On Friday, the Texas Supreme Court refused to intervene in a request by two renewable energy companies that said they would forfeit millions of dollars in tax savings from a program expiring this year because an overburdened state agency failed to process their statement. .
The Texas Comptroller’s Office has until December 31 to place companies in a program known as Chapter 313 and give them a 10-year rebate on their property taxes.
The two companies taking legal action, Stetson Renewables Holdings LLC and Ogallala Renewable Project LLC, filed over $20 million in tax savings in May 2022.
Shortly thereafter, they received confirmation that their applications had been received and they were eligible for the promotion.
But once eligibility is determined, the oversight agency is required to assess the economic impact of the application within 90 days, the companies said in their court filing. The companies alleged that the comptroller’s office, swamped with applications requiring approval, failed to complete the review in time, resulting in two firms’ applications being rejected.
The companies have asked the Texas Supreme Court for help, but on Friday the court said the matter was outside its jurisdiction and that lawmakers should decide whether to issue new instructions to the comptroller.
“Even after December 31 has passed, the legislature, if it wishes, can require that all timely applications be considered approved. Or it may retroactively waive the December 31 deadline for any application that was otherwise filed on time and instruct the Controller to continue processing those applications. Or the legislature could restore access to the program for everyone for a specified period or permanently,” Judge Evan A. Young wrote. “However, under the statute as it stands, any such relief would go beyond the judiciary and affect political decisions that are appropriate for other branches of government.”
In 2021, the Legislature decided to let the Chapter 313 program die after complaints that it represented “corporate welfare.” The program provides billions of dollars in tax credits for companies relocating to Texas. In the program’s final year, Texas Comptroller Glenn Hegar said his office received “an extraordinary amount of applications from companies seeking incentives under the current program.”
He noted that his staff has to cope with a workload that has increased significantly over the past six months, despite the lack of additional staffing support from the Legislative Assembly.
In explaining its decision not to intervene, the court also noted that it did not appear that the auditing service acted with malicious intent when it failed to process the two firms’ Chapter 313 claims in a timely manner.
“There is nothing to indicate that the controller refused to act out of a desire to harm [the renewable energy firms] or because he opposes Chapter 313. Instead, he claims he has done and is doing everything that could be done under the circumstances,” Young wrote.
Lawyers for the companies on Friday declined to comment. A spokesman for the comptroller’s office said he was pleased with the court’s decision and was “thankful for the clarity he provided on this matter.”
Under the Chapter 313 program, manufacturing and energy companies approach local school districts for a 10-year rebate on their property tax bills in exchange for building or expanding in the community and, in some cases, creating new jobs. The Texas Comptroller’s Office must also approve these agreements.
For school districts, there is nothing wrong with approving tax breaks because any lost income for public schools is compensated by the state. This movement of government dollars, critics say, leaves less money on the table for other government services such as health care or public safety.
Schools may also sign agreements directly with companies for additional payments in exchange for tax credit approval, which critics say contributes to funding disparities among school districts.
Two renewable energy companies have filed Chapter 313 applications for wind and solar energy projects located in five different Texas independent school districts: Bynum ISD, Hart ISD, Holliday ISD, Miller Grove ISD, and Sulfur Springs ISD. They were informed of their denials earlier this month.
In the filing, the companies claim their applications were rejected, though some companies, including Elon Musk’s electric vehicle company Tesla, applied for savings after them and were still approved. Tesla has applied for tax breaks to build a lithium hydroxide plant for batteries.
“The Comptroller’s failure to meet its statutory obligations and issue certifications puts at risk approximately $773,550,000 in estimated capital investment in Texas, $27,001,784 in projected incentives, and projected $29,676,600 in projected minimum taxes and other payments to school county,” the statement said.