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Fort Worth signs on to push for new incentives to recruit companies to Texas

February 18,2023

See full Fort Worth Report article by David Montgomery here.

Stung by Texas’ loss of multibillion-dollar jobs deals to other states, nearly 180 top manufacturers, business leaders and economic development chiefs across the state are waging a unified appeal to the Texas Legislature to adopt new state incentives to “bring jobs and long-term revenue to Texas communities.”

The appeal comes after the phase-out of the controversial 313 incentive program that brought hundreds of businesses to Texas, but a spokesman for the group said the effort is aimed at creating a new incentive structure and would not be designed to re-create 313, named for its position in the state tax code.

“Chapter 313 is an expired program,” said Todd Staples, president of the Texas Oil and Gas Association, “and there’s not an effort to renew it.”

The new program would also feature economic incentives but would correct shortcomings in accountability and transparency, Staples said in a cell-phone interview, without detailing specifics.

The effort “should be one the top priorities” considered by lawmakers during their 140-day session, which ends on May 29, Staples said

Other leading signatories include Glenn Hamer, president of the Texas Association of Business; Tony Bennett, president of the Texas Association of Manufacturers; Hector Rivero, president of the Texas Chemical Council; Carlton Schwab, president and CEO of the Texas Economic Development Council, and Dale Craymer, president of the Texas Taxpayers and Research Association, which encompasses a broad spectrum of Texas businesses.

“Our organizations are committed to working with the Legislature to preserve the business climate and foster future growth by developing a new, transparent and accountable economic development policy,” reads the opening sentence in the five-paragraph letter, which went to lawmakers and state leaders Tuesday. “This mission is critical to ensuring Texas can compete for large capital-intensive investments, which bring jobs and long-term revenue to Texas communities.”

Economic directors, chamber of commerce executives, and city administrators throughout the state and region also signed the letter, including Robert Sturns, economic development director of Fort Worth; Steve Dye, city manager of Grand Prairie; Michael Jacobson, president and CEO of the Greater Arlington Chamber of Commerce, Dale Petroskey, president and CEO of the Dallas Regional Chamber, and Chris Wallace, president and CEO of the North Texas Commission. Sturns was unavailable for comment.

Gov. Greg Abbott, without mentioning the written appeal, touched on the same basic goals in his State of the State Address, which the Republican governor delivered in prime time on Thursday at a San Marcos manufacturing plant.

Other signers included Craig Rhodes, vice president of economic development for the Greater Houston Partnership; Jenna Saucedo-Herrera, president and CEO of the Greater San Antonio Regional Economic Partnership, and Kerry Hall, interim president and CEO of the Austin Chamber of Commerce.

“To keep Texas the best state for business, our local communities need new economic development tools this session,” Abbott declared, citing the state’s $2 trillion economy that makes Texas the ninth-largest economy in the world and the biggest job-creating state in the country.

Although Texas has added more than 1.9 million jobs since 2015, when Abbott became governor, the business leaders said in their letter that Texas “could fall behind” as other states and countries “are deploying their own temporary tax discounts and incentives” to lure companies.

Texas has lost three major job-creating sweepstakes over the past 15 months.

Electric vehicle manufacturer Rivian Automotive’s 2021 decision to locate a $10 billion plant in Georgia dealt a blow to Fort Worth’s effort to attract the plant through a $440 million tax incentive package. Arizona had also competed for the facility.

In other major defeats for the Lone Star State, Intel Corp chose Ohio as the site for a new semiconductor plant and Micron Technology chose New York State for a $100 billion semiconductor fabrication facility, billed as the largest ever, in both cases rejecting offers from Central Texas.

“Texas stands to lose more jobs, more investments, more tax base and more growth if we don’t restock our economic development toolbox with a new economic development incentive this legislative session,” the business and economic leaders said, referring to the multibillion-dollar losses of Rivian, Intel and Micron.

The new incentive plan appears to be a work in progress, and the details, as well as potential legislative sponsors, have yet to emerge. But it will presumably be structured on the basic premise of most competitive incentive programs, offering tax breaks and other rewards to encourage sought-after businesses and manufacturers to set up shop in Texas.

The 313 program, enacted in 2001 as the Texas Economic Development Act, allowed public school districts to attract new businesses by offering them a 10-year limitation on their appraised property value for a portion of the school district property tax. The program was allowed to expire on Dec. 31, 2022.

Chapter 313 incentives have been credited with helping bring a Toyota truck plant to San Antonio and a Samsung semiconductor facility to Austin, but opponents have argued that Chapter 313 produced questionable returns on investments of tax dollars and directed incentives to businesses that have might come to Texas regardless, according to a report by the Texas Comptroller.

Rep. J. M. Lozano, a Republican who lives in Sinton in the Corpus Christi area, has filed HB2421 to re-enact the 313 incentives on behalf of community leaders and business groups who worry about out-of-state competition. He said Saturday that he was unaware of the push by Staples’ coalition and added: “For me, any incentive program would be great.”

Another major incentive program is the Texas Enterprise Fund, operated through the governor’s office to offer cash grants to attract businesses that are otherwise considering going to other states. Described as “a deal closer,” it’s designed to nudge re-location prospects into choosing Texas instead of locating elsewhere.

Staples said business leaders have been discussing the potential of new incentives for months and will conduct even more discussions among themselves and with lawmakers in advance of the March 10 deadline for filing bills.

“We need every economic development tool in the toolbox,” he said. Asked about specific incentives, Staples said “the Legislature is going to have to work through that and determine what they are comfortable with and what works and what will be the most effective.”