Lawmakers pass business incentive law, critics say it hurts schools

AUSTIN (KXAN) – Within the final hours of the regular legislative session, Texas lawmakers passed a measure designed to attract businesses to Texas and create high-paying jobs.

The Texas Jobs, Energy, Technology, and Innovation Act gives tax breaks to businesses, but opponents say it's on the backs of the state's students.

Texas' previous economic development plan, known as Chapter 313, expired in 2022.

The new law, which was House Bill 5, replaces it. Like its predecessor, it gives businesses and corporations discounts on school property tax as an incentive to come to the Lone Star State.

Business community members and chambers of commerce across the state widely support the measure.

Earlier in the legislative session, Steve Ahlenius, president of the Greater Beaumont Chamber of Commerce told the House Ways and Means Committee, “Without HB 5, we are at a competitive disadvantage.”

In that same meeting, Bob Harvey, president of the Greater Houston Partnership said, “We do need to have a robust program in place to keep us competitive, especially as the site selection process comes to the final stages when incentives absolutely matter to the final decision makers.”

But not everyone is happy HB 5 passed.

“Economic development should be separated from school finance and school board decision making,” said Reverent Miles Brandon, with the group Central Texas Interfaith, a chief opponent to HB 5.

Brandon said the law allowing school districts to grant school property tax cuts to businesses undercuts Texas schools.

“Those dollars are staying in their bank and not coming into the public school funding system,” he said. “We would like everybody to pay their fair share.

While Brandon and his group don't support the measure, they are glad for changes from the previous tax incentive package that expired. For example, tax abatement is cut in half, there's more accountability, including the requirement the governor sign off on applications, and school districts that decide on the tax breaks can no longer take money from companies.

“So, school districts now really have to look hard and say, ‘Is this good for our community to give these dollars away?’”, he said.  

The act also increases the number of jobs businesses have to create in order to qualify.

Only certain types of industries, including manufacturing, technology, and oil refining are eligible for the new incentive package. Renewable energy is not.