Greg Abbott vows to replace Chapter 313 incentive program

Sign up for The Brief, The Texas Tribune’s every day publication that retains readers up to velocity on probably the most important Texas news.

Gov. Greg Abbott on Wednesday sought to reassure enterprise leaders that state lawmakers would act throughout this legislative session to enhance the state’s financial growth instruments after letting a preferred company tax-break program expire final 12 months.

He additionally stated Texas was already feeling the influence of dropping the program, just lately lacking out on a “massive” company mission to New York.

Addressing the Greater Arlington Chamber of Commerce, Abbott appeared to give his most in depth public feedback but on the way forward for financial growth in Texas after the top of the so-called Chapter 313 program. Abbott nodded to the politically charged nature of the subject by bringing it up because the “elephant in the room.”

“Chapter 313 is gone, and that said, there is a desire in the Capitol to make sure Texas does remain No. 1 for economic development,” Abbott stated, “and we’re working on — and others in the Capitol are working on — to ensure that we will have economic development tools going forward that may not exactly replicate 313” however will maintain Texas No. 1 for financial growth.

Abbott didn’t element what these new instruments could be, however his feedback are a lift to enterprise leaders who’re attempting to deliver again Chapter 313 in some type. The program was meant to lure massive firms to Texas by discounting native college district property taxes for them, however it had grow to be beset with bipartisan accusations of “corporate welfare.” In 2021, the state Senate declined to think about a invoice extending the program, the primary time in its 20-year historical past that legislators determined not to renew it.

Abbott briefly alluded to the talk over the program in his State of the State speech on Thursday, saying “local communities need new economic developments tools this session.” That remark and his remarks in Arlington align him with state House Speaker Dade Phelan, R-Beaumont, who’s prioritizing a Chapter 313 revival. But they face a big hurdle from Lt. Gov. Dan Patrick, who presides over the Senate and bragged final month that he “killed” Chapter 313 in 2021 as a result of it “had been misused.”

Abbott stated Wednesday that the expiration of Chapter 313 factored into the recent decision by Micron to construct a brand new laptop chip manufacturing unit in upstate New York as a substitute of Texas. Abbott stated it made Texas “lose to one of the worst states for business in America.”

“We were in running for … a massive semiconductor manufacturing facility, and we lost to New York for one reason: New York had a better benefits package,” Abbott stated. “The CEO of Micron was basically begging me because he really wanted to do business in Texas. … We gave every penny that we could give, and New York literally offered billions of dollars more that we could not keep up with.”

Abbott was not as outspoken about Chapter 313 when it was on the chopping block in 2021. He was noncommittal, for instance, when requested in November 2021 if he would name a particular session to renew the program.

Under the program, companies may apply to the native college district for a 10-year low cost on their property tax payments in change for constructing or increasing locally and, in plenty of circumstances, creating new jobs. There was little draw back for college districts to approve the tax breaks, as a result of any foregone income for public faculties was made up for by the state. But conservatives denounced it as a company giveaway and a few liberals argued it left much less cash on the desk for different state companies, similar to well being care or public security.

The concern stays politically sensitive, particularly amongst Republicans who’ve lengthy debated what sort of function — if any — the state ought to play in incentivizing enterprise relocations. Abbott’s 2022 major challenger, Don Huffines, shortly criticized Abbott’s feedback in Arlington, tweeting that “corporate welfare stands in the way of tax relief for Texas families and free market competition for Texas companies.”

Abbott appeared properly conscious of the program’s tattered status Wednesday. He jokingly advised enterprise leaders in Arlington that if they’re speaking with lawmakers this session in regards to the subject, “never bring up the numbers 313. It leaves a bad taste in peoples’ mouth.”

Last week, over 150 enterprise teams, together with the top of the Greater Arlington Chamber of Commerce, wrote to lawmakers calling for a “new, transparent, and accountable economic development policy.” They didn’t use the time period Chapter 313.

The program formally expired on Dec. 31, 2022, the final date that the comptroller’s workplace had to enter firms into the program. The workplace was overwhelmed with purposes within the remaining months of the program, and two renewable power companies sued after their purposes received denied amid the late rush. The Texas Supreme Court declined to intervene.

Disclosure: Arlington Chamber of Commerce has been a monetary supporter of The Texas Tribune, a nonprofit, nonpartisan news group that’s funded partly by donations from members, foundations and company sponsors. Financial supporters play no function within the Tribune’s journalism. Find an entire checklist of them right here.