A Texas economic incentive offers massive tax breaks to companies, but its renewal isn't a done deal

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Texas schools get direct payments from businesses that benefit from economic development tax breaks. Credit: Allie Goulding/The Texas Tribune

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Intel nearly built a massive chip fabrication plant near Fort Worth in 1991, but the tech giant instead picked Arizona because Texas property taxes were too high. Two years later, Texas lawmakers reacted by creating Chapter 313, also known as the Texas Economic Development Act, to offer property tax breaks to major companies that locate new facilities in the state.

Since then, oil refineries, petrochemical factories and even the upcoming Tesla plant outside Austin have enjoyed massive breaks on their property taxes thanks to the program. Today, Chapter 313 agreements account for almost a billion dollars in tax breaks for some of the largest companies in Texas.

In exchange for the tax incentive, those corporations pay fees directly to local school districts to make up for their share of the lost property tax revenue.

But the program is set to expire at the end of 2022, so the Legislature either has to renew it or allow it to lapse, letting any existing agreements between companies and schools slowly fizzle out.

A few months ago, renewal seemed like a guarantee, but debate over revisions to the program has stalled efforts to extend 313.

“I think the session started as if it was a win-win done deal, and I think the argument that’s pretty clear now that we have been making is it’s not a win-win,” said Doug Greco, the lead organizer for Central Texas Interfaith and an affiliate of the Texas Industrial Areas Foundation. “There’s winners and losers, and when the big winners are a small number of companies, and losers are kids in urban school districts, that’s not a deal we want to make.”