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State Rep. Todd Hunter, R-Corpus Christi, center, offered House Bill 5, which bears striking similarities to the previous incentive program, which was known as Chapter 313 for its place in the Texas Tax Code.
Bob Daemmrich/Bob Daemmrich/CapitolPressPhoto
Republican Lawmakers are again trying to give tax breaks to massive corporations considering an investment in Texas , just two years after they killed a similar program. But this time they will exclude their favorite bogeyman: renewable energy projects.
State Rep. Todd Hunter, R-Corpus Christi, presented the Texas Jobs and Security Act to the House Ways and Means Committee on Monday morning, promising a different approach.
“We’re really trying to protect the economy for the future,” Hunter said. “This is, statutorily, a new document.”
But his House Bill 5 bears striking similarities to the previous program, which was known as Chapter 313 for its place in the Texas Tax Code. Companies ask school boards to waive a certain amount of property tax over decades in return for significant investments that create jobs.
If the comptroller approves, the Legislature allocates taxpayer dollars to replace the school district’s lost revenue.
Chapter 313 started in 2012 with an estimated $2.4 billion price tag, but by 2020 it had cost the state $10.8 billion . The now-defunct program will have cost Texans $31 billion by the time the last tax break expires in 2049.
Conservatives and liberals complained that school districts approved too many packages for companies that never produced the promised jobs and granted abatements to projects that would have been built anyway . In a rare bipartisan moment, the Legislature in 2021 let Chapter 313 expire effective Dec. 31.
Chambers of commerce have spent the past two years lobbying for a replacement and House Speaker Dade Phelan promised to prioritize it. Thus was born House Bill 5.
Lawyer and lobbyist George Christian, who helped Hunter draft HB 5, described three key differences.
First, it excludes renewable energy. Petrochemical plants, refineries and other oil and gas facilities would remain eligible. Only this time, for those projects, there is no job requirement.
Second, the bill increases transparency by requiring public reporting of economic data that corporations and school districts had kept secret . Companies must prove that the incentives were a deciding factor in their investment.
Lastly, HB 5 limits the kickback a school district can demand from a company in return for approving an abatement. School boards can only demand 30 percent of the first $2 million in tax savings, but larger projects would generate a higher percentage for the company.
More than 1,000 Texas chambers of commerce and local economic development officers officially supported the bill Monday.
“We need to have a robust program in place to be competitive,” Bob Harvey, CEO of the Greater Houston Partnership, told lawmakers. “We are competitive on every level except on property tax.”
Marina Gonzales, of the San Antonio Hispanic Chamber of Commerce, said the bill “will help our region remain competitive to attract transformative economic change.”
This is corporate America’s big play. As Tesla CEO Elon Musk routinely demonstrates , executives demand an auction where local and state governments bid ever-larger tax breaks in return for building in their jurisdictions. In Texas, the property taxes levied by school districts are the most expensive taxes paid by corporations.
Texas chronically underfunds schools, though, so districts are loathe to offer tax breaks unless the Legislature makes them whole. Under Chapter 313, districts often demanded cash payments in return for approving incentive programs, allowing them to have their cake and eat it too.
Hunter insisted that HB 5 is different from Chapter 313, but only superficially. The most radical change is excluding wind and solar projects and, presumably, battery storage facilities that go with them. Christian, who helped draft the bill, said it was a political decision because Republicans are beating up on them this year.
Rural school districts want the Legislature to include renewable energy projects because they constituted the only investment in two-thirds of the counties that used Chapter 313, the Advanced Power Alliance reports . But Lt. Gov. Dan Patrick promised to kill any bill supporting renewable energy.
Opposition to HB 5 came from church groups, environmentalists and health care advocates who argue that state revenues should go to schools and communities. The Rev. Miles Brandon, representing the Network of Texas IAF Organizations, said the state has more important priorities.
“Lawmakers have a stark choice, stand up to protect Texas taxpayers and schoolchildren, or go along with a bill written by multinational corporations to underwrite their bottom lines with hard-earned Texas taxpayer dollars,” he told the committee.
Brandon is correct, governments should build good transportation networks, supply clean water and educate the workforce , not choose winners and losers. Texas shouldn’t get sucked into pay-to-play, but if it must, HB 5 is not the way to do it.
Chris Tomlinson, named 2021 columnist of the year by the Texas Managing Editors, writes commentary about money, politics and life in Texas. Sign up for his “Tomlinson’s Take” newsletter at HoustonChronicle.com/TomlinsonNewsletter or Expressnews.com/TomlinsonNewsletter .
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