What began as a kind of pipe dream for those opposed to the tax breaks, the Texas Senate declined to consider legislation that would renew the Chapter 313 program for two years — effectively signaling its dissolution going forward.
“It fell on the weight of itself,” Sen. Lois Kolkhorst (R-Brenham), one of the chief Senate opponents of the bill, told The Texan. “The body was very uncomfortable with the program as it is and we couldn’t find consensus on what the program needed to look like.”
“Chapter 313” is a section in state code that allows school districts to provide economic development abatements to companies relocating to their areas. Created in 2001 under the direction of then-Governor Rick Perry, the legislature renewed it for 10 years back in 2011 and thus was up again for renewal this year.
If not renewed this session, the program would sunset.
When taking advantage of the abatement, a business promises to create a certain number of jobs. Of the existing Chapter 313 awards, half belong to renewable energy companies and 47 percent are awarded to “manufacturing” companies, among which oil and gas suppliers are included.
An analysis by the Houston Chronicle placed the price tag for the extension at $10.8 billion and $211,600 per job created.
Through the first 15 years of the program, companies receiving the abatements have generally created more jobs than they’ve pledged.
“For over a decade, I’ve asked for transparency and changes to the program because of some of the inconsistencies we were seeing, with how the program was being utilized, and the departure from its original purpose,” Kolkhorst added.
Kolkhorst’s colleague, Sen. Bob Hall (R-Edgewood), also celebrated the death of HB 4242.
“Since my first day in office, I have been dedicated to ending chapter 313 tax abatements which increase the property taxes of citizens in order to pay for the property taxes of corporations through a crony capitalist program,” Hall told The Texan in a statement.
“Last night the Senate killed HB 4242, bringing an end to this program. This is a huge win for Texas taxpayers.”
There were two pieces of legislation aimed at renewing the program — one, a simple two-year renewal of its current structure, and the other, a 10-year extension and massive expansion of its qualifications.
The latter would have allowed companies to effectively double-dip on the abatement by renovating their already-constructed facilities.
“Renewal of this statute is important for Texas to continue to compete on a global level. This is a great time to move Texas forward,” bill author Rep. Jim Murphy (R-Houston) said defending the legislation.
It was killed by a point of order in the House after various conservative members mounted a string of opposition, managing to add an amendment stripping entirely from the bill the expansion aspect — neutering it to just a decade-long extension.
But the two-year extension, House Bill (HB) 4242, sailed relatively smoothly through the body. Only 21 members voted against its final passage and it moved to the upper chamber.
For all intents and purposes, it appeared that would be all there was to it. Opponents of Chapter 313 had succeeded in torpedoing the more ambitious version, but appeared to be saddled with a simple and brief extension.
Encircling this public floor fight was a building coalition of strange bedfellows involving the state’s two most influential think tanks — the conservative Texas Public Policy Foundation (TPPF) and progressive Every Texan.
The pair opposed the program and issued a joint statement shortly before the House considered both pieces of legislation.
That statement cited a 2017 study that found between 85 percent and 95 percent of the businesses that benefited from the Chapter 313 agreements would have relocated to Texas anyway.
Additional problems the pair cited include the diversion of funds away from education and toward the tax breaks while the job creation promises can be, and are often, waived.
The snowball that these groups started rolling made its way into the Senate.
In a Senate committee hearing, Kolkhorst declared the program was “run amok” and in desperate need of restarting “with an absolute clean slate.”
Sen. Brian Birdwell (R-Granbury), the bill’s sponsor, acknowledged the program’s need for reform, and offered substitute language increasing the extension for an extra year to iron out the statutory kinks.
After two hearings, HB 4242 passed out of committee 11 days after it was received from the House with only two “no” votes — Kolkhorst and Sen. Bryan Hughes (R-Mineola).
During that time, behind the scenes jockeying within the Senate delayed the bill’s advancement.
TPPF and Every Texan continued to advocate the program’s dissolution.
And precious time continued to tick off the clock.
In a last-minute push to save the program he ushered in, former Governor Rick Perry tweeted an appeal for renewal: “HB 4242 will keep TX #1 for jobs and investment. To my friends in the Texas Senate: Let’s keep Texas open for business! Yes on HB 4242.”
Pressing up against the Senate’s deadline to pass House bills through its chamber, those with a stake in the fight watched the floor proceedings in anticipation of a potential rhetorical battle over the program.
But that never happened. The votes were not there for Birdwell to open the floor up for debate, let alone pass the legislation. From the outside looking in, what began as a torrent of rhetoric and jockeying faded into the sunset.
“Every member was aware of what 313’s were and I really didn’t work it,” Kolkhorst stated, and reiterated, “It just fell on the weight of itself.”
Rep. Jeff Cason (R-Bedford), an opponent of the program who filed legislation this session to gut it entirely, told The Texan as the clock wound down Wednesday night, “If 313’s die tonight, that will be a huge win for Texas property taxpayers. We need to stop further burdening our own citizens with billions in property tax giveaways.”
Jason Isaac, director of TPPF’s Life:Powered project and former state representative, celebrated the program’s momentary death, telling The Texan, “Ending this massive corporate welfare program is a huge victory for Texans.”
Isaac, one of the two signatories on the think tanks’ joint statement, added, “The strong bipartisan support for ending Chapter 313 is one of the most encouraging developments of this session. I look forward to welcoming to the table more people and industries to pursue property tax relief to the benefit of all Texans.”
While HB 4242 is dead, Kolkhorst warned that the program’s renewal could be “slipped into a conference committee report, somewhere.”
Before the bottles of champagne are popped, the countdown toward sine die must strike zero — and moving forward, the legislature will have to confront whether to keep the program dead or revive it with drastic reform.
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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.
