The Texas House on Friday voted 127-6 to continue reducing school property taxes as an inducement for capital-intensive companies and wind farms to locate or expand in Texas.
The Texas Economic Development Act, which would expire next year without re-authorization, reduces the taxable value of qualified companies by as much as 90 percent for 10 years. House Bill 3390 would extend the program through 2024.
“This is our most important economic development tool,” said the bill’s author, state Rep. Harvey Hilderbran, R-Kerrville.
The program is credited with helping bring large companies such as Samsung Electronics in Austin and Toyota in San Antonio. Since 2001, school districts have granted an estimated $2.4 billion in tax breaks to 128 projects in exchange for an estimated $62.4 billion in new investments over the life of the agreements.
Critics of the program have questioned whether the companies might have relocated to Texas without the subsidies. Others say the state should leave such economic decisions to the free market.
The only debate Friday, however, was the school districts’ share of the deals struck with the firms.
Current law allows companies to pay $100 per student to the school district as a side payment — an inducement to the tax breaks.
State Rep. Jim Murphy, R-Houston, said that policy penalizes school districts with large enrollments. In Houston’s school district, for example, he said the side payments to the school district could start as high as $20 million.
Murphy argued that encourages companies to locate in smaller districts.
He offered an amendment saying school districts could negotiate side payments between $50,000 per year to a maximum of 10 percent of the company’s tax break.
State Rep. Craig Eiland, D-Texas City, said Murphy’s amendment would take money from many school districts.
The House tabled Murphy’s amendment on a vote of 86-24.