Two Years of Texas IAF Opposition Leads to Reforms to Limit Giving School Money for Corporate Tax Breaks 

The Texas Senate and House passed a compromised version of HB5 that still fundamentally represents misguided economic development to the benefit of out of state corporations that would come here for other factors anyway.  This perpetuates a corporate welfare state which Chambers of Commerce and industry groups could never prove otherwise.

However, a 2-year campaign by Texas IAF and allies led to some major reforms in HB5 compared to the now defunct and failed Chapter 313 program.  When these tax abatement deals are proposed at local school districts, there will now be a fair fight for taxpayers and public school supporters concerned about corporate welfare.  HB 5 Reforms to Chapter 313 include:

• Elimination of kickbacks to school districts granting these agreements.  These "supplemental payments" by the corporation to the school district granting the tax break created a perverse incentive for the district to always approve these corporate tax breaks regardless of overall cost to Texas public schools.  Under Chapter 313, only 5% of Texas students live in districts which came out ahead at the expense of the other 95%.
• Cutting the overall school district tax abatement that a corporation can receive to 50% of the Maintenance and Operations property taxes  (down from 100%).
• Requiring approval of each agreement by both the local school board AND the governor, ensuring that both local voters and state-wide taxpayers have representation when each abatement is proposed, reviewed and decided.
• Requiring school boards take at least 30 days before their final decision, make the decision by vote in a public meeting, and post the proposed abatement deal and relevant documents to the public at least 15 days in advance (now currently only 4 days).

As much credible research demonstrates, 85 to 90% of these out of state corporations would choose to build or expand their facilities in Texas for many reasons without receiving  a school property tax break. Texas IAF organizations will continue to be vigilant as the Comptroller writes the rules and starts this new program to assure that  he does not reproduce a corporate welfare program that has already committed Texas taxpayers and school children  to $31 Billion in school property tax handouts to large corporations over the last 20 years. 

New Tax Break Program for Manufacturing, Oil and Gas Heads to Abbott's Desk After Last-Minute Deal, Houston Chronicle [pdf]

Texas Lawmakers Approve New Corporate Tax Breaks, Austin Business Journal [pdf]

Lawmakers Pass Business Incentive Law, Critics Say it Hurts Schools, KXAN Austin [pdf]

Statement on Passage of House Bill 5, Texas IAF