About 20 years ago, the city of Fort Worth lost a deal with Intel. The technology giant wanted to build a $3 billion plant, but backed out because of high property taxes in the state. This, and other lost deals, led then-state Rep. Kim Brimer to push for the Texas Economic Development Act.
The legislation, also known as Chapter 313 in the state tax code, was passed in 2001 and is set to expire in 2022. It allowed school districts to offer tax breaks to manufacturing companies wanting to move into their district. The companies then paid a fee to the school to make up for the loss of revenue.
Brimer’s legislation became what critics called the largest corporate welfare program in the state. Currently, there are 591 active Chapter 313 agreements, according to the Texas Comptroller’s Office.
Now, those economic incentives for businesses wanting to build in Texas could be lost by 2022. The economic development tool has fallen out of favor, and the Legislature has not passed a bill to extend the program.
Brimer, a Republican who served in the House from 1989 to 2003 and then in the Senate until 2009, said Chapter 313 served its intended purpose: to bring economic development and competition to Texas.
During this past legislative session, the conservative Texas Public Policy Foundation and the liberal Every Texan Foundation issued a joint statement condemning Chapter 313. According to The Texas Observer, Chapter 313 projects ended up losing more value and have cost the state nearly $10 billion.
But Brimer said the tax breaks are not the point.
“It worked outstanding,” he said. “But where people have misgivings is, ‘You’re giving a tax break to a big company.’ That’s not it at all. The real lure is the local contractors that are increasing jobs.”
In Texas, school districts set a tax rate for property in the boundary of the district, and it often changes each year with the budget. At the time of the bill’s passage in 2001, Brimer said, the state property taxes were a lot higher than other states.
Property taxes are still high in the state. Texas has the seventh highest property tax burden in the nation, according to the nonprofit Tax Foundation.
Brimer argues the program has helped Texas become competitive in getting manufacturing companies to build in the state over the years. Chapter 313 led to deals like the Toyota plant in San Antonio and the Texas Instruments plant in Dallas, he said.
“We found out that a $3 billion plant was going to have about $4-5 billion in equipment on top of the value of the building,” Brimer said. “And these were very clean, high-paying jobs, like chip making. And our whole tax structure couldn’t participate in any type of economic development negotiations because the school property tax was all frozen by state standards.”
However, none of those agreements came to Fort Worth.
Fort Worth Economic Development Director Robert Sturns said the city has not used it in any of its agreements.
“It is a tool that we would love to be able to utilize,” Sturns said. “So, I’m hopeful that there will be some ongoing discussions at the state level about the opportunity to extend that provision in the Legislature, but we’ll see how that plays out.”
The bill was intended to keep Texas competitive in the manufacturing business, Brimer said.
“The basics are, build it and they will come or you’re not going to build it, they are not going to come,” Brimer said. “And this was right for the time. People need to keep an open mind and look to how competitive our state can be.”
Kristen Barton is an enterprise reporter for the Fort Worth Report. Contact her at firstname.lastname@example.org. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.