Opportunity to Tell the Texas Legislature to Abolish Chapter 313

It was not that long ago that property tax abatements were illegal in Texas because they were considered to be theft.

This historic and biblical perspective was embedded in the Texas Constitution. Acknowledging the ethical and economic problems with the government giving taxpayer money to individuals or businesses, the Constitution contains what is known as the Gift Clause, which at one time prohibited the “grant[ing of] public money or thing of value in aid of, or to any individual, association or corporation.” This provision helped Texas avoid the corruption inherent with private citizens getting rich at the expense of taxpayers and reduced the transfer of wealth from productive Texans to those who were less productive but more politically connected.

Then in 1987, the Legislature approved and sent a constitutional amendment to Texans providing an exemption to the Gift Clause, allowing the “creation of programs and the making of loans and grants of public money … for the public purposes of development and diversification of the economy of the state, the elimination of unemployment or underemployment in the state.” It passed by the narrow margin of 51.7 percent of the popular vote.

One of the corporate giveaways that came from this is Chapter 313 tax abatements. Using Chapter 313 of the Texas Tax Code, school districts can give major tax breaks to businesses, often cutting their taxes by 50% over ten years. More and more of these tax breaks are going to renewable energy generators that have contributed greatly to the unreliability of the Texas electricity grid.

Now, Texans have a chance to make this program go away. Thanks to a strong outpouring of public opinion last year, Chapter 313 is set to expire at the end of this year. But already, Austin politicians like Texas House Speaker Dade Phelan are making plans to replace Chapter 313 with another program. To that end the Texas House Committee on Ways and Means is having a hearing this Thursday at 11 a.m. on the following interim charge:

Conduct a comprehensive review of the impact of not renewing Chapter 313, Tax Code. Evaluate tax incentives offered by other states and make recommendations for incentivizing manufacturers and other capital-intensive businesses to locate to Texas.

However, it is still possible that all school district property tax abatements can be brought to an end. Texans can appear before the committee (usually for 2 to 3 minutes) to let them know whether you think Chapter 313 should expire and not be replaced. Here are the details for the hearing:

COMMITTEE:    House Ways & Means 

TIME & DATE:  11:00 AM, Thursday, September 8, 2022 

PLACE:       E2.012 Texas State Capitol Underground Extension
CHAIR:       Rep. Morgan Meyer 

If you cannot join me in Austin to testify, Texas residents can submit your comments online. Comments must be submitted before the hearing is adjourned.

If you’d like to know more about the problems with Chapter 313, you can go to the Texas Public Policy Foundation’s website, click on the search icon at the top, then search for “313.” You can also find resources on 313 by clicking here.

I encourage anyone whose concerned about corporate cronyism and the harm caused by renewable energy to attend in person or fill out comments online and ask the committee to let Chapter 313 expire without a replacement. If you are coming to Austin to speak or submit comments online, please reply to this email to let me know. And, also, please send your comments to me.