1. Association Raises Concerns about Economic Development Programs

2. Release Date: June 1, 2015

AUSTIN – As the 84th Legislature came to a close today, the Texas Association of Manufacturers (TAM) applauded the Texas Legislature for its commitment to smart tax policy, regulatory certainty, civil justice reform, transportation infrastructure, and sound energy policy. The Association also raised some concern regarding the future of economic development programs that have successfully attracted investment to the Lone Star State.

Lawmakers passed HB 32 by Representative Bonnen and SB 1 by Senator Nelson, which deliver broad tax relief for businesses and homeowners. “Smart tax policy puts money to work in our economy through increased consumer spending and expanded business investment and job growth,” said Tony Bennett, president of TAM.

HB 1865 by Representative Morrison and SB 709 by Senator Fraser make Texas more competitive by bringing certainty to the environmental permitting process while preserving robust public participation. The legislation puts in place timelines that give potential investors certainty when planning for capital investment and production schedules to break ground, according to Bennett. “In the past, Texas missed out on large, job-generating projects because it could take four times as long to get a permit here as in neighboring Gulf Coast states,” he said. Bennett also noted that the legislation addressed abuses of the contested case hearing process through which some parties used the process to simply obstruct or delay economic development.

Bennett said lawmakers made a smart move to encourage robust and timely environmental remediation when it is necessary by passing HB 1794 by Representative Geren and SB 1509 by Senator Hancock. An obscurity in Texas law allowed some local governments to bring multi-billion dollar lawsuits against companies for alleged environmental violations (sometimes decades later), despite the fact that companies had spent millions cleaning up the site in compliance with state and federal laws. “This legislation strikes the right balance between enforcement of strict environmental regulations while encouraging good faith remediation whenever it's necessary,” said Bennett.

The legislature passed another civil justice-related bill, HB 1692 by Representative Sheets and SB 1942 by Senator Huffman, which allows a Texas court to dismiss a lawsuit with little or no connection to the state that would be more appropriate for another court (“forum non conveniens”). HB 1692 aims to preserve Texas courts for Texas residents by requiring non-residents to establish that claims arising in another state or country have a significant connection to Texas.

Long-term, sustainable funding for transportation infrastructure has long been a priority for TAM. This session, the legislature passed SJR5 by Senator Nichols and Representative Pickett, which sends a constitutional amendment to Texas voters which would direct $2.5 billion of sales tax revenue toward roads each year, starting in 2018. If approved by voters, the constitutional amendment would also direct 35 percent of all taxes from motor-vehicle sales and rentals to transportation after 2020. “Investment in transportation infrastructure is critical to public safety and will help Texas maintain its #1 national ranking for job creation and exports. We have to be able to move people and commerce safely and efficiently across our state. SJR5 is a long stride in the right direction.”

The legislature also passed bills that will encourage affordable electricity (HB 1535 by Representative Frullo and SB 841 by Creighton) and foster proper utility oversight (SB 933 by Senator Fraser and Representative Cook). Bennett noted that the legislature was wise to reject a proposal (SB 365) that would have allowed power companies to prematurely recover a wide range of costs – and potentially increase rates – without proper oversight from the Public Utility Commission.

“For the progress we saw on several fronts, we observed an unsettling trend this session where proven economic development programs were targeted and weakened,” said Bennett. “Manufacturers are concerned that sooner than later political ideology which takes aim at programs like the Texas Enterprise Fund or Chapter 313 Tax Abatement incentives will have a very real and negative effect on investment and job creation here.”

Bennett noted that all states have programs in place to attract jobs within their borders. “When every manufacturing job creates at least four additional service sector jobs, recruiting major industry investment to Texas should be a no-brainer. If we continue to dismantle our competitive tools, it will be like walking out on a pier with no fishing pole, no bait and no net and thinking you'll catch anything. It won’t happen,” said Bennett.

Media contact: Gretchen Fox, gfox@gfoxconsulting.com, 512-694-4326