Legislation extending the expiration date of Texas’ primary tax incentive for attracting major new investment to the state failed to come up in the Senate before last night’s deadline. HB 4242 by House Ways & Means Chair Morgan Meyer (R-Dallas) and Senate Natural Resources and Economic Development Chair Bryan Birdwell (R-Granbury) would have authorized Chapter 313 agreements through December 31, 2024. Without the legislation, the program will expire at the end of 2022. Dissatisfaction with the current Chapter 313 program among legislators takes many forms, but chief among them is the perception that the program allows school districts to profit from the program in the form of annual “hold harmless” payments that escape the school finance system. These payments can be onerous for businesses and significantly reduce the value of a Chapter 313 abatement. If there is a silver lining to the failure of HB 4242, it is that we now have the opportunity to innovate a new and better economic incentive for attracting and retaining businesses with a choice of where to invest their capital for the 2023 legislative session.

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