time to save the planet,” he said. “It all boils down to the price of energy. Once industries have to bear the full cost of their production, including emissions and taxes and all the other things that have been subsidized, then it’s no longer advantageous, and that’s when things start happening.”
In Blow to Big Oil, Corporate Subsidy Quietly Dies in Texas, The Intercept [pdf]
Texas Legislature Dooms Chapter 331, Which Gives Tax Breaks to Big Businesses, Business Journal [pdf]
Missed Deadline Could Doom Controversial $10B Tax-Break Program, Houston Chronicle
A Texas Law Offers Tax Breaks to Companies, but It's Renewal Isn't a Done Deal, Texas Tribune [pdf]
A Controversial Tax Program Promised High Paying Jobs. Instead, Its Costs Spiraled Out of Control, Houston Chronicle [pdf]
Losers and Winners from Chapter 313, Central Texas Interfaith
The Unlikely Demise of Texas’ Biggest Corporate Tax Break, Texas Observer [pdf]