Comptroller Proposes Drastic Cuts in Information About Costs of Chapter 313 Tax Breaks

A program of school property tax abatements known as “Chapter 313,” after its section in the Tax Code, is a substantial drain on future state resources. This colossal giveaway strains the rest of General Revenue services – higher education, health and human services, and public safety – to make up for foregone local school taxes. The state budget fills gaps in school taxes created by these special-interest deals by maintaining funding for a district’s state formula aid, as if the abated value of the business property did not exist. If the property were instead taxed at its full value, local tax revenue would increase, reducing the need for state aid and allowing scarce resources to be redirected to other uses or to increasing state support for our schools.

The program will expire, but the cost of Chapter 313 tax breaks will continue

Chapter 313 is slated to expire at the end of 2022. But the billions of dollars in costs of the program in foregone school property taxes will continue for decades, since the start of the 10-year abatement can be extended for many years after an agreement is approved. Because the number of new applications has grown every year since the program was introduced, and a flood of new applications is expected in 2022 as companies rush to take advantage of the expiring tax break, the bulk of the cost of Chapter 313 has yet to be experienced.

The Comptroller currently publishes valuable information, collected from the beneficiary companies, projecting the future costs of each Chapter 313 agreement in foregone tax revenue, plus information on promised payments made to school districts known as “supplemental payments” (also known as “payments in lieu of taxes” or PILTs) and “revenue protection payments.” In addition, the Comptroller annually publishes the number of jobs created and their annual wages. This information, collected in a comprehensive biennial report and summary, reports data projections through 2039 for agreements made through the middle of 2020, with two and a half years of agreements yet to come. An estimate of the cost to the state for the next six years is also included in the Comptroller’s Tax Exemption & Tax Incidence study.

The Comptroller is planning to reduce our ability to know future costs

The Comptroller has just published a proposal (view definitions here) to drastically reduce the information collected from beneficiary companies, making it impossible for the Legislature, the media, and the public to know future costs of the program. Instead, a new web-based form will collect only the actual data for the past two years, eliminating all other historical reporting and projections of future property values, the amount of foregone tax revenue, and payments to school districts. In addition, job creation and wage data that is currently collected by school districts, then forwarded to the Comptroller for posting on the state’s website, would be retained by the district and not posted, requiring interested parties to make individual requests from hundreds of school districts. The information now made available in the Comptroller’s reports, vital to public evaluation of the program, would not be available in the future if the Comptroller’s cutback on data collection were adopted.

The future costs of Chapter 313 played an important role in the recent legislative debate over extending the life of the program past its current expiration date. For instance, the fiscal note to HB 1556, which would have continued the program, was able to project the ten-year costs of the bill using estimates of future foregone tax revenue in applications filed in the prior five years. This information would no longer be collected under the Comptroller’s proposal. 

Other vital information would be eliminated by the Comptroller

Proponents of Chapter 313 argue that, after the ten-year abatement, substantial property value will remain on the rolls to generate tax revenue for schools. Current reporting requirements allow a comparison between the company’s initial estimate of “year 11” values, used as a key selling point in getting school district approval of a proposed agreement, and the actual taxable value of projects that have completed their abatement period. Companies are also required to report actual investment, plus market and taxable values, for each prior year of the project. This historical data was relied upon by the Texas Observer in calculating the difference between investments made by each project, its peak value during the abatement period, and its actual taxable value at the end of the abatement. Similar information was the basis for a bill filed by then-Rep. Drew Springer in 2015 that would have recaptured the tax benefit of a project that did not maintain at least 80 percent of its market value when returning to the tax rolls. The fiscal note for that bill relied on an analysis of projections in existing agreements – information that would no longer be collected under the Comptroller’s proposal. 

Chapter 313 supporters argue that the program creates new, high-paying jobs. But the Houston Chronicle, in its influential series on Chapter 313, used the job-creation reports submitted by companies, along with the projections of future lost tax revenue, to calculate the unreasonably high cost to the state of each job created.  School districts currently gather information on the number of “qualifying jobs,” which have a certain minimum required annual wage, and “non-qualifying jobs,” which have a lower required wage. Under the Comptroller’s proposed rule, no data on these “non-qualifying” jobs, which often comprise the majority of jobs created, will be collected. Elected officials, the media, and the public will be unable to evaluate the worth of a project in terms of total jobs and wages it might bring to a community.

Other public investments rely on the information the Comptroller would no longer collect. For instance, under the new school finance formulas adopted in 2019, the projected changes in property values related to Chapter 313 are an element in projecting tax rate compression for both individual school districts and the statewide system, as well as the cost to the state of the Foundation School Program in the state budget.

Let the Comptroller know you oppose this slashing of public information

Data collection may seem an obscure and trivial procedure, but the implications of the Comptroller’s proposed cutback in data collection and availability make it clear that elected officials, the media, and Texans concerned about adequate and equitable funding of our schools and other public services should act to make their opposition to this proposal known. Comments on the proposed rule should be submitted by December 17 to John Villarreal, Manager, Data Analysis and Transparency Division, Comptroller of Public Accounts, at

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