Stop Expanding School Property Tax Breaks For Big Corporations

Statement by United Labor Legislative Committee:

When bad public policy mixes with opportunistic politics, the results can be disastrous for the long-term interests of Texas.

That has become the case with school property tax abatements under “Chapter 313.”

As labor unions, we fundamentally support creation of solid middle-class jobs to sustain working families into a changing future. But we strongly believe Chapter 313 costs more than it delivers and should be eliminated in its current form.

The perverse incentive that has been created by enabling school districts to approve a property tax break that the state pays for is becoming costly even by state budget standards: an estimated $1.9 billion in the coming budget cycle, $2.3 billion in 2024-25, and because the agreements can span a decade or more, a virtual guarantee that, without legislative action, the cost will rise dramatically.

We believe the virtues of Texas as a location for major corporations exist independently of tax incentives. If a company wants to come here for business reasons, the ability to forego the responsibilities of property ownership is not necessary. 

Worst of all, some proposals to amend the program as we renew it would deal out working people. Current law at least includes requirements for companies receiving tax breaks to commit to a minimum number of jobs that meet modest criteria for decent wages. HB 1556, a leading proposal to amend Chapter 313, would eliminate all job creation requirements while allowing companies to avoid their entire school tax bill.

The inefficiency of the Chapter 313 approach is mind-boggling. Every Texan has calculated that when total gross tax benefits are taken into account, the cost per job created is well over $1 million. While the entire state pays, the benefits to local communities are not evenly distributed. A large portion of the tax savings goes into the pockets of out-of-state shareholders. And enforcement of corporate commitments is loose.

Chapter 313 abatements are a strange go-to device in a state that purports to love free markets. The abatements have provided fuel for a never-ending subsidy contest among states that corporations exploit time and again. De-escalation needs to begin somewhere, and a program that amounts to a blank check into the future for questionable gain is a great place to start.

Texas should end Chapter 313 abatements and focus savings to the state on higher education, workforce training, and other improved infrastructure that would attract business to Texas by outperforming, rather than seeking to outbid, other states.

The United Labor Legislative Committee is the lobbying arm of labor unions and allies in Texas, headquartered at the Texas AFL-CIO. The Texas AFL-CIO is the state labor federation consisting of 240,000 affiliated union members who advocate for working families in Texas.