The Texas Public Policy Foundation and Every Texan release a joint statement regarding legislation to extend the Chapter 313 program of school property tax abatements. These tax breaks do not deliver the promised benefits, shift school funding costs, and waste tax dollars.

Statement from the Texas Public Policy Foundation Life:Powered Director Jason Isaac and Every Texan Legislative & Policy Director Luis Figueroa:

“Texas is fortunate to not need incentives to persuade companies to locate here. Research and experience show that abatements are an unnecessary and wasteful perk and companies would have come to Texas regardless. But the carve-outs do have a real impact on our ability to adequately fund all public schools and ultimately shift the responsibility for supporting them onto other businesses, homeowners, and renters. Even the expectation to create the paltry required number of jobs is often waived. It’s time to call these tax breaks what they are: handouts to favored industries and to the few school districts that use them to incentivize companies to locate there. Texans shouldn’t be on the hook for these sweetheart arrangements, and we certainly shouldn’t maintain them at the expense of our schools. Texas ought not to extend Chapter 313.”

The Details:

  • Chapter 313 is not necessary. A 2017 study of Chapter 313 agreements estimated that between 85% and 95% of the Chapter 313 projects studied would have located in Texas without the incentive.
  • Tax revenues that would have funded education are diverted away. Chapter 313 allows school districts and businesses applying for a tax break to negotiate “supplemental payments” that are not integrated into the funding mechanism supporting Texas public schools.
  • Supplemental payments show that Chapter 313 tax breaks are too high to start with, if necessary at all. Businesses applying for a Chapter 313 tax break sometimes pay more than 40% of their tax savings back to the school district in supplemental payments, showing that, at the very least, they do not need such large tax breaks, if they need any.
  • School districts can waive — and often do — the job creation requirement for an applicant, which can be as few as 10 jobs in rural areas.