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“Please do not let chapter 313 come back in any form.”
“Please oppose this legislation that benefits corporations at the expense of education for Texas children.”
“Chapter 313 should not be revived, simply allow it to expire.”
“Drop this completely! No more tax breaks!!!”
“I don’t write political letters very often. I’m writing today to oppose Chapter 313 and any other legislation that will hurt our families and children.”
Those are just some of the comments submitted to a recent hearing of the Ways and Means Committee of the Texas House of Representatives. The issue before the committee was an early discussion regarding whether to renew one of the country’s worst corporate tax handouts, Chapter 313, named for where it sits in the Texas code.
Last year, a bipartisan coalition unexpectedly blocked the renewal of Chapter 313 in the Texas Statehouse. Come the end of this year, it will cease to exist as a program — and corporate interests are gearing up to campaign to bring it back when the Texas legislature reconvenes at the beginning of 2023, in spirit if not in name.
This is going to be one of — if not the biggest — corporate tax incentives battles in a state legislature next year.
Opponents of Chapter 313 are rightfully not content to sit by and let their big win be reversed. Of the nearly 80 pages of comments submitted to the Ways and Means Committee on the potential renewal of Chapter 313, all but two total comments were opposed to a revival. Opponents clearly came from all across the political spectrum, but were nearly unanimous in their desire to see Chapter 313 stay dead and buried.
And they’re right to want to keep 313 off the books. It’s a massively wasteful program, with about $10.8 billion in tax breaks outstanding as of 2020. Academic work and journalism investigations have both consistently found that the vast bulk of the money flows to corporations that had no intention of building anywhere other than Texas.
Nathan Jensen, a professor at UT Austin, found that fully 85-90 percent of the projects financed by Chapter 313 would have happened regardless of the subsidies it provided. The program also gives school districts a perverse incentive to approve projects in their area, as you can read about here, greasing the skids for destructive deal after destructive deal, which costs taxpayers all across Texas dearly.
Even with the expiration, Texas taxpayers are going to paying for Chapter 313 deals for decades, since a slew of corporations, including Samsung and Tesla, are rushing through applications, trying to ensure they get deals on the books — some of them which would be in effect until 2040 — before the program’s expiration at year’s end. The Texas Comptroller currently has a whopping 400 applications to the program, up from 120 during a normal year. “We anticipated that there would be some amount of an uptick. I will cut to the chase and say it is way more than what we anticipated,” Associate Deputy Comptroller Kory Castillo said.
I wish the facts and figures regarding how bad a deal Chapter 313 has been would be enough to carry the day and ensure that any renewal gets laughed out of the room. Alas, that is not the case. Corporate interests are already out there scaremongering that Texas is going to start losing economic development projects, particular to Louisiana next door, if it doesn’t create something to replace Chapter 313. There’s no real reason to think that’s true, but it’s the line lobbyists are banking on, and it will certainly be effective in some corners of the Texas legislature.
The key will be if the strange bedfellows coalition that blocked a renewal last year can hang together in the face of all that pressure. If they can, they’ll have really set an example for the rest of the country to follow.
This post initially appeared in a slightly different form on the author’s Substack, Boondoggle, on September 21, 2022.
Pat Garofalo is the author of The Billionaire Boondoggle: How Our Politicians Let Corporations and Bigwigs Steal Our Money and Jobs, the Boondoggle Newsletter, and the director of state and local policy at the American Economic Liberties Project.
