RandomGuy
04-01-2016, 09:54 AM
Texas’ biggest corporate welfare program is one you’ve probably never heard of — and it’s growing every year.
At a time when the Legislature can spend months scrapping over $100 million for pre-K, when $55 million to air-condition Texas prisons is a nonstarter, corporations such as Exxon and Dow Chemical need only ask and Texas hands them billions.
Speaking in low voices and idly watching their fishing lines, a handful of men and women mingle on a secluded pier at the southern tip of Texas. Drivers rush past on the highway above, east toward the discount shops and beach bars of Port Isabel and South Padre Island, or west to the shrimp shacks and shipbreakers at the end of the Brownsville Ship Channel. Here, in between, are acres of wetlands, the tidal flats of the Laguna Atascosa National Wildlife Refuge, where a cast of songbirds and raptors shuffles in and out with the seasons. A quarter-million ducks stop by every November. There’s also a population of ocelots, small enough to count, driven in by encroaching development.
Soon, this pier could sit at the heart of a great new industrial district, the likes of which the Rio Grande Valley has never seen. Sprawling facilities will receive natural gas from the Eagle Ford Shale, convert it to liquid form and ship it to Latin America, Europe and Asia, where it commands a higher price. Five liquefied natural gas (LNG) exporters have lease agreements here on the ship channel. Three of them, including Annova LNG, have filed plans with federal regulators. Annova wants to build its terminal just across the channel from this pier. Tankers capable of holding 40 million gallons of LNG would chug in from the Gulf, ease into a dock and fill up from storage tanks the size of tall buildings.
...
Last summer, Annova came to the Point Isabel Independent School District, which includes Port Isabel and South Padre Island, to ask for a $120 million tax break for its new terminal. So the activists made their case to the school board, too — but this time, as they learned, the stakes were much higher.
...
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.
...
When board members returned to announce their decision, the vote was unanimous: The district rejected Annova’s application. “The community has spoken,” one board member announced, “and we affirmed.” The crowd cried and cheered. One of them sent a poem to the local newspaper casting the victory in epic terms: “I was with that big group of villagers / When we finally wiped out the vampires.”
While some board members shared the activists’ environmental concerns, board president Mickey Furcron says that, for him, the vote was a matter of expediency. He didn’t relish the thought of hearing an environmental horror story every time he opened a new board meeting. A few million wasn’t worth that much to the schools, he said, and anyway, even if he disagreed, “we have a responsibility to represent the wishes of our constituents.”
If the deal truly was necessary to bring Annova to town, local residents hoped, then the board’s rejection would keep the company out. But within a day, Annova announced that even without the break, it planned to press ahead with its terminal on the ship channel. For once in the life of the Chapter 313 program, a community dared to call a company’s bluff. As it turned out, Annova didn’t need the handout after all.
--------------------------------------
Left out a lot.
Basically, a lot of companies are asking for, and getting, lots of tax breaks that Texas is footing.
One has to wonder at the actual benefit to the state, given record corporate profits in the US.
https://www.texasobserver.org/chapter-313-texas-tax-incentive/
At a time when the Legislature can spend months scrapping over $100 million for pre-K, when $55 million to air-condition Texas prisons is a nonstarter, corporations such as Exxon and Dow Chemical need only ask and Texas hands them billions.
Speaking in low voices and idly watching their fishing lines, a handful of men and women mingle on a secluded pier at the southern tip of Texas. Drivers rush past on the highway above, east toward the discount shops and beach bars of Port Isabel and South Padre Island, or west to the shrimp shacks and shipbreakers at the end of the Brownsville Ship Channel. Here, in between, are acres of wetlands, the tidal flats of the Laguna Atascosa National Wildlife Refuge, where a cast of songbirds and raptors shuffles in and out with the seasons. A quarter-million ducks stop by every November. There’s also a population of ocelots, small enough to count, driven in by encroaching development.
Soon, this pier could sit at the heart of a great new industrial district, the likes of which the Rio Grande Valley has never seen. Sprawling facilities will receive natural gas from the Eagle Ford Shale, convert it to liquid form and ship it to Latin America, Europe and Asia, where it commands a higher price. Five liquefied natural gas (LNG) exporters have lease agreements here on the ship channel. Three of them, including Annova LNG, have filed plans with federal regulators. Annova wants to build its terminal just across the channel from this pier. Tankers capable of holding 40 million gallons of LNG would chug in from the Gulf, ease into a dock and fill up from storage tanks the size of tall buildings.
...
Last summer, Annova came to the Point Isabel Independent School District, which includes Port Isabel and South Padre Island, to ask for a $120 million tax break for its new terminal. So the activists made their case to the school board, too — but this time, as they learned, the stakes were much higher.
...
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.
...
When board members returned to announce their decision, the vote was unanimous: The district rejected Annova’s application. “The community has spoken,” one board member announced, “and we affirmed.” The crowd cried and cheered. One of them sent a poem to the local newspaper casting the victory in epic terms: “I was with that big group of villagers / When we finally wiped out the vampires.”
While some board members shared the activists’ environmental concerns, board president Mickey Furcron says that, for him, the vote was a matter of expediency. He didn’t relish the thought of hearing an environmental horror story every time he opened a new board meeting. A few million wasn’t worth that much to the schools, he said, and anyway, even if he disagreed, “we have a responsibility to represent the wishes of our constituents.”
If the deal truly was necessary to bring Annova to town, local residents hoped, then the board’s rejection would keep the company out. But within a day, Annova announced that even without the break, it planned to press ahead with its terminal on the ship channel. For once in the life of the Chapter 313 program, a community dared to call a company’s bluff. As it turned out, Annova didn’t need the handout after all.
--------------------------------------
Left out a lot.
Basically, a lot of companies are asking for, and getting, lots of tax breaks that Texas is footing.
One has to wonder at the actual benefit to the state, given record corporate profits in the US.
https://www.texasobserver.org/chapter-313-texas-tax-incentive/