News88th TXLege

Abbott Signs Corporate Welfare Boondoggle Into Law

June 8, 2023
Jeramy Kitchen
88th Legislative Session, Corporate Welfare, Greg Abbott, Property Tax, Spending

On Wednesday, Texas Governor Greg Abbott signed legislation purporting to be a “new” economic development tool into law. Despite its similarities to the now-ended Chapter 313 tax abatement program, its supporters insist this new program is a more accountable and transparent way to incentivize economic activity.

House Bill 5, authored by Republican State Rep. Todd Hunter (Corpus Christi) creates a new economic incentive program that ultimately provides a property tax abatement of up to 50 percent to qualifying companies for a decade, notably something not afforded to individual property taxpayers.

Abbott chose to sign the legislation in a closed ceremony.

The legislation was a legislative priority of Texas House Speaker Dade Phelan (R-Beaumont). It took varying forms as it moved through the legislative process, ultimately requiring the Texas House to make certain concessions to get it across the legislative finish line. The most notable concession is the exclusion of “renewables” as an industry that qualifies for such an abatement. This new program also includes the addition of needed approval for such applications from both the Texas comptroller and the governor.

House Bill 5 takes effect on September 1, 2023, and allows the comptroller to commence with implementing the law and developing the application process.

Bipartisan Opposition

The legislation passed and was signed into law despite explicit opposition to such a thing in both major political parties’ state platforms.

The Texas Republican Party platform states:

94. Property Tax Abatements: We support repealing Tax Code Chapter 312 county and municipal
property tax abatements, and we oppose reintroducing school property tax abatements, formerly known as Chapter 313.

The Texas Democrat Party platform states:

“Eliminate tax loopholes and unproductive special breaks to simplify the tax system and provide revenue for essential services.”

That same platform continues:

“Prohibit ‘corporate welfare’ incentives that pit states and communities against each other.”

Who Supported The Legislation?

The legislation passed the House by a vote of 120 in support and only 25 in opposition. The opposition included a list of lawmakers from both major political parties. It passed the Senate by a vote of 27 in support and only four in opposition. Ultimately, House Bill 5 had 81 House lawmakers sign on as authors of the legislation.

The list of individuals and organizations that came out in support of House Bill 5 as it was being considered in the committee process is largely comprised of economic development corporations and industries or businesses that sought to benefit from such a program.

What Does it Mean for Texas Taxpayers?

Ultimately, the 88th Legislative Session ended without lawmakers providing new property tax relief to taxpayers, but instead providing property tax abatements to large multinational companies. Moreover, the tax burden for individual taxpayers will only increase as a result of the new abatement program, as there is no requirement that the local government jurisdiction giving the abatement offsets their spending, meaning they get the revenue from elsewhere.

The 88th Legislative Session was comprised of many pieces of legislation related to corporate welfare successfully making it through the legislative process. It is estimated Texans will see more than $12 billion worth of corporate welfare-related policy on their November 2023 ballot as they consider proposed constitutional amendments.

Approval of such things is approval of government continuing the corrupt practice of picking winners over losers in a system that is supposed to be based on free enterprise.

Concerned taxpayers may contact their lawmakers here.

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