Houston Republic

Texas lawmakers are proposing a 10-year extension and removal of job creation requirements from a tax abatement offered to big businesses by state school districts for renewable energy projects.

Chapter 313 exemptions, which allow school districts to lower the taxable value of properties in return for investment, will be worth more than $1.7 billion to companies in 2021 and 2022.

HB 1556 proposes to extend the abatement, due to run out next year, until 2032, while also eliminating the minimum job creation rule, currently at 25 permanent new posts in urban areas and 10 in rural communities.

Other provisions include a requirement to report to the Legislature on some elements of the exemptions, but also an expansion of eligibility to those properties being renovated, expanded or improved.

A majority of the exemptions in recent years were granted to renewable energy companies, notably wind-related projects. Critics of the program argue the tax breaks deliver few jobs, particularly by renewables.

According to the 2019 report on the Texas Economic Development Act, the 163 projects linked to manufacturing had produced a little more than 14,000 jobs, while 188 wind-related delivered 1,424. Non-wind renewable projects produced 98 jobs.

The Texas Public Policy Foundation said in a report that the Texas "tax abatement process lacks transparency, accountability, and is badly in need of reform. Some industries that benefit from tax abatement agreements, such as renewable energy, create virtually no jobs at all."

Many of the manufacturing jobs in the oil, gas and auto industries would have happened without any subsidies, the foundation said, citing studies.

Barbers Hill and Brazosport, two Houston-area school districts, have approved approximately 10% of all active Chapter 313 agreements, according to publicly available documents.

One recent high-profile tax break went to Tesla for its planned truck factory in Austin. Tesla, which will receive a $46 million break, has promised to create 5,000 new jobs at the plant and invest more than $1 billion.

The value of a property granted Chapter 313 tax breaks is limited to between $80 million and $100 million in urban areas, and $10 million in rural communities.