Texas' top court says it can't force state to extend deadline for corporate tax break

On the cusp of the new year, the Texas Supreme Court denied a request from several renewable energy companies to force the state to process all applications for a major corporate tax break program that expired at the end of 2022.

Many business advocates have argued that Texas lawmakers must replace the program — known as Chapter 313 — or watch the state lose out on big-ticket expansions and relocations.

Chapter 313 of the Texas Tax Code established a program that allowed school districts to offer property tax incentives to businesses that wanted to build within the districts’ boundaries. The state comptroller's office is in charge of evaluating and certifying that proposed agreements meet the standards set by Texas law. After that certification is granted, final approval for the tax breaks comes from the individual school districts.

Comptroller Glenn Hegar's office received a flood of applications in 2020 from businesses seeking to have potential tax breaks approved before the program expired.

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After Hegar said his office would not be able to process all applications before the deadline because of the high volume submitted, two businesses filed a petition asking the state Supreme Court to extend the program's expiration date and order the comptroller to review their applications.

The two companies that challenged the matter — Ogallala Renewable Project LLC and Stetson Renewables Holdings LLC — submitted their applications in May, seeking more than $20 million in tax savings.

The court ruled that it did not have the authority to require state government to take those actions, saying it would be up to the Legislature to give the comptroller's office new instructions related to the Chapter 313 program.

"Any such relief would trespass beyond the judicial realm and into the policy decisions that are proper for the other branches," Justice Evan A. Young wrote in the opinion, delivered Friday.

In a Dec. 13 statement, Hegar had called the businesses' case before the Supreme Court "frivolous."

"My office had the difficult task of managing a workload that has more than tripled in the last six months of the year. ... Despite receiving billions of dollars in property tax abatements over the life of the program and potentially billions more in approved incentives just this year, these companies and their attorneys are asking Texas taxpayers to shoulder even more despite the Legislature’s decision to discontinue the program," Hegar said in a statement.

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During the last legislative session in 2021, lawmakers declined to renew the Chapter 313 program. The lack of support in the Legislature for renewal came after years of controversy in which critics said the program lacked proper oversight and guidelines.

"The Legislature could have provided express transition authority that would have allowed us to continue reviewing and approving applications after the first of the year so long as the applications were filed before the program's expiration date," Hegar said, "but the Legislature did not provide such transition authority."

Economic development proponents say the result is that Texas is risking its ability to compete nationally and globally against other regions that offer lucrative tax incentives for corporate projects.

This article originally appeared on Austin American-Statesman: Court says it can't force Texas to extend deadline for corporate tax break