Preserve Property Tax Abatement Authority

One of the most powerful economic development tools in Texas will expire on September 1, 2019 unless the Legislature extends it. Chapter 312 of the Texas Tax Code provides authority for cities and counties to provide temporary property tax exemptions for manufacturing and other projects – a must-have incentive considering Texas has the 4th highest industrial property taxes of any state (65% higher than the national average). Most states and countries offer similar economic development incentives. Competition for major manufacturing investment is fierce and Texas will lose jobs to other states if Chapter 312 expires. As one Senator put it at a committee hearing last session, “49 other states will love it when Texas abandons economic development.” The Legislature cannot let that happen and must extend Chapter 312.

It is likely that an attempt will be made by opponents of tax abatement to also target Chapter 313, the authority for school districts to limit property taxes for purposes of economic development, though that chapter is not set for expiration until 2022.

Chapters 312 and 313 are key for Texas communities to locate major manufacturing plants, which act as magnets to attract additional vendors and suppliers, service companies and other businesses that follow the “host” industrial project. This “ripple” or “multiplier” effect creates still more quality jobs and immediate property tax wealth for many Texas communities. In fact, every direct manufacturing job Texas creates provides an average of 3.7 jobs in other industries.

Abatement authority must be preserved for Texas to remain competitive with other states and countries for major capital investment.