CREATE 2-YEAR PAUSE TO ASSESS FISCAL IMPACT OF $31 BILLION IN CURRENT CHAPTER 313 TAXPAYER OBLIGATIONS

The Networks of Texas IAF Organizations (Texas IAF) urge Texas Senators to vote NO on HB5, the bill to renew the failed and defunct Chapter 313 program. With just a few days to go before the deadline for the Senate to pass House bills, the legislature has no clear path forward for the state’s costliest corporate tax incentive program, which was ended last legislative session with bi-partisan opposition.  HB5 passed out of committee late Sunday with only 6 of 11 votes in favor.

“Though in the past few days there has finally been a real debate on the use of hard-earned taxpayer dollars on corporate giveaways, time has run out to put together an economic development program that protects schools and taxpayers,” said Rosalie Tristan, leader with Valley Interfaith of the Texas IAF. “Legislators and lobbyists had two years to put together a plan, and it’s clear that none exists because school-based corporate tax breaks are a failed strategy that undermines the future of our state.”

SPECIFICALLY, HB5:

BANKRUPTS TAXPAYERS – HB5 would exponentially add to the already $31 Billion in over 900 taxpayer obligated Chapter 313 agreements. $20 BILLION OF THESE AGREEMENTS WERE SIGNED IN THE LAST 6 MONTHS OF 2022 ALONE!

EXPANDS FAILED CHAPTER 313 – Chapter 313 never funded EXPANSION OF EXISTING FACILITIES. HB5 would go beyond relocations and new plants, TO OBLIGATE TAXPAYERS TO POTENTIALLY FUND EXPANSION OF OVER 300 EXISTING OIL, GAS, AND MANUFACTURING PLANTS WITH EXISTING CHAPTER 313 AGREEMENTS!

CONTINUES “STACKING” OF TAX GIVEAWAYS – 72% OF MANUFACTURING PROJECTS (INCLUDING OIL AND GAS) THAT WERE GRANTED CHAPTER 313 AGREEMENTS IN 2022 WERE FOR PROJECTS THAT WON’T BE COMPLETED FOR 6 YEARS OR MORE, AND SOME FOR DECADES INTO THE FUTURE!  HB5 Continues to allow companies to hook state taxpayers to pay for projects that start for years down the line, and for which the companies have no obligation to build.

SHIFTS BENEFITS PRIMARILY TO COASTAL PETROCHEMICAL INDUSTRY – While Chapter 313 at least had its benefits disbursed statewide somewhat across rural, suburban, and urban areas, the new qualifications under HB5 would essentially create a regional program where most qualifying projects would be in the petrochemical industry in the coastal region, but paid for by taxpayers ACROSS THE STATE.

“As several members of Senate Business and Commerce Committee pointed out, companies were well taken care of when existing Chapter 313 agreements nearly tripled to $31Billion in the last 6 months of 2022, often for projects decades into the future,” said Fr Miles Brandon of St. Julian of Norwich Episcopal Church in Williamson County. “That’s nearly a generation of tax giveaways.  Taxpayers and lawmakers deserve a chance to catch their breath and create a more rational and fiscally prudent approach to economic development.”

*The Network of Texas IAF Organizations are non-partisans; institutionally based community organizations whose purpose is to train leaders to organize families around issues which affect their quality of life. The network includes Communities Organized for Public Service and The Metro Alliance and ICAN in San Antonio, The Border Organization, Valley Interfaith in the Rio Grande Valley; TMO in Houston; EPISO and Border Interfaith In El Paso; Austin Interfaith; ACT in Fort Worth; Dallas Area Interfaith; AMOS - Arlington, The West Texas Organizing Strategy; and Beaumont, Port Arthur and Orange.

Press Release [pdf]
Texas Industrial Areas Foundation Network Analysis of Chapter 313 [pdf]
Vote No on HB 5 [pdf]
Texas Industrial Areas Foundation Analysis of "Stacking" Permitted [pdf]
State Senate to Revamp Tax Break Program, Houston Chronicle [pdf]

Labor allies, environmental groups and public policy nonprofits have joined the Texas IAF-led effort to oppose the renewal of Chapter 313.  And this week, independent editorials opposing the bill have been published by the Houston Chronicle and Austin American Statesman.

[Photo Credit: Mark Mulligan, Houston Chronicle] 

Published: Austin American Statesman, December 22, 2012

   No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.” — Adam Smith, “Wealth of Nations”

   “Do not take advantage of a hired worker who is needy ...” — Deuteronomy 24:14

   Austin Interfaith and the Greater Austin Chamber of Commerce agree on several things when it comes to incentive deals. We both want businesses to come to Austin, and we want them to bring good job opportunities, with a career path, for its workers.

   However, Austin Interfaith draws the line at subsidizing poverty employment on the taxpayer dime. If a corporation wants to open shop in Austin and pay poverty wages, they are welcome to do so without economic incentives. All corporations already benefit from public sector police and fire protection, streets and drainage infrastructure, transit, garbage collection and other goods. For more than five years, our position has been that if we, as taxpayers, are going to invest our public dollars in private enterprises, it stands to reason that we, as taxpayers, should establish a threshold and protocol that prevents hardworking people from being poor and miserable.

   The chamber considers a wage threshold to be an unacceptable burden on the blue-chip corporations it recruits — even the federal poverty line for a family of four ($23,000 per year). In contrast, an analysis by the Austin Business Journal noted that the equivalent “$11 an hour floor would not be a big deal to incentive grabbers.” Just last week, Visa voluntarily accepted that same threshold.

   When the city of Austin grappled with the question of how much to pay its own employees and contractors years back, they chose the $23,000-a-year threshold to keep their workers above the poverty line. Last month, the City Council’s special committee on economic incentives bravely concluded that businesses receiving public dollars should be subject to that same standard, and proposed that future incentives only go to those that pay $11 an hour or more. Their proposal last month not only addressed the issue of wages — it would also address the process.

   The city’s current process for tax incentives involves meetings that last late into the night. Professional presentations stress that the deal will be “cash positive” to the city and bring great jobs to Austin. Austin Interfaith and others testify that many workers will be left in poverty and-or consigned to dangerous working conditions. Corporate representatives sit in shock because they thought this was a done deal. After receiving a letter from the city manager describing the offer and indicating that the deal is recommended for approval, they are here to celebrate — not to be dragged through the mud. Sometime after midnight, the deal is approved.

   Austin Interfaith, whose members include more than 30 religious, labor and educational institutions, wants these made-for-TV dramas to end. We developed a set of standards for incentive proposals to meet all stakeholders’ objectives. If tax incentives are to be granted, they should only be for companies willing to pay an hourly wage of no less than $11 an hour, including to contract construction workers. Companies should hire locally, provide benefits and support training opportunities so that people can advance at work.

   Opponents of the wage floor want to make it optional, suggesting that the city offer an extra bonus to businesses in order to “incentivize” paying at least $23,000 a year. This would lead, instead, to poverty wages.

   The chamber incorrectly claims that US Farathane would not have been eligible for incentives if even one job falls below $11 an hour. Under the committee’s proposal, a company that plans to hire ex-offenders, high school dropouts or other hard-to-employ people would certainly be eligible for an exception and could have their request considered favorably.

   A wage floor is not just about preventing physical privation. Adam Smith’s concern with poverty was about public participation in the life of community — he considered a “necessity” that which would allow one to appear, and to act, in public without shame. Our faith traditions likewise call on us to pay our workers fairly so that they can provide for their families and participate in public life with dignity.

   Austin Interfaith and its member organizations, the Worker Defense Project and LiUNA, support the special committee’s proposed wage floor.

   Higher-paid workers are more productive, loyal, creative and collaborative — and will attract the kind of corporations our city deserves.

   De Cortés and Batlan are members of the Austin Interfaith Strategy Team.

“A diverse mix of Labor Union representatives, city and county elected officials, faith-based organizations and advocates for fair wages and working conditions came to the Workers Defense Project office Tuesday night…to celebrate a move by the county regarding tax incentives, a move many are hoping the city of Austin will follow.

“We really feel a company that’s not willing to pay $11 an hour isn’t a very good candidate for an incentive…” said  Bob Batlan with Austin Interfaith.”

A Celebration of a Change in Tax Incentives in Travis County, KVUE News

Leaders celebrated the 3-1 passage of a living wage proposal by the City of Austin’s special committee on economic incentives.  In partnership with member institutions Workers Defense Project and the Laborers International Union of North America, ”one-hundred construction workers and their allies were at city hall for the meeting, marching for something they’ve asked for time and again—a living wage….Austin Interfaith’s Jim O’Quinn says that’s why [Austin Interfaith] backs a push for standards companies must meet before they can get tax breaks from the city.”  The measure, which will come before the city council in upcoming months, needs four votes to pass.

[Photo Credit: Jay Janner, Austin American Statesman]

Living Wage at Heart of Overhaul to City Incentive Program, YNN Austin

Travis County to Require $11 Hourly Wage for All Incentive Deals; Austin Weighs Similar Requirement, Austin American Statesman

Leaders piled into City Hall to ask City council members to raise the minimum workers would be paid.  Says Garcia,”When we’re using public funds we’ve got to bring in jobs where families can at least afford to eat.”

Controversy Surrounds New Jobs Coming to Austin, KVUE-ABC