A piece of legislation that would have extended Texas' Chapter 313 tax abatement program has stalled, raising questions about the plan's future.
The intended purpose of Texas House Bill 4242 was to postpone the expiration of the Chapter 313 tax abatements included in the Texas Economic Development Act until Dec. 31 of 2024. Although the bill was passed in the House, HB 4242 failed to pass in the Senate by the close of the legislative season. Without further action, Chapter 313 tax abatements will now expire on Dec. 31, 2022.
While Chapter 313 is scheduled to expire, Dick Lavine made clear in a November 2021 column published by social policy think tank Every Texan that billions of dollars in costs will continue for up to 10 years, as agreements can be extended for up to a decade.
The comptroller's office currently publishes essential information that is collected from the beneficiaries of policies like Chapter 313 but has filed a proposal that would drastically reduce the amount of data gathered from the beneficiaries. Lavine argues that by doing so, they are "making it impossible for the legislature, the media and the public to know future costs of the program."
Lavine said job creation and wage data from the school districts will no longer be available for the comptroller's reports. Information used to project the cost of the bill out 10 years will no longer be collected or reported. The job creation requirements of being a beneficiary include creating "qualifying" and "non qualifying" jobs, and the latter would cease to be reported on by the comptroller if this bill passes.
"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 concluded.
The Chapter 313 abatements have not been without controversy. The section was designed to encourage job creation by limiting taxes for business for 10 years.
Studies have found that Chapter 313 abatements often do not fulfill their economic development goals, according to the Houston Chronicle. 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 experts believe that the best solution to 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 313 abatements require projects to create at least 10 permanent jobs in return for their investment. However, theWC Texas News reported that renewable energy projects who received 313 abatements rarely met this job creation requirement.
Chapter 312 and 313 tax abatements cause taxpayers to subsidize renewable energy projects in Texas that cost hundreds of millions of dollars each year, according to Texas comptroller data.
Texas Gov. Greg Abbott has been skeptical of 313 tax abatements. 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."
"It was abused and had gone way beyond the initial intent, which was an incentive for employers to come into the state and set up a business," Luis Figueroa, legislative and policy director of social policy think tank Every Texan, told the Lone Star Standard. "[The expiration of the policy] will have absolutely no impact, certainly in the short term. And businesses will continue to come to Texas because it is unique."
According to America's Power, through 2018, renewable energy resources—primarily wind and solar—have received subsidies amounting to more than $100 billion.
