Texas Comptroller of Public Accounts Glenn Hegar had floated the idea of ceasing data collection for Chapter 313-related information this year.
Dick Lavine, senior fiscal analyst for the think tank Every Texan, questioned the wisdom of such a move.
“Data collection may seem an obscure and trivial procedure, but the implications of the comptroller’s proposed cutback in data collection and availability make it clear that elected officials, the media and Texans concerned about adequate and equitable funding of our schools and other public services should act to make their opposition to this proposal known,” Lavine wrote in a November Every Texan article, as reported by Lone Star Standard.
On Monday, he noted the proposal has been discarded.
“The comptroller has withdrawn the proposed rule and promised ‘the data that people are concerned about or want is still going to be available,’” Lavine told Texas Business Daily.
Chapter 313 is set to expire Dec. 31, and Lavine said few need to mourn its loss.
“The evidence is overwhelming that the great majority of projects receiving Chapter 313 abatements would have located in Texas without the tax break,” he told Texas Business Daily. “A better approach would be to improve the factors that are important for business relocations [such as] a well-trained workforce, adequate transportation infrastructure and a reliable electric grid.”
Lavine said until the economic incentive program is dead, it could still prove costly.
“Chapter 313 agreements are binding contracts, so the billions in school tax revenue given up in these agreements [which can be approved Dec. 31, 2022] are irrevocably lost,” he said.
House Bill 4242, authored by Texas Rep. Morgan Meyer (R-Dallas) and sponsored by Rep. Brian Birdwell (R-Tarrant County), would have postponed the expiration of the Chapter 313 tax abatements included in the Texas Economic Development Act until Dec. 31, 2024. Although the bill passed the House, it stalled in the Senate.
Studies have found that Chapter 313 abatements often do not fulfill their economic development goals. Almost two-thirds of the programs waive their job creation rules and about 20% of the programs are allowed to keep their subsidy despite underpaying workers.
Some analysts believe the best solution for dealing with Chapter 313 abatements is to simply start from scratch and utilize past evidence of inefficiencies and wasteful subsidies to better inform a new program.
Chapter 312 and 313 tax abatements cause taxpayers to subsidize renewable energy projects in Texas that cost hundreds of millions of dollars each year, critics argue.
According to data from the Texas Comptroller’s Office, no company receiving tax abatements in west central Texas created the required 10 jobs under state law and, instead, received job creation waivers.
Chapter 313 abatements require projects to create at least 10 permanent jobs as a result of their investment. However, the WC Texas News reported that renewable energy projects who received 313 abatements rarely met this job creation requirement.
Gov. Greg Abbott has been skeptical of 313 tax abatements, according to a Texas comptroller report. In 2015 he vetoed an expansion of the practice citing that “serious concerns exist about its oversight, its transparency and its value to the taxpayers.”
Through 2018 renewable energy resources, such as primarily wind and solar, have received subsidies amounting to more than $100 billion.
Transparency USA noted there was bipartisan support for Chapter 313 abatements to expire, saying “the 509 agreements that have been made under Chapter 313 provisions have reduced tax revenue by $10.8 billion. Proponents of the program argue that it’s needed not only to incentivize businesses in Texas, but also to promote green energy policies. Opponents decry the program as wasteful and as the government picking winners and losers.”
The group also stated that “in a speech last week to the Texas Oil and Gas Producers Ad Valorem Tax Conference, Republican Speaker of the House Dade Phelan suggested lawmakers would work to bring back the controversial program in the next legislative session.”
Phelan tweeted in early February about why a Chapter 313-like policy is necessary to bring business to Texas: “The #txlege continues to prioritize & work on providing property tax relief, improving the appraisal system, and developing a program to replace Chapter 313, a crucial incentive program to attract businesses to Texas.”
At Every Texan, Lavine focuses on building state and local revenue systems that meet Texans’ needs, according to an online biography. He has worked there since 1994.
Prior to joining Center for Public Policy Priorities, as the think tank was known until 2020, he served as a senior researcher at the House Research Organization of the Texas House of Representatives for a decade.
Lavine is a chartered financial analyst who was a member and chairman of the board of directors of the Travis Central Appraisal District and is a member of the executive board of AFSCME Texas Retirees, the statewide union local of retired public employees.
He earned a bachelor of arts in economics, magna cum laude, from Harvard College in 1969, and a doctor of jurisprudence, cum laude, from the University of Pennsylvania in 1975.