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 T exas Economic Development Act (Texas Tax Code Chapter 313 Property Tax Value Limitation)

Texas Tax Code Chapter 313 creates a program for certain large businesses to limit the appraised value on their property for the purposes of local Texas public school property taxes. Under GASB [Governmental Accounting Standards Board] Statement No. 77, the program is considered a property tax abatement.

An appraised value limitation is an agreement between a taxpayer and a school district in which the taxpayer proposes to build or install property--and create jobs meeting certain job and wage requirements--in exchange for a ten-year limitation on the taxpayer's property value for school district maintenance and operations tax (M&O) purposes. For the term of the agreement, school M&O taxes are not levied on the property value in excess of the limitation amount. Limitation amounts are established by statute and vary by school district from $10 million to $100 million.

A 2017 report to the Texas Legislature by the Texas Comptroller reported 311 limitation agreements, representing an estimated $146 billion of total investment through the entire length of the agreements. That report indicated that between 2002 and 2015, local school property tax revenue reductions due to limitation agreements were approximately $7.1 billion.

A "Tax Exemptions and Tax Incidence Report" prepared by the Texas Comptroller in February, 2017, estimated that school districts would lose $513 million of local revenue in 2017 because of limitation agreements, indicating that they could be expected to lose over $1 billion annually by the year 2021. Reduced local school district revenues are substantially replaced with state funds through the public school finance system.

The Texas Tax Code gives to the Texas Comptroller's office the responsibility to adopt rules necessary for the implementation and administration or the program. The Comptroller's office has by rule through the Texas Administrative Code delegated to school districts the responsibility to enforce the limitation agreements. In 2013, in House Bill 3390, the Texas legislature charged the Comptrollers office with reviewing the number of qualifying jobs created in future projects receiving tax limitations.

Studies of the program.

In 2010, the Comptrollers office studied the program, making recommendations.

The Texas Legislative Budge Board in its Texas State Government Effectiveness and Efficiency: Selected Issues and Recommendations (January 2011) analyzed the Chapter 313 program, making recommendations.

In November of 2016, the Texas Senate Committee on Natural Resources and Economic Development analysed the Chapter 313 program in that committee's Interim Report to the 85th Legislature.

In 2013, the Chapter was amended to require the Texas State Auditor's Office to review at least three major limitation agreements annually. The SAO Reports for 2014, 2015 , 2016 , and 2017.

Links: Comptroller Chapter 313 webpage - detailing the application process, with links to current and past law and rules. Documents posted- applications, certifications, amendments, oversight forms, reports, etc

Proponents: TTARA, TAM,

Texas Taxpayers and Research Association (TTARA) argues that the program attracts projects that would have not come to Texas otherwise. And that without the program Texas cannot compete with other states.

Opponents: TPPF, CPPP

A bill in the 2017 legislative session by Burton. Witness lists?

In the press: Free Lunch. rationale, etc misled, corporate welfare ballooning, TO on Jens