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Study shows Coastal bend has missed out on over $2 billion in tax revenue

Posted at 10:38 PM, Sep 27, 2022
and last updated 2022-09-28 18:20:06-04

CORPUS CHRISTI, Texas — How well off are some of the industrial companies when it comes to taxes?

A study was released Tuesday, funded by the Coastal Alliance to Protect our Environment (CAPE). It examines the tax incentives given to industrial companies in Nueces and San Patricio county. Tax incentives are given by cities, counties, and school districts.

“We live in what many of us call,' The Last Paradise in Texas.' These are all the incentives they need,” said Errol Summerlin of CAPE.

The environmental conservation group wanted to know if the tax breaks given to steel and petrochemical corporations were worth the jobs they promised.

The study looked at 18 companies that CAPE felt had the biggest impact on public health and the environment.

These companies have roughly paid $580 million in taxes. What the study found was these companies have received $2.47 billion in tax breaks.

The cost of one of the jobs promised by these companies on average is $953,294 in tax abatements.

“When looking at benefits you have to look at the health impacts of these fossil fuel industries that have the greatest adverse impacts to air and water quality,” Summerlin said.

The study was conducted by the Canadian firm Autocase Economic Advisory. They looked at three kinds of tax abatements. The 18 companies receive one to three of these kinds of agreements.

Chapter 312 agreements are tax breaks on property taxes from cities or counties to corporations.

Chapter 313 agreements are tax breaks on property tax from school districts to corporations. These agreements are for a fixed number of years up to 10 years.

Industrial District Agreements (IDA) is between cities and corporations. The agreement says cities would agree not to annex a company into their city and thus have them pay more taxes. Corpus Christi has 65 IDAs.

313 agreements make up 70 percent of the total tax breaks.

Autocase stated that 313 agreements have more of a negative impact on the state than on the taxpayer.

“Because of that state aid and state funding due to 313 agreements, there’s less available funding that can actually go to essentially all the districts,” said Stefan Dindayal, an Autocase employee who helped conduct the study.

The school district that has given the most tax breaks is Gregory-Portland Independent School District (GPISD) at $1.3 billion. The equivalent of $243 for every student in Texas public schools.

Ian Vasey a consultant with Nueces County Development Commission argues that without incentives like 313 agreements, the Coastal Bend loses out on a lot of business.

He said he personally worked on bringing Gulf Coast Growth Ventures to the Coastal Bend and knows the tax incentives helped them decide on Texas over Louisiana.

The study does not address what the economic impact of having the 18 corporations is.

Vasey said 313 agreements are used because of the Robinhood law that causes school districts to lose out on tax revenue.

This year, 405 Chapter 313 School Value Limitation Agreement applications have been filed with the Texas State Comptroller's office.

“School districts here get to keep a larger part of the revenue instead of sending it back to Austin," he said. "And then, in turn, that revenue getting sent to other parts of the state, which don't have to face the issues of growth.”

The 313 agreements didn't begin until 2002. With these tax agreements, companies make payments called revenue protection payments or RPP.

It’s not as much money as what collecting taxes would have been. But RPP's paid to school districts are protected. Summerlin said there are nine school districts not receiving any 313 agreements, in the two counties.

Vasey argues that these payments and others from the 312 and Industrial District Agreements make it worth it in the long run. When agreements phase out, municipalities begin collecting significant tax monies, he said.

“When you start collecting an additional, collectively $100 million dollars a year in revenue out of these major industrial projects, you can do a lot of things. You can fix a lot of streets, you can hire a lot of police officers and that’s the importance of high capital investment, major industrial projects,” said Vasey.

There are 11 pending 313 agreements in San Patricio and Nueces Counties. Cheniere alone has three pending with GPISD.

The 313 law will expire at the end of the year.

But legislators may renew it in the next legislative session. Hence, why companies are filing many of these agreements now, such as Tesla with Robstown Independent School District.

Summerlin added that CAPE will continue fighting against 313 agreements should legislators revive them.

To view the whole study you can click here.

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