Over 20 years ago, the Texas Legislature passed the Texas Economic Development Act, which allows school districts to offer tax incentives for businesses that invest in their communities. The Act, commonly called "Chapter 313" because of its position in the Texas Tax Code, fundamentally improved the economic development landscape. Chapter 313 has been extended several times but is now set to expire December 31, 2022.
Chapter 313 gives school districts a mechanism for allowing 10-year limitations on appraised value for a portion of property taxes. In exchange for the value limitation and reduced liability, the recipient agrees to build or install new facilities and create jobs. The school district is reimbursed by the State.
I was around and did the studies when Chapter 313 was enacted and implemented. It completely changed the state’s ability to compete for capital-intensive projects, and it remains crucial to encouraging new investment. Our tax system in Texas is not conducive to attracting expensive facilities due to the heavy reliance on property taxes (which, unlike most levies, are incurred irrespective of economic fluctuations and ability to pay). This program provides a way to balance the scales, thus overcoming an otherwise daunting disadvantage.
