Texas Gov. Greg Abbott signified his support for resurrecting the Chapter 313 tax subsidy program during his recent State of the State speech.
"To keep Texas the best state for business, our local communities need new economic tools this session," Abbott, a Republican, said.
Several reports, including one published by Bloomberg the same day as the governor's speech, Thursday, Feb. 16, connected Abbott's comments to a potential revival of Chapter 313.
Brad Johnson, The Texan journalist, noted the possible connection in a tweet by quoting Abbott's comment on economic tools and calling it "some support for a Chapter 313 revival in some fashion".
According to the official website of the Texas Comptroller, Chapter 313 was a program that allowed "public school districts to offer tax incentives for businesses that invest in their communities" and was made to "attract new businesses by offering them a 10-year limitation on their appraised property value for a portion of the school district property tax. In exchange for the value limitation, the business agrees to build or install new property and create jobs in the school district."
In June 2021, the Texas Legislature didn't pass a bill to extend Chapter 313 beyond its expiration date of Dec. 31, 2022. In May 2021, Houston Chronicle reported that Chapter 313 abatements often failed to fulfill their economic development goals, with almost two-thirds of the programs waiving their job creation rules and approximately 20% of them allowed to keep their subsidies despite underpaying employees.
Some experts considered that the best solution for dealing with the abatements was to start from the beginning and study past evidence of inefficiencies and wasteful subsidies to better inform a new program.
On May 7, 2021, public policy think tanks The Texas Public Policy Foundation (TPPF) and Every Texan published a joint statement opposing the renewal of Chapter 313, pointing to a lack of companies attracted to the state because of it, the accompanying loss in tax revenue and the ability of school districts to waive the minimum job creation requirement of 10.
Former TPPF Vice President of Research Bill Peacock wrote an editorial for Houston Daily published last May, saying that renewable energy generators often take advantage of Chapter 313's provided tax abatements and that tax breaks are used to "turn a profit on what would otherwise be an unprofitable investment in highly inefficient renewable energy".
During a recent Senate Business & Commerce Committee hearing on a plan to redesign the Texas power grid, State Sen. Mayes Middleton (R-Galveston) invoked Chapter 313 by comparing it to the Performance Credit Mechanism plan.
"It kind of reminds me of some of the things that we’ve heard in Chapter 313’s past before where they, you know, they say, ‘Oh, we wouldn’t have done it without that 313’, and then later on they’re like, ‘Well, we would’ve (done) it anyway; we would’ve built it anyway’,” Middleton said.
