The House Committee on Small Business and Economic Development met on March 9 to hear invited testimony concerning job growth in Texas and tools used to promote economy and business growth within the state.
 
Dale Craymer, Texas Taxpayers and Research Association

  • Texas is a good place for business, Right to Work, stable energy, ready workforce, lack of personal income tax, etc.
  • However, there are infrastructure issues and skills mismatch in labor sector; job training is very important for TX
  • Texas can be a high tax state for business, particularly for capital intensive industries; Texas is one of the few that tax business inventories, some other states exempt equipment taxes
  • Comparing economic output to tax paid by business, Texas is higher than the national average
  • These are barriers to investment; $1 billion investment would pay $640 million in property taxes over a 25 year lifespan, well above the national average
  • Property tax incentives offered do not fully displace the property tax burden
  • Differing incentive and program standards are a maze for businesses to work through, every form requires consultants to help navigate
  • Costs of filing for incentives lessens value of incentives; having only one application would help
  • Tax incentives are not a direct cost to taxpayers, this money goes back into the economy and incentives attract businesses who otherwise would pay no taxes at all
  • HB 26 (84) was a great step forward, should allows us to look at benefits delivered
  • Chair Button – Current process hinders the future development and investment in the state, appreciates the TTARA position
  • Leach – What you we done to make us worse with business taxes and what can we do moving forward? Understands the franchise tax was an issue
    • Looked at the actual dollars paid, so our data is a little different
    • Other states have recently taxed business higher, declining O&G industry also affects tax base
  • Vo – Do you have suggestions on how we can tax evenly given property tax is so heavy in Texas?
    • What really hurts us are the things we tax like business inventory and personal property
  • Vo – What other areas would we collect from to make up for this?
    • Unfortunately, unless the state subsidizes this, everyone else gets hit harder
  • Vo – So franchise tax is lowest tax in Texas, should we be looking at it?
    • Average business will pay 10-16x more in property and sales
    • Franchise tax is mostly harmful on the administrative side, cost for compliance is high

 
Dr. Joe May, Dallas County Community College District Small Business Development Center

  • Only two ways to grow the economy, increasing the number of people in the workforce or increasing productivity of the workforce
  • Community colleges participate in both of these areas heavily
  • We are growing jobs in Dallas and seeing people move in to fill these positions, need to concentrate on growing our local workforce and educating them to compete
  • We are unable to directly approach companies to review available training for workforce; other states can and it would be good to have a process in Texas (HB 108)
  • Goldman Sachs recognized the work we do and invested
  • Small businesses are the driving economic force in most communities in the state, Small Business Development Center in Dallas is a huge benefit
  • Button – Mentions HB 108, encourages people to take a look
  • Button – You mentioned to Goldman Sachs investment?
  • Yes, it’s a part of a comprehensive investment plan to support minority and women-owned businesses; they help fund a program for us
  • Difficult to see how certain higher education funding in the budget affects this, but it does and is obfuscated due to the way the budget is drawn; this funding will be cut without effort for it
  • Button – Encourages committee to speak with Appropriations about these issues
  • Ortega – You said this was through 4 community colleges?
    • Dallas County Community Colleges and 3 other institutions of higher learning, DCCCD embeds personnel for this program in many different campuses
  • Ortega – And is all of this being cut?
    • Yes, we are required to fund SBDCs to receive federal matching funds

 
Robert McKinley, University of Texas San Antonio Center for Economic Development

  • Texas has a few tools available to help with economic growth, the Texas Enterprise Fund, SBDC and chambers, etc., and low regulation + beneficial tax environment
  • Small businesses want market opportunities, capital access, etc.
  • Attraction and retention of major corporations in the state is crucial, small business development goes hand-in-hand and participates in the supply chain
  • Large corporations give rise to many more small business jobs, drives tax revenues
  • Important to support rural growth, interconnected rural communities can help drive the economy across the state
  • SBDCs assist in many areas along a business’ development, definitely part of the value-add of the high volume and growing small business sector
  • Button – Hope the Appropriations committee is receptive to your presentation
    • Yes, Art III S/C and Speaker Straus have been very receptive

 
Carlton Schwab, Texas Economic Development Council

  • We are in favor of the tools that promote development in the state
  • Many consider the best area of business development to be at the local level
  • Highlighted 4 projects that promote economy: Baker Hughes Education Center in Tomball, Target Distribution Center in Lindale, Consolation Field in Sugar Land, and Hilmar Cheese in Dalhart
  • These projects have meant a lot to these communities
  • One coming project demonstrates need for Chapter 313, petrochemical facility in Sen Patricio; generates 600 direct jobs that will generate 3,500 resulting jobs after construction
  • Enterprise Fund has helped create 80,000 jobs and large investments, very beneficial

 
Bill Peacock, Texas Public Policy Foundation

  • Presents TPPF material on programs and regulations that are beneficial to business
  • Less government spending helps the economy
  • Texas has a very favorable economic environment for workers
  • Economic benefits/incentives should be applied to industry fairly, should focus on competitiveness
  • Presents state comparison data for state economics
  • Button – This is good information, but state data is hard to compare in this way; will have a very serious look at all the information received

 
Garret Groves, Center for Public Policy Priorities

  • Traditional middle-skill jobs are disappearing, consistent question is what happens to individuals and businesses in this space
  • In contrast, higher skill and lower skill jobs are increasing all across the US
  • Has implications for wages for workforce; high wage jobs are growing in Texas, but middle wage jobs are shrinking
  • Workforce shift is putting a large stress on training system that generate high skilled labor, these training sectors are important
  • Part of this is due to automation eroding the middle wage sector
  • Button – Shares article with opinion from President Trump that high paying jobs are available, but that workforce does not have the skills to fill them