On April 10, the Texas House Ways & Means Committee heard testimony on House Bill (HB) 5, a bill intended as a replacement for the now defunct Chapter 313 tax abatement program that expired after the last legislative session in 2021.
HB 5 appears primed to move out of committee soon, and proponents of the bill highlighted several key differences between the new legislation and the old Chapter 313. But that is not enough to convince some groups who remain opposed.
"This statute is quite a bit more limited in the kinds of projects that can qualify," George Christian, an Austin attorney who helped draft various versions of the bill, said during a Texas House Ways & Means Committee hearing; the Austin Business Journal reported recently.
Chapter 313 was a program that permitted "public school districts to offer tax incentives for businesses that invest in their communities" and was designed 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," the Texas Comptroller's website said. In exchange for that limitation, the business would build or install new property in the school district and create new jobs.
Committee testimony on HB 5 discussed that the current draft being considered by the Ways & Means Committee does not permit renewable energy projects, such as wind and solar farms, to participate in the proposed tax abatement system.
The Lone Star Standard reported in February that Texas Gov. Greg Abbott called for "new economic development tools this session" in his State of the State address, a line that many saw as support for resurrecting Chapter 313, which expired at the end of 2022.
The exclusion of renewable energy projects from HB 5 seems to line up with Abbott's promise that they would not be included in any new version of Chapter 313, The Texas Tribune reported.
Texas state Rep. Todd Hunter (R-Corpus Christi) testified that HB 5 improves on the old Chapter 313 in a number of ways and that "it does have the accountability and it does have the transparency" that critics said Chapter 313 was lacking.
But the changes made in HB 5 to the tax abatement program are not enough to satisfy some of its critics. The Houston Chronicle Editorial Board said on April 17 that HB 5's attempt to resurrect Chapter 313 would bring back the program in a way that would be "worse than ever before," noting that the changes made in HB 5 had poor trade offs they believe would result in worse outcomes overall for Texans.
Dick Lavine, an analyst at Every Texan, tweeted his opposition to HB 5.
"Texans support tax breaks if they're fiscally responsible," he said in the post. "A program w[ith] few assurances that we'll get a return on our investment doesn't fit the bill."
