Opinion: Keep the engine of Texas economic development humming
If Texas were a nation, it would be the world’s ninth largest economy, larger than Canada, Mexico, South Korea and Russia. Within a short amount of time, the Lone Star State’s GDP is expected to surpass Italy as the eighth largest economy.
Our state is blessed with natural resources, a large population and a geography favorable to international trade. But those alone don’t account for the phenomenal growth of the Texas economy over the last two decades.
Texas leaders have championed business-friendly policies and incentives to build the state’s economy, attract and grow businesses and develop the talented workforce that businesses depend upon. It explains why Texas just won the Governor’s Cup for job-creation from Site Selection Magazine for an unprecedented eleventh straight year.
The intense competition to attract major business investments that create good-paying jobs takes place at an international level. Other states and countries provide a variety of incentives to lure those investments. To remain competitive, we must ensure we level the playing field as much as possible.
One tool Texas had used since 2001 was an incentive program known as Chapter 313 for its location in the Texas Tax Code. For businesses making major capital investments, Chapter 313 allowed school districts to limit the taxable value of a portion of their school district property tax for a period of ten years. The state compensated the district for most of the lost tax revenue for the term of the agreement. Meanwhile, the district and the community reaped the benefits of additional revenue from the remainder of property taxes, increased economic activity and jobs.
Chapter 313 expired at the end of 2022, removing a critical incentive that has helped bring billions of dollars of investments and hundreds of thousands of jobs to Texas. In a competitive environment in which other states are aggressively courting the same businesses looking at Texas, the losses for Texas and the Texas economy aren’t merely hypothetical. With Chapter 313 set to expire last year, among the deals known to have been lost to lucrative incentives in other states were potential multibillion investments from electric vehicle manufacturer Rivian that went to Georgia and chipmakers Intel and Micron that went to Ohio and New York respectively.
Nowhere have the benefits of incentives like Chapter 313 been more impactful than in the Austin-San Antonio region, where state-level incentives have helped create more than 185,000 jobs over the past 20 years. Some of the notable deals in which incentives played a key role were those that brought Toyota, Microsoft, Caterpillar and Navistar to the San Antonio area, and Oracle, Tesla, Samsung and Apple to the Austin area.
Last month, the organizations we represent formalized an effort to advance an agenda that promotes modern economic development and job creation in the Austin-San Antonio megaregion. We also joined with scores of other chambers of commerce, economic development entities and trade groups from all across Texas in sending a letter to the 88th Legislature calling on our elected leaders to create a new, transparent and accountable economic development policy that protects Texas’ position as the nation’s economic powerhouse. That policy must utilize incentives – including property tax incentives – that help bring capital investment, jobs and long-term revenue to our schools and communities.
Since Dec. 31, Texas has been unilaterally disarmed in the national contest for economic development. Our competitors have not been and will not be. Now is the time for the Legislature to act to keep building on our state’s economic successes and prevent Texas from losing more jobs and more investment.
Michael Lynd, Jr. is CEO of Kairoi Residential and serves on the executive committee of the greater:SATX Regional Economic Partnership. Gary Farmer is president of Heritage Title Company of Austin, Inc. and is the chair of Opportunity Austin.
This article originally appeared on Austin American-Statesman: Business incentives help keep Texas economy strong
