Chapter 312

WHAT IS CHAPTER 312?

Chapter 312 of the Tax Code allows cities, counties and special districts to offer temporary property tax reduction to new investment projects. Temporary property tax reductions have attracted investment to Texas and led to thousands of new manufacturing jobs -- with more jobs coming in the next few years, helping to create a booming economy.

Ch. 312 is set to expire and must be renewed by the legislature during the 2019 legislative session for Texas to remain competitive with other states. Other states offer these incentives and Texas will lose its competitive edge in attracting investments without Ch. 312.

WHY DOES TEXAS NEED CHAPTER 312?

Almost every other state offers temporary tax reductions, even though their property taxes are much, much lower that those in Texas. Texas property taxes for industrial projects are the 4th highest of any state - 65% higher than the national average.

High property taxes create a huge barrier to new investment, particularly capital-intensive investments like manufacturing facilities. If Ch. 312 expires, Texas will lose major projects and jobs to other states. Temporary tax reductions are imperative for Texas to attract investment and stay competitive.

HOW DOES CHAPTER 312 WORK?

Ch. 312 reductions are temporary and are limited to the initial years of a facilities operations - no more than 10 years. When the reduction period is over, the previously-exempt property goes onto the local tax rolls at its full value, growing the local government's tax base and generating funds for road improvements and new schools.

When considering a Ch. 312 application, a taxing unit must provide advance public notice and a posted public meeting.

Temporary tax reductions have been used by Texas local governments to ensure the location of businesses such as Toyota, Facebook, Samsung and Blue Bell Ice Cream, creating thousands of jobs and millions of dollars in local economic revenue.

CHAPTER 312 DOES NOT AFFECT STATE FINANCES OR INCREASE TAXES ON OTHER PROPERTIES.

Ch. 312 applies only to NEW investment and can not be used to exempt existing facilities. Ch. 312 can only ADD to local tax bases. The temporary property tax reduction on a new property does not increase property taxes on other properties. There will be no state cost on the fiscal note on legislation to renew Ch. 312.