HB 5(Hunter / Meyer / Burrows / Shine / Longoria / et al.) as substituted passed to 3rd reading (118-22) with 10 adopted amendments.
A HillCo report covering the floor discussion can be found below.
This report is intended to give you an overview and highlight the various topics taken up. It is not a verbatim transcript of the discussions but is based upon what was audible or understandable to the observer.
House Floor 5-4-2023
HB 5 (Hunter / Meyer / Burrows / Shine / Longoria / et al.) Relating to agreements authorizing a limitation on taxable value on certain property to provide for the creation of jobs and the generation of state and local tax revenue; authorizing fees; authorizing a penalty.
- Hunter – 313s are gone, Rep. Shine will work with me on process so you know what is going on; everyone involved has worked on this bill, everyone has been engaged
- Hunter – 1) 313s are gone, 2) no renewables, 3) audits are in the bill
- Have no problem with renewables, not a negative statement, but they are not in the bill
- This is not corporate welfare, this is eco dev, trying to shape this as a TX program
- I’m big on the transparency and the auditing
- This time we’re uploading money to the schools, merging more involvement between schools and business
- Will be an eco dev tool to continue to attract investments, economic benefit statement prepared by applicant will cover benefits over 25 years, school finance impact report will be 25 years, involves ISD and Lege in reporting, includes state auditor review
- Has a new job requirement & has qualifying and eligibility provisions
- Shine – Descriptions of sections
- Shine – 403.602 is definitions, incl. grid reliability, new dispatchable generation, seawater or brackish desal
- 603 has Dec 2036 expiration, consistent with sunset schedule for agencies
- 604 incl. job and investment requirements, job req is doubled
- 605 describes taxable value of projects to calculate M&O payments to ISDs, 5 categories scaled on property value
- 606 addresses application
- 607 addresses req from applicant to provide economic benefit statement, criteria from Comptroller
- 608 incl. school financial impact report
- 609 determination by Comptroller to recommend or deny project to ISD
- 610 is hearing process if Comptroller doesn’t recommend project
- 611 is timeline for processing
- 612 addresses parameters of agreement under chapter
- 613 incentive period timeline (10 years)
- 614 incentive payments to ISDs
- 615 failure to comply claw back
- 616 audit
- 617 compliance report from applicant
- 618 ISD report for incentive payments
- 619 Comptroller report
- 620 conflict of interest provision
- 621 receipt and processing of incentive payment
- 622 confidentiality
- 623 Comptroller to post on website application within 10 days of receipt
- 624 rules & forms
- Hunter – Now we are in May & I want you to pay attention to amendments, some amendments may be bills that came out of people’s committees; will be accepting some amendments, will not be asking for a table
- Smithee – Bill defines eligible project & eligible property, in order to get tax treatment needs to be eligible project built on eligible property, correct?
- Shine – Correct
- Smithee – Grid reliability project would be any project generating baseload or dispatchable electricity so could include renewable energy if it could be certified as dispatchable?
- Shine – Definition is probably not completely clear; dispatchable could include batteries, etc. with exception of wind or solar
- Smithee – Assuming we could have battery storage or air compression that would make renewables dispatchable, would then renewables be eligibles?
- Shine – If it was done by body could probably do without too much trouble
- Smithee – Seems to me under bill that as long as it could be dispatchable it could be eligible?
- Shine – Correct
- Smithee – On eligible property, excludes any property used for intermittent generation; seems like a potential conflict where I could have eligible project that might not be on an eligible property?
- Shine – On Pg 3, seems like we could have other energy sources in dispatchable arena later on
- Smithee – Trying to make sure we’re not picking winner and losers
- Shine – Intermittent power wouldn’t qualify under 403
- Smithee – I get that, we want dispatchable, but from wherever we can get it
- Collier – For projects with taxable value of $10b or more, taxable value is appraised value less exemptions; Need to create 50 jobs, construction jobs are eligible, what are those?
- Shine – Those jobs part of putting the project into creation
- Collier – Architect?
- Shine – No answer on that
- Collier – Engineer
- Shine – Engineer would be part of the construction job
- Collier – Can be construction site, can get credit for 1 required job for every 10 construction site jobs?
- Shine – Yes, not necessarily on the site
- Collier – So architect and engineers?
- Shine – Just got an answer, architects are included
- Collier – Applicant could reach 50 required jobs during construction phase?
- Shine – Yes, and most have exceeded that in reviewing other projects
- Collier – So 50 jobs could be accomplished before even starting business; on the $100m required investment, is that saying the property is worth that?
- Shine – $100m is what they have to put in place before incentive begins
- Collier – Money being exchanged? How would they invest that?
- Shine – Material & cost
- Collier – Is the applicant required to create 50 new jobs every year, or just maintain?
- Shine – Have to maintain the 50 jobs each year, will likely end up with a lot more than 50 jobs
- Most of the economic impact from jobs will be through the course of the construction period itself, likely 3-4 years
- Collier – No obligation to make more jobs if they meet the 50 required
- Shine – would depend on the project, this is the obligation based on the formula
- Collier – Is there a HUB provision in the bill?
- Shine – No HUB requirement in bill, but have number of those scattered around the state predominantly in construction and support, would depend on if there is a HUB business in the area
- Collier – In creating a new section, would be something helpful to include
- Collier – So have to maintain 50 jobs on average, if you maintain 75 for years, could you then go to 50?
- Shine – If the requirement is 50 in the contract
- Collier – Could the ISD increase that requirement? How much flexibility does an ISD have?
- Shine – ISD could specify this in the agreement and applicant could agree or not
- Collier – Analysis says at least 50 jobs, so if ISD requires 100 jobs they can?
- Shine – Can make that part of the agreement process and applicant can choose
- Collier – 50 jobs must be in Texas on site? Not virtual?
- Shine – They do not have to be on site
- Collier – $60k application fee?
- Shine – Set in statute, as well as amendment fees
- Collier – Appreciate Comptroller needing to give second look to application, they can deny?
- Shine – Yes, and there is a hearing process if Comptroller does deny
- Schaefer – On Pg 4 of the bill, Sec. 11 talks about grid reliability projects, would it be your preference to add more thermal or renewable?
- Shine – Should pursue all alternatives, in this statute we do not look at renewables
- Schaefer – Does this bill or does it not benefit wind and solar?
- Shine – Does not provide for wind and solar
- Schaefer – So bill does not benefit wind and solar?
- Shine – Not for new projects
- Schaefer – Sec. 11 specifies base load or dispatchable energy or provides stored energy to the grid from batteries regardless of power source; wouldn’t this be wind and solar?
- Shine – Definition of dispatchable maybe needs more clarity
- Schaefer – Would you be willing to take an amendment ensuring batteries are only for thermal sources?
- Shine – If you’ll draft and bring it down we’ll look at it
- Schaefer – Batteries can come from wind and solar, those are the primary sources
- Shine – batteries are source neutral and could be used in those cases
- Schaefer – Battery production is heavily subsidized because it benefits wind and solar; concern is that wind and solar are part of this bill because batteries are integral to grid
- Shine – Not sure they would equate to more wind and solar because they are source neutral
- Schaefer – Batteries are primarily used by wind and solar generators, could allow more of those projects?
- Shine – Sounds reasonable
- FA 1 Shine – Perfecting amendment, incl. NAIC date from 2007 to 2022, school finance impact report, application, indemnity clause, and effective date
- FA 1 adopted
- FA 2 Gates – Promotes qualified workforce, apprenticeship programs
- FA 2 adopted
- FA 3 Tinderholt – withdrawn
- Zwiener POO, Rule 11, Sec. 2, withdrawn
- FA 3 withdrawn
- FA 4 Smithee – Designed to account for renewables that are dispatchable
- Smithee – If we can have dispatchable renewables, why wouldn’t we have power from every source possible; avoids picking winners and losers
- Does not just include wind and solar, but things like biomass plants
- Patterson – Biomass plant in East Texas is owned by Austin Energy?
- Smithee – Don’t know, just discussed with Rep. Clardy who is concerned about plants like that
- Patterson – Biomass plant added no megawatts during Uri; are you saying we need more incentives for wind and solar?
- Smithee – Problem with wind and solar is that although it provides power, it is not dispatchable
- Wind or solar project could fit into definition of eligible project, but question of whether it could fit into definition of eligible property; amendment clarifies this
- Policy decision on whether we want to pick winners and losers
- Patterson – Federal gov is already picking winners and losers
- Smithee – Not sure our job is to level the playing field; want to get as much energy as possible online
- Renewable sources like wind have reduced cost of energy to ends users
- Patterson – Wind brings negative 12 cents per kilowatt hours
- Smithee – Cost is much cheaper for renewable power
- Patterson – Depressed market to such a degree that it caused problems
- Smithee – Talking about future, if we can create dependable, reliable, dispatchable energy from whatever sources, that’s what we need to do; want all of the above
- Patterson – Should we be investing tax dollars into this when thermal performs better?
- Smithee – Not doing that here, just saying that if wind and solar can be fully dispatchable can do that
- Patterson – PCM is structure we’re having to put in place because of wind and solar deficiencies
- Smithee – Under the bill, still has to be dispatchable; not there yet and no projects now could qualify under this criteria
- Need to prepare for the future & this would help drive down costs; should put aside special interests
- Patterson – Would wind and solar fall into HB 5 under this FA?
- Smithee – Only to the extent they can certify they are providing dispatchable power
- Hunter opposes the amendment – Made agreement with groups on this bill, this bill is not renewable vs. non-renewable; will honor the agreement, helping other groups on some other matters
- Anchia speaks for the amendment – Supports economic development projects, future will include baseload thermal generation, peaker plants, but will also include about 30k megawatts of dispatchable solar in the interconnection queue today; grid will only remain reliable with solar coming online in the next few year
- Anchia – Wind is about tapped out, solar will come online in concert with battery storage
- FA 4 withdrawn
- FA 5 Howard – Reduce sunset to 2033
- FA 5 adopted
- FA 6 Gates – Allows for ISD to enter into agreement with company with eligible proposed project (apprenticeship program & workplace education)
- FA 6 adopted
- FA 7 Tinderholt
- Bucy POO, Rule 11, Sec. 2, withdrawn
- FA 7 withdrawn
- FA 8 Tinderholt
- Howard POO, Rule 11, Sec. 2, withdrawn
- FA 8 withdrawn
- FA 9 Schaefer – Limits battery storage to power from thermal sources
- Schaefer – Acceptable to author
- FA 9 adopted, then vote reconsidered
- Shine moves to reconsider vote by which FA 9 was adopted, motion prevails
- Hunter speaks against the amendment – Have a lot of agreements and different groups in the bill, Rep. Smithee pulled down his FA & asking Rep. Schaefer to pull his FA down in the same way
- Schaefer – Was not aware of any agreement, FA ensures batteries subsidized in the bill only apply to thermal generation sources; bill as written primarily benefits wind and solar as those primarily benefit from batteries
- FA 9 fails (20-107)
- FA 10 Garcia – Increases transparency, disclosure requirement for companies on any incentives offered by other states
- Garcia – Violation of confidentiality, withdraws
- FA 10 withdrawn
- FA 11 Jarvis Johnson – Protection for new employees, livable wage
- Acceptable to author
- FA 12 to FA 11 TMF – Salary scale tacked to average of manufacturing jobs in that county
- TMF – Acceptable to author
- FA 12 to FA 11 adopted
- FA 11 adopted
- FA 13 Harrison
- K King POO, Rule 11 Sec. 2, sustained
- FA 14 Tinderholt – Companies need to submit client report annually instead of biannually
- FA 14 adopted
- FA 15 Schaefer – Ensures applicants comply with state law
- FA 15 adopted
- FA 16 TMF – Have an amendment to the amendment
- FA 17 to FA 16 TMF – Increases claw back to 2.5x, permanent jobs need employer sponsored health care plan
- FA 17 to FA 16 adopted
- FA 16 adopted
- FA 17 to FA 16 TMF – Increases claw back to 2.5x, permanent jobs need employer sponsored health care plan
- FA 18 Wilson – Clarifies that when business start paying full M&O tax rate after the abatement ends, that revenue goes towards lowering ISD’s M&O tax rate
- Wilson – Bill sis really about property tax relief
- FA 18 adopted (135-0)
- FA 19 Hinojosa – Workers to be paid prevailing wages
- Hinojosa – shouldn’t give tax breaks on back of workers
- Hunter speaks against the amendment – Have wage formulas in bill and parties have agreed
- FA 19 fails (53-86)
- FA 20 Slaton – ISDs have to post that they have an application on web if they have a website
- FA 20 fails (8-124)
- Hunter move to reconsider FA #15 Schaefer (109-24)
- FA #15 Schaefer back before the House
- Zwiener POO, Rule 11, Sec. 2,
- Amendment is broader than scope of the bill so not germane
- HB 5 passed to engrossment (118-22)
