Keeping Texas Competitive through Economic Development Policy

Published Sep 29, 2020 by Steven Will

With COVID-19 infections continuing and barring the development and widespread distribution of a vaccine within the next three months, all signs point towards a 2021 state legislative session with restrictions on hearings, visitors and even bill filings. Despite the restrictions, a top priority for the Texas Legislature should be continuing the state’s most important economic development legislation – Chapter 313.

Creating Jobs and Economic Impact
Chapter 313, also known as the Texas Economic Development Act, was created in 2001 as a way to offset Texas’ relatively high property tax rates, lure large-scale capital investment, and compete with other states and countries.

Despite its reputation as a low-tax state, Texas property taxes on industrial facilities are the third highest in the nation and 65% above the national average. Industrial and manufacturing companies are high-demand and high-growth, with an average annual salary of $89,685. Nearly 235,000 people work in the manufacturing industry in just the Houston region. Over $119 billion in capital investments in Texas are tied to the Chapter 313 program, with billions more planned. Keeping these projects in Texas powers our state and regional economies.

How the Program Works
The Chapter 313 program provides a 10-year school property tax limitation (the largest allocation of property taxes) on new facilities which might otherwise not have come to Texas without the incentive. The program requires oversight from school districts and the Texas Comptroller. Projects pay the full amount in city and county property and sales taxes, and after the 10-year limitation is up, pay the full property tax limitation. Meanwhile, employees are paid a high average salary and contribute to the local economy. Suppliers and service businesses catering to the employees also add to the economic growth.

Requiring Reauthorization This Session
The Chapter 313 program is scheduled to expire in 2022. If it is not reauthorized, Texas will lose its most valuable tool to attract businesses which might otherwise go elsewhere. The Partnership is working closely with a coalition of chambers of commerce, economic development organizations, businesses and policy organizations to ensure this need is addressed during the 87th Legislative Session. We encourage everyone who wishes to see the Texas economy remain competitive join the coalition at https://keeptexasfirst.com.

For more information about Texas economic development policy issues, please contact Steven Will (Manager, Public Policy). And learn more about why companies choose Houston.