Preserve Authority to Offer Limited, Temporary Property Tax Discounts

One of the most powerful economic development tools in Texas will expire on December 31, 2022 unless the Legislature extends it. Chapter 313 of the Texas Tax Code, the authority for school districts to offer limited, temporary property tax discounts for purposes of economic development, will again be debated this session. Capital-intensive industrial projects are highly sought after around the world for their large tax base wealth and high-paying jobs. Chapter 313, or a successor program that works to the same goals, is a must-have incentive, considering that Texas is among the top five states in the nation with the highest industry property taxes and the fact that nearly all other states and countries offer similar economic development incentives. Manufacturing projects act as magnets to attract additional vendors and suppliers, service companies, and other businesses that follow the host project. This “ripple” or “multiplier” effect creates still more quality jobs and property tax wealth for many Texas communities. In fact, every direct manufacturing job Texas creates provides an average of five jobs in other industries (Source: National Association of Manufacturers/IMPLAN).

Competition for major manufacturing investment is fierce and Texas will lose jobs and investment to other states if Chapter 313 is allowed to expire without a replacement. As one Senator put it at a legislative committee hearing on tax incentives, “the 49 other states will love it when Texas abandons economic development.” The Legislature cannot let that happen and must renew or replace Chapter 313.