Wednesday, March 16, 2016

Meet Texas' Largest CORPORATE WELFARE program you've never heard of....


"Dishonest scales are an abomination to the Lord,
But a just weight is His delight."
Proverbs 11:1

Did you know local school districts can give massive tax abatements to politically connected corporations while having the state make up the difference?!?  (Neither did we):
Property taxes are the largest source of funding for Texas public schools, and big industrial projects can add lots of new money to the school system quickly. Annova’s LNG terminal alone would be worth more than the tax base of one-quarter of Texas school districts. Companies pay most of their tax bill to the local school districts. For certain big projects, though, districts can forgive most of that sum using the Texas Economic Development Act, a 15-year-old program that’s often known by its place in the tax code, Chapter 313. That program actually makes it worthwhile for school districts to give away millions in tax revenue.

Under the law, if a school district grants a tax break for a desirable new project, the state is obliged to cover the difference. The cost of the deal comes out of the state budget. In its application to Point Isabel ISD, Annova said its terminal would be valued at $1.4 billion, but wanted the school district to pretend for the next 10 years that it was worth just $25 million. The tax break, Annova told the district, would be “a key component” in its decision to build. In fact, as local activists learned, the whole point of the Chapter 313 program was to lure business to Texas that might go elsewhere. If the school board rejected Annova’s deal, maybe the company really would pack up and leave. The school board vote, then, wasn’t going to be just another sternly worded resolution — it could be, locals hoped, the Achilles’ heel that could kill the project for good.

Residents knew they had momentum on their side, having won over so many other local officials. But as they had recently learned, schools hardly ever say no to a Chapter 313 deal. No district had ever rejected one this big. In fact, the program is built to encourage schools to give away the state’s money. Schools have no incentive to reject a deal, and often gain millions by handing out tax breaks.

....

In most cases, Chapter 313 deals are both a windfall for companies and a way for school districts to turn a neat profit. When districts sign away millions in corporate tax breaks, the state of Texas pays them back and lets them negotiate side deals with the company worth millions more. The rationale behind these generous terms is to lure big capital-intensive projects to Texas when corporate honchos are considering other states. Companies must pledge to create a certain number of high-paying jobs, and claim that the tax break is “a determining factor” in their decision to build in Texas.

The scale of Chapter 313 dwarfs its better-known counterparts, the Texas Enterprise Fund and Emerging Technology Fund. Those two programs came under scrutiny in recent years as reporters and legislators found evidence that the governor had used them as slush funds for his friends. But at least those programs had a limit. Since 2003, the Legislature has spent $781 million from the two funds, which is $43 million less than Chapter 313 will cost the state in the next two years.
It's a lengthy article, but seriously, read the whole thing here.

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One more gem:
As a job creation program, Chapter 313 has been incredibly costly too — as of 2013, each job credited to a 313 project cost the state $350,000, well more than any other program the state runs.
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Finally, kudos to the Governor:
Last session, the Legislature even tried to expand the program with a bill that would have cost an extra $50 million every year. Governor Greg Abbott vetoed it, writing that “while the program may sometimes have a positive impact on local economic development, serious concerns exist about its oversight, its transparency, and its value to the taxpayers.”

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