The Texas House gave initial approval to its priority property tax abatement program that is intended to attract more businesses to the state.
“No longer are we just local, we’re dealing with global companies … and we’re trying to shape this as a Texas program,” Rep. Todd Hunter (R-Corpus Christi) said, laying out the bill. “Chapter 313 is gone forever.”
House Bill (HB) 5 would replace the now-defunct Chapter 313 program that allowed school districts to grant businesses a decade-long reduction in the taxable value of their property in exchange for bringing their operation to the district.
It passed by a vote of 118 to 22 — 46 Democrats voted in support and 11 Republicans voted against.
HB 5 has 79 joint authors or coauthors, a majority of the House.
The idea to establish a new economic development abatement program is supported by Speaker Dade Phelan (R-Beaumont) — the speaker voted for the bill, something typically only reserved for high-priority legislation — but its chances in the Senate are less clear.
Its predecessor expired at the end of 2022 after the Legislature declined to renew the program during the 87th Legislative Session, choosing to let it sunset and start anew.
The latest version of the bill — different from the one heard in committee — includes a sunset provision, allowance of batteries in applicability of the abatements “regardless of power source,” and a prohibition against a third-party consultant representing both a school district and the company involved in the abatement deal. The bill also includes an audit requirement by the state of these agreements.
The original bill’s sunset provision set its expiration for 2036, but an amendment by Rep. Donna Howard (D-Austin) reduced that to 2033.
Renewables are not included in the bill, though battery storage projects are. Battery projects may purchase power from wind and solar generators — or thermal generators, for that matter — but as written, the renewable projects themselves are ineligible from the abatements according to the authors.
They do not meet the definition of “dispatchable.”
Rep. Matt Schaefer (R-Tyler) offered an amendment to put the question of renewables’ exclusion beyond all doubt by changing the power source language to batteries “that store energy from a thermal source.”
Initially, the amendment was adopted without much obstruction. But then Rep. Hugh Shine (R-Temple), a joint author of the bill, called for a motion to reconsider the amendment’s vote. It passed, and the House summarily voted down Schaefer’s amendment 20 to 107.
Rep. John Smithee (R-Amarillo) offered, and summarily withdrew, an amendment to write in renewables to the definition of eligible projects “if they ever meet the qualifications of dispatchable.”
Hunter said after both that “agreements had been made” during the negotiation of this bill and he wanted to preserve those — to which Schaefer remarked, “I wasn’t involved in those negotiations.”
The exclusion of renewables has been a line in the sand by lawmakers and state officials, including Gov. Greg Abbott. Lt. Gov. Dan Patrick said in January that he authorized Senators to kill the Chapter 313 renewal bill in large part because of how much renewables used it.
Over two-thirds of the approved abatements under Chapter 313 were renewables, and the job requirement was waived in nearly every one.
Under Chapter 313, the job requirement was 25 for urban and suburban areas and 10 for rural ones. In the new proposal, the job requirement breakdown is 50 or more jobs in counties with 750,000 people or more, 20 jobs for counties between 25,000 and 750,000, and five jobs for any county with less than 25,000.
In the old program that job requirement could be waived, something most often utilized by wind and solar projects that often only promised to create one permanent job.
Another big difference is that HB 5 gives the Texas Comptroller of Public Accounts more authority to reject applications. Under the old version, the comptroller’s role was more ministerial, only able to reject agreements for faulty paperwork.
Despite that raised hurdle, final approval of these agreements under the bill lie with the individual school districts.
On the floor, House members attempted to tack on 20 amendments, only 10 of which were adopted.
Another amendment by Schaefer was initially adopted by a vote of 109 to 24, but after a motion to reconsider was summarily rejected by the body. The amendment would have prohibited companies receiving an abatement under this program from paying monetary benefits to employees or contractors for any activity that would “constitute a criminal offense under the laws of this state.”
The language of the amendment would apply to companies financing things like abortion services and, if this session’s Senate Bill 14 passes, gender modification procedures.
After a lengthy standstill, Hunter made the motion to reconsider Schaefer’s second amendment and a handful of Democratic members gathered at the back microphone, pining to call a point of order. Schaefer inquired if he could speak on the amendment before the point of order, but it was called as soon as he got to the front microphone.
And so the amendment was stripped, likely a red line for Democrats who otherwise would support the bill.
In the debate leading up to this, interest groups of all stripes lobbied for and against Chapter 313’s replacement.
Over 700 school districts penned a letter to lawmakers supporting a replacement that included a request for more autonomy over the program’s allotments, including which businesses may qualify. Also supportive are the Texas Association of Manufacturers and the Texas Oil and Gas Association, whose members are within the bounds of those eligible for the abatements.
On the flip side, two politically opposite but temporarily united think tanks — the conservative Texas Public Policy Foundation, and the progressive Every Texan — are both against the bill and rallied hard against the renewal of Chapter 313 in 2021.
Last session, House members killed a 10-year extension of the Chapter 313 program that also would have expanded the abatement eligibility to renovations on existing projects — not just new builds. The body then scrambled to pass a brief two-year extension of Chapter 313 to provide for more time for a decade extension to be hammered out.
But the Senate had other ideas.
Especially after getting so many cosigners, the bill’s lower chamber passage was almost in the cards — though it must still pass again on third reading Friday. But its passage through the Senate is an open question. And how the upper chamber approaches the language that Schaefer tried to root out will be something to watch.
When she led the effort to kill Chapter 313 last session, Sen. Lois Kolkhorst (R-Brenham) did not voice a philosophical opposition to an abatement program but said that Chapter 313 had become far too rife with abuse and opacity.
Now the ball is in the Senate’s court to decide whether the adjustments made by the House sufficiently absolve those concerns, and whether to adopt similar language putting to bed the question of renewables’ potential inclusion in the abatement program.
Comments
Post a Comment