AUSTIN (KXAN) — Texas’ massive corporate tax credit program expired in 2022, but through Dec. 31, state officials said an “extraordinary number” of companies were attempting to apply. The state legislature could now be tasked with dealing with a stack of pending applications.
Chapter 313 incentives allowed manufacturing and energy companies to apply for a 10-year rebate on their property tax bills from Texas school districts in exchange for adding jobs and supporting the local economy.
Over the years, critics have argued that some requirements have been rolled back and some companies have created few or low paying jobs with few benefits. Some, including a coalition of interfaith leaders with The Metropolitan Organization, Central Texas Interfaith, and Texas Industrial Areas Foundation Organizations, call the program “corporate welfare” and that the rest of Texas taxpayers are essentially “making the difference.” ”
“We pay taxes. Parents, teachers, grandparents, alumni pay taxes to our school districts and the state. So, we believe this is something everyone is responsible for,” said Rev. Minerva Camarena-Skeith of St. John’s Episcopal Church.
Joe Higgs, organizer of The Metropolitan Organization, added: “Basically, it was carte blanche.”
During the 2021 legislative session, he said the coalition was pleased when lawmakers decided to allow the program to expire.
Texas Comptroller Glenn Hegar, whose office was tasked with analyzing the economic impact of these agreements and certifying them, said their workload “more than tripled in the last six months of the year” as applications poured in before the program expires at the end of 2022.
“Despite the fact that my office is certifying over 300 projects this year alone, this is clearly not enough,” Hegar said in a statement issued in mid-December.
The statement also noted that the legislature could have allowed his office to continue reviewing and approving applications after the first of the year, but that “transitional powers” were not granted to his office.
The Comptroller’s statement was released after two renewable energy companies petitioned the Texas Supreme Court to intervene on their behalf. According to an opinion released by the court last week, the two firms filed applications in mid-2022 before the deadline, but an “administrative bottleneck” at the comptroller’s office prevented their approval.
The conclusion stated, in part, “[the Comptroller] anticipated an influx of Chapter 313 applications before the program ended, and substantially increased the number of employees and contractors trained and willing to work on them. But the actual volume of applications significantly exceeded even these expectations…”
As first reported by the Texas Tribune, the court ultimately concluded it lacked jurisdiction over the matter, saying it was up to lawmakers to decide whether to allow the comptroller to approve the remaining filings or revive the Chapter 313 program entirely.
Justice Evan Young wrote, “However, the reason why the carriage turns into a pumpkin at midnight on New Year’s Eve is because the legislature has long desired this outcome. If the pumpkin is destined to become a carriage again, this too must come from the will of the legislature.”
Earlier this year, Speaker of the House Dade Phelan and several other lawmakers expressed support for a new stimulus program to replace Chapter 313, but with more transparency and accountability.
In a statement to KXAN on Monday, Phelan said he has seen “first hand” in his area and throughout Texas “how useful these incentives have been for countless manufacturing companies.”
He said in a statement that “they have created economic opportunities in other parts of our state, such as North Texas with Texas Instruments or Central Texas, where Samsung announced a major investment in a new semiconductor manufacturing plant. It is this kind of investment that allows our state to be globally competitive and less dependent on other countries, and paves the way for Texas, thanks to Samsung’s investment, to become a leading semiconductor manufacturer.”
Phelan went on to note that in 2021 the House of Representatives passed a measure that would have expanded some of the incentives, but “the Senate decided not to act on it.” He said he and his fellow members of the House of Representatives spent hours studying how to improve job creation.
“Through the efforts of my colleagues, I am confident that our chamber will lead the way in adopting credible business engagement incentives that include genuine accountability and transparency,” Phelan concluded in a statement.
Industry and business associations have also pushed for chapter 313 replacement. According to a recent blog post by Texas Business Association CEO Glenn Hamer, replacing chapter 313 with a “new, modern, and transparent economic development program” will be the group’s top priority when lawmakers return to the Capitol on January 10. .
Hamer wrote that these incentives were necessary for Texas to “attract new and expand existing large capital-intensive projects in Texas, including critical sectors such as advanced technology, life sciences, semiconductor manufacturing, and energy-related projects.”
However, Bob Fleming, another leader of The Metropolitan Organization, said his coalition will continue to fight any option that comes from public school dollars. He suggested that the supporters of these benefits take money out of the general budget and explain to people “why it is in their best interest” to give away at least $10 billion.
“I don’t think they want that,” Fleming suggested. “We are not against business. We are not against jobs. We don’t mind companies moving to Texas. We are not opposed to any of these things. But we are opposed to funding them by taking money from our public school system.”
Mother Minerva added: “Is this the best use of our tax dollars, or is this the best use of our tax dollars to educate our children, provide quality health care, provide raises for our teachers, ensure good, continuous work after 12th grade, and advance training? » sure there are dollars for job training so that we have the educated and workforce we need to attract the businesses we want to our communities — businesses that are willing to partner with us and contribute to our community, not deplete our resources. ”