Two Years of Texas IAF Opposition Leads to HB 5 Reforms to Limit Giving of School Money for Corporate Tax Breaks
The Texas Senate and House passed a compromised version of HB5 that still fundamentally represents misguided economic development. A 2-year campaign by Texas IAF and allies, however, led to major reforms in HB 5 compared to the now defunct and failed Chapter 313 program. When these tax abatement deals are proposed at local school districts, there will now be a fair fight for taxpayers and public school supporters concerned about corporate welfare. HB 5 Reforms to Chapter 313 include:
- Elimination of kickbacks to school districts granting these agreements. These "supplemental payments" by the corporation to the school district granting the tax break created a perverse incentive for the district to always approve these corporate tax breaks regardless of overall cost to Texas public schools. Under Chapter 313, only 5% of Texas students live in districts which came out ahead at the expense of the other 95%.
- Cutting the overall school district tax abatement that a corporation can receive to 50% of the Maintenance and Operations property taxes (down from 100%).
- Requiring approval of each agreement by both the local school board AND the governor, ensuring that both local voters and state-wide taxpayers have representation when each abatement is proposed, reviewed and decided.
- Requiring school boards take at least 30 days before their final decision, make the decision by vote in a public meeting, and post the proposed abatement deal and relevant documents to the public at least 15 days in advance (now currently only 4 days).
As much credible research demonstrates, 85 to 90% of these out of state corporations would choose to build or expand their facilities in Texas for many reasons without receiving a school property tax break. Texas IAF organizations will continue to be vigilant as the Comptroller writes the rules and starts this new program to assure that he does not reproduce a corporate welfare program that has already committed Texas taxpayers and school children to $31 Billion in school property tax handouts to large corporations over the last 20 years.
Statement on Passage of House Bill 5, Texas IAF