88th LegislatureStatewide NewsTaxes & SpendingChapter 313 Replacement, Commercial Court in Economic Development Slate of Phelan’s Priority Bills

Last session, the Texas Senate pumped the brakes on renewal of the Chapter 313 abatement program, leading to its expiration at the end of 2022.
February 28, 2023
Speaker Dade Phelan (R-Beaumont) continued on Tuesday the slow drip of House priority bills, announcing three more bills that include the much-anticipated economic development incentive program to replace the now-expired Chapter 313.

In addition to the economic development proposal, the slate includes one bill that would create a commercial court to handle disputes between businesses and another that would create a higher education scholarship program for trade school education.

“As Texas continues to grow and attract even more business that creates jobs and spurs local economies, our state must ensure that we have the kinds of tools to keep us competitive with others on a national and global scale,” Phelan said in a release.

“With so much job growth happening in our state, it’s also important that we have the necessary avenues that foster workforce development to keep up with demand.”

House Bill (HB) 5 by Rep. Todd Hunter (R-Corpus Christi) is the economic development program with which House leadership aims to replace Chapter 313 — a tax abatement program whose charter was not renewed by the Legislature during the 2021 session and so expired at the end of 2022.

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Hunter’s bill only includes manufacturing, critical infrastructure, and “national and state security and critical domestic supply chain support” projects as eligible for the incentives. Just like with 313, agreements under this proposal would originate between the business and their respective school district.

It also tasks the Texas Comptroller of Public Accounts with establishing criteria for the required economic benefit statement and does not include the job creation requirement that existed under 313 — a requirement that was waived by the vast majority of agreements.

The idea of a replacement for Chapter 313 has been building momentum for quite a while. Phelan advanced the suggestion as far back as a year ago.

Chapter 313 faltered under its own weight as criticism of abuse and a lack of transparency mounted from both the political left and right. Last month, Lt. Gov. Dan Patrick stated that he greenlit the tax break’s death due to transparency concerns and the large number of renewable projects taking advantage of the abatements.

With no draft available, it’s unclear if renewable projects are included in this seemingly blessed version, but multiple different House members have indicated any 313 replacement would write out those recipients.

The lobbying push behind some form of replacement has become almost as loud as the voices who called for 313’s expiration last session, an opposition that succeeded in torpedoing not one but two different proposals to extend or expand its effect. Over 200 different economic development-focused organizations have circulated a letter calling for a new program, and the lobbying effort has been formidable.

Rep. J.M. Lozano (R-Kingsville) filed a 313 straight revival bill earlier this month; Hunter’s bill is a mere seven pages long compared with Lozano’s 35.

Gov. Greg Abbott even called for some replacement during his 2023 State of the State address.

The second priority bill — HB 8 by Rep. Gary VanDeaver (R-New Boston) — would establish the Advanced Career and Education scholarship program aimed at increasing the availability of career and technology-focused training at higher education institutions.

This is another priority that Abbott highlighted in his address, stating, “Our goal is to ensure that every Texan is prepared to succeed in high-demand industries like technology, healthcare, and energy. That’s why this session we will reward community colleges that produce skilled, employable Texans.”

Third on the list is HB 19 by Rep. Andrew Murr (R-Junction) which would create a business-focused statewide court to handle commercial disputes — a way of partially unclogging the backlogged court system.

The seven judges on the prospective Fifteenth Court of Appeals in Travis County would be appointed by the governor and confirmed by the Senate to serve two-year terms. They would not have to seek election from voters.

“Local businesses will flourish even more if we reduce the gridlock in our courts by creating specialized courts with the expertise to deal with complex commercial litigation,” Abbott said in his address.

This group of bills each relates to the lower chamber’s priority to prolong the business-friendly environment that has led Texas to top the list of states seeing the largest influx of commercial entities in the country.

Phelan announced four other priority bills last week, including a year-long extension of Medicaid coverage for new mothers.

The House reserved the first 20 bill numbers for priority legislation, only seven of which have been announced so far.


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Brad Johnson

Brad Johnson is a senior reporter for The Texan and an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.