Texas House speaker says he’s confident Legislature will revive expiring corporate tax break program

House Speaker Dade Phelan sits on an interview with The Texas Tribune at the Capitol on Aug. 24, 2021. (Eddie Gaspar/The Texas Tribune, Eddie Gaspar/The Texas Tribune)

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Texas House Speaker Dade Phelan, R-Beaumont, said Thursday he is confident the Legislature can find a way to revive a multibillion-dollar corporate tax break program intended to attract large companies to Texas.

Lawmakers let the program, known as Chapter 313, expire at the end of this year after the Senate declined to consider a bill extending it. It was the first time in its 20-year history that legislators decided not to renew the program.

“We have to take a long, hard look at how we’re gonna reestablish the Chapter 313 tax agreements,” Phelan said Thursday in San Angelo. “We’re gonna come back and we’re gonna work well together, the House and the Senate. We’re gonna have a version of 313s that are more transparent, with more accountability, more oversight. I firmly believe we can get that done.”

The program works by discounting local school district property taxes for corporations, and its supporters say it has been key in drawing major companies like Tesla and Samsung to Texas. Critics in both parties say such companies were already coming to Texas regardless and the program amounts to “corporate welfare.”

Last year, the House passed a bill to extend the program by two years, but the Senate never debated it. Lt. Gov. Dan Patrick has been relatively quiet about the future of the program, as has Gov. Greg Abbott, who ignored some calls last year to add the program’s revival to his special session agendas.

Phelan’s interest in saving the program is not entirely new. He tweeted in February that the Legislature will prioritize “developing a program to replace Chapter 313, a crucial incentive program to attract businesses to Texas.” Also, one of the interim charges that Phelan gave the House Ways and Means Committee earlier this year was to “conduct a comprehensive review of the impact of not renewing Chapter 313, Tax Code.”

Speaking at the West Texas Legislative Summit in San Angelo, Phelan called the program “near and dear to my heart” and said it has “served this state very, very well.” He noted how it has spurred the growth of the oil industry in his Southeast Texas district.

“If other states didn’t have them, then we wouldn’t need them, but they do,” Phelan told the summit.

Earlier Thursday at the same event, the topic of Chapter 313 came up on a panel of eight lawmakers, and most expressed support for continuing the program in some form.

State Rep. Travis Clardy, R-Nacogdoches, said it was a “short-sighted decision” for the Legislature not to extend the program. He acknowledged there is a “normal, natural pushback” against the program that argues, he said, it amounts to government “picking winners and losers and playing favorites.”

“I understand that position, but I really do think for the sake of Texas, we need to continue in a program like this,” Clardy said. “We need to make sure those tax dollars are being wisely used, that there’s control and transparent — yes, we absolutely have to. But we need the tool of the 313 … whatever it takes. I think we’ve got to go back, put that in there.”

State Rep. Kyle Kacal, R-College Station, said it was especially important for rural communities like the ones he represents.

“We’ve got to keep this in our toolbox to keep rural communities viable and add that competitive edge,” Kacal said.

Among some panelists, though, there was more caution. State Rep. Mary González, D-Clint, alluded to concerns that the Chapter 313 distorts the state’s public-school funding system.

“Whatever we do in the future, I think it, A, needs to not be positioned against public education or any other vital services like this health care,” González said, “Second, I think it needs to have greater fairness, accountability and transparency.”

State Rep. Glenn Rogers, R-Graford, said he was against reviving the program in its current form. He was among those who voted to continue it last year.

“I don’t think 313 is going to exist, but we’ll have a more streamlined version, I believe, that will emerge that will be better,” Rogers said. “But I wouldn’t support continuing 313 as is, but I would certainly look at other ways we can promote economic development in rural communities.”

While the program is set to expire at the end of this year, there has been a scramble by companies to get in applications before then. That means the program will continue to grow for at least the next decade — and grow significantly.

Among the recent applicants has been Samsung, which has applied for Chapter 313 tax breaks to possibly build 11 new chipmaking facilities in the Austin area, according to the Austin American-Statesman. Samsung has already announced plans to build a semiconductor factory in Taylor, which is outside Austin.

Disclosure: Samsung Semiconductor has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.


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