A new “economic incentive” scheme put forth by the Texas House to replace the state’s expired Chapter 313 program drew criticism from citizens during a public hearing.
“This corporate welfare amounts to a $31 billion loss statewide,” said Houston-area resident Katherine Han when speaking against the measure.
The Texas House Committee on Ways & Means heard public testimony on House Bill 5 by State Rep. Todd Hunter (R–Corpus Christi) on Monday. Hunter says the Texas Jobs and Security Act would “give Texas some tools to continue to attract new business in the state.”
Citizens say it’ll cost them.
Chapter 313 allowed school districts to offer large tax breaks for 10 years to unreliable energy and other businesses—including the wind farms that famously failed Texans during the winter storm of 2021. The tax breaks came at no loss to the school districts. Instead, the state supplemented the lost revenue to the districts from sales taxes and other state-collected taxes.
Although the Chapter 313 program expired at the end of 2022, Texas lawmakers are looking to replace it, despite criticism from the right and left. Both the Republican Party of Texas and the Democrat Party of Texas call for the abolition of Chapter 313 abatements in their party platforms.
“This is not 313,” said Hunter.
“Taxpayers keep being reminded that HB 5 is not Chapter 313, and I must concede they are right. It is worse. There is no sunset provision, no oversight, and the program wastes more money than Chapter 313s,” Texans for Fiscal Responsibility President Tim Hardin told Texas Scorecard.
Amid high inflation and record property taxes, taxpayers are begging for relief. However, “the House ignores their voters and has to rob Texas taxpayers to pay woke, multinational corporations,” according to Hardin.
“Both political parties oppose this type of corporate welfare, and the uniparty in Austin has decided to ignore taxpayers and instead serve corporate interests and lobbyists,” said Hardin. “Texas taxpayers deserve better.”
Yet school district officials defended the 313 replacement proposal.
“Over the past two decades, our area has continued to compete with other states and countries for world-scale petrochemical and liquefied natural gas projects. These global industry leaders are investing more than for-profit infrastructure in our area. They look to us as a Texas public school to provide an educated, industry-certified pipeline of talent for high-wage, high-demand jobs, becoming partners and providing opportunities for our students to graduate and enter the workforce,” said Rebecca Kelly, chief financial officer for Brazosport ISD, testifying in favor of HB 5.
“The provisions of House Bill 5 will allow us the ability to continue offering companies temporary tax relief, which will in turn bring jobs and long-term revenue to the state and our local communities,” said Kelly.
Manny Rollis, a resident of Brazosport ISD, testified against HB 5, stating, “In my community, I watched my appraisal district devalue my whole community—where there was nothing by minority people. They took our land and gave it to the Port of Freeport in order to expand.”
“These tax abatements hurt us in the long run,” he said. “Our school district [Brazosport ISD] just stood up here a few minutes ago and talked about the graduation rate and all that. That’s a lie, because they just put [in the] newspaper the other day [that] the dropout rate is so bad in our school district.”
“So, if we want to be truthful about all of this … think about the people that are suffering. Think about us,” said Rollis. “I have 27 grandkids [and] I expect them to have a future. I served my country as a soldier; I did everything right. And I expect my government to do right. That’s why we send y’all here.”
Han said she opposes HB 5 “due to the huge amount of tax loss of the Texas communities we’ve seen with similar tax agreements in the past.”
“These tax giveaways amount to corporate welfare for already extremely wealthy companies,” said Han. “Texas taxpayers are essentially subsidizing highly profitable industries that do not need our financial assistance. Communities are bearing all the ill effects of dangerous infrastructure, and we’re seeing crumbs in return.”
The Texas Association of Business, as well as many chambers of commerce, economic development councils, and school districts, testified in support of HB 5.
HB 5 was left pending in committee.