Companies are rushing to gain approval for their projects before a law expires on Dec. 31 that allows public school districts in Texas to offer tax incentives for businesses that invest in their communities.
"Chapter 313,” the term for the 2001 Legislature's Texas Economic Development Act, has been extended three times since its original expiration date in 2007, according to the website of Texas Comptroller of Public Accounts Glenn Hegar.
Under Chapter 313, new businesses receive “a 10-year limitation on their appraised property value for a portion of the school district property tax,” the website said.
“In exchange for the value limitation, the business agrees to build or install new property and create jobs in the school district,” the website said.
Companies are trying to take advantage of the program while they can. Dick Lavine, senior fiscal analyst with the organization Every Texan (a public policy organization for social justice), compared the rise in applications to the Land Run of 1889, which disposed of federal public domain in Oklahoma.
“1889 - Oklahoma Land Rush for free land. 2022 - Texas Land Rush for expiring school property tax abatement giveaway. 400 #Chapter313 applications so far this year, 2x the amount in any prior full year,” Lavine tweeted.
Lavine cited a Bloomberg Tax report that said companies submitted nearly “400 applications in the first five months of 2022.”
While companies given the tax breaks under Chapter 313 pay less in property taxes to schools in exchange for guarantees to create jobs, few companies meet their job creation obligations, the Austin Journal reported.
“Opponents argue that Chapter 313 produces questionable returns for its investment of tax dollars, with incentives going to businesses that might have established themselves in Texas in any case,” Hegar’s website said.
Companies received tax breaks under Chapter 313 of $2.4 billion in 2012 to $10.8 billion in 2020, the Houston Chronicle said.