The Comptroller’s office has posted the 2010 Texas Economic Development Act Report. The updated report assesses the progress of each property tax value limitation agreement in effect and highlights program trends and issues that may be useful to legislators and others in preparation of the 82nd legislative session.
The Texas Economic Development Act, allows school districts to attract new taxable property development by offering a tax credit and an eight-year limitation on the appraised value of the property for the maintenance and operations portion of the school district property tax.1 The local tax revenue the school district forgoes in this manner is substantially replaced through the school funding formula, according to the report. Furthermore, in many cases, school districts have negotiated supplemental payments from participating businesses, based on a percentage of the businesses’ tax savings.
Owners of Chapter 313 projects have invested approximately $21.1 billion in Texas through 2009, and have projected a $47.3 billion investment over the lifetime of the project agreements. This report addresses the requirement in the statute for the Comptroller to submit a report to the legislature “assessing the progress of each agreement.” It weighs the progress of agreements made through August 2010, based on information collected from the school districts and the agreements’ beneficiaries. This report also includes information not required by statute and is provided for informational purposes only.
The report highlights some important issues that may be useful to legislators and others, including:
- Of the 136 agreements that have been approved since 2002, 35 have been cancelled or otherwise deactivated, leaving the total number of active agreements at 101. Additionally, three of the 101 “active” agreements will likely not move forward, therefore leaving 98 active projects that make up the basis of this report.
- Of the 98 active projects (as of August 2010), 29 percent are manufacturing and 65 percent are renewable energy.
- Of the $47.3 billion estimated investment under the 101 agreements, 56 percent of the investments are in manufacturing and 28 percent are in renewable energy. The other 16 percent of the investments are in research and development, clean coal, advanced clean energy, electric power generation, and nuclear electric power generation.
- Of the 6,239 estimated jobs agreed to under these 98 project agreements, 77 percent are in manufacturing and eight percent are in renewable energy. The other 15 percent of jobs are in the other categories listed in the previous bullet.
- Of the estimated gross tax benefit of $1.9 billion, manufacturing projects are estimated to receive 42 percent, renewable energy projects are estimated to receive 38 percent and nuclear energy projects are estimated to receive 18 percent.
- Renewable energy projects are returning 34 percent of their tax benefits back to the school districts through supplemental payments, while manufacturing and nuclear energy projects are paying 17 percent and 18 percent respectively in supplemental payments.
- The 98 active projects are projected to pay an estimated $807 million in local property taxes over the life of their agreements.
- Of the 98 active projects, nine are authorized under Subchapter B (non-rural) and 89 are authorized under Subchapter C (rural).
To view the report and other Chapter 313 program information, visit our website at http://www.texasahead.org/tax_programs/chapter313/#teda.