Big Business Pushes for More Tax Breaks at Taxpayer Expense

Last Thursday I spent 11 hours at the Texas state Capitol in Austin. The occasion for all the fun was a hearing by the House Ways and Means committee on issues related to property taxes. 

It was pretty amazing to watch the proceedings. One of the biggest problems we have in America today is that our various governments take far more of our money than they are entitled to and then spend it on things they do not have authority to spend it on or give it to people they do not have authority to give it to. This is certainly the case when it comes to property taxes in Texas.

Yet throughout the day, most of the discussion from both House members and those who testified was focused on how to make Texas’ property tax system more efficient or to use it to give big tax breaks to big business. Nobody on the committee seemed concerned that property taxes in Texas are driving people out of their homes, being spent to groom our children to ignore God and instead live a life serving Marxist and gay ideologies, and being used to attract renewable energy generators who are wrecking our electric grid.

For my part, I joined with perhaps a dozen other folks to stop the government from using the property tax system to give massive tax breaks to big business while the rest of us (except farmers and ranchers) continue to pay some of the highest taxes in the United States. Texas homeowners and small businesses face the 5th or 6th highest property tax rates in the country. And there is no relief in sight. Legislators have promised property tax “relief” at least five times as far back as 1997 and never delivered. Nor do they talk about property tax “reduction” because in order to reduce property taxes, they actually need to stop spending so much of our money. And that they are loathe to do.

I’ll save the column on property tax reduction for another day, however, and instead today focus on Chapter 313 of the Texas Tax Code. Chapter 313 is the provision that allows school districts to offer property tax reductions, or abatements, to politically favored businesses.

The numbers when it comes to Chapter 313 tax abatements are staggering. As of June 2020, there were 509 active Chapter 313 agreements between school districts and businesses. The agreements reduced the taxable value of the property owned by those 509 or so businesses (some businesses might have more than one agreement) from $63.7 billion to $16.3 billion. Over the life of those agreements (typically ten years), property taxes for these companies will be reduced by $10.8 billion, and average of $21 million per business. The majority of these agreements are with renewable energy generators. Out of a total of 312 agreements with renewable generators as of 2020, 210 were with wind farms and 102 with solar farms.

The reason for the hearing last week was because Chapter 313 will expire at the end of the year. Multiple attempts by legislators and big business were made to extend it during the 2021 regular session of the Texas Legislature, but an interesting combination of opposition from conservatives, progressives, and the mainstream media led to its demise. However, big business, school districts, most members of the House Wayas and Means committee and Texas House Speaker Dade Phelan seem determined to bring it back to life next year. Thus, the hearing was held to give Chapter 313 advocates a forum to make their pleas. Big business groups like the Texas Taxpayers and Research Association, Texas Oil and Gas Association, and Texas Association of Manufacturers, along with school districts, showed up to take advantage.

Just in case they fail, businesses and local school districts have been hard at work attempting to get in under the deadline. At present, there are over 408 proposed 313 agreements between districts and businesses waiting for review and certification by the Texas Comptroller Glenn Hegar. The good news is that the comptroller’s office does not have the personnel to process all of the applications. The bad news is a lot of them will be approved; of the 408, already 90 have been certified and another 35 been executed by school districts.

Renewable projects are overwhelming the process. A total of 291 applications, or 71%, are for renewables. And this time, solar projects are dominating wind, with 243 applications for solar and 48 for wind. Only 114 projects are for typical manufacturing projects. And since wind and solar farms typically bring only one or two jobs with them, very little “economic development” will result from this massive give away from Texas taxpayers.

Not to be all gloom and doom, as I noted about a dozen of us showed up to make the case that Chapter 313 should be allowed to expire without being replaced. And like last year, both progressive and conservative groups took part. I was there on behalf of the Huffines Liberty Foundation. Others appearing included the True Texas Project, the Texas Public Policy Foundation, and Every Texan.

There is no doubt this will be a fight during the Texas Legislature’s regular session in 2023. How much of a fight will be determined by how many Texans concerned about high property taxes and organized theft through Chapter 313 show up. If enough do take part by contacting their state senators and representatives, coming to Austin to testify, and spreading the news to neighbors and the media, I believe it is a fight that those who love liberty can win.