In a significant move for the Lone Star State, on Sunday, the Senate Committee on Business and Commerce voted to send House Bill 5 to the Senate floor where it will receive a vote. HB 5 would replace the Chapter 313 economic development program with a new, modern program aimed at keeping Texas competitive economically while also incorporating reforms to address concerns. Although the bill was passed out of the Texas House of Representatives earlier this month with overwhelming support, its fate in the Senate is less certain.
Proponents of House Bill 5 (HB 5) argue that it is crucial that Texas creates a new economic development tool. Other states and countries are using similar tools to attract businesses and for Texas to remain an economic leader, HB 5 supporters stress the need for Texas to do the same.
“Other states and nations are competing fiercely to land large projects, and in the past year alone, Texas has lost out on major projects because we lack an economic development program. To remain competitive, attract investment, create jobs, and generate tax revenue for our local communities and school districts, Texas must use the tools that other states and countries are using,” said Todd Staples, president of the Texas Oil & Gas Association.
“The Texas economic model is like a three-legged stool. It requires no state income tax, a light regulatory touch, and effective economic development incentives. If we want to keep our trophy case full, the Texas Legislature must create the right tools to attract large capital-intensive investments, bringing jobs and revenue for years to come,” Glenn Hamer, president and CEO of the Texas Association of Business.
HB 5 emphasizes the importance of embracing technological advancements, a crucial aspect for the progress of Texas in the digital age. Recent hi-tech projects that have been attracted to Texas largely because of economic development programs include Tesla, Toyota and Samsung. HB 5 seeks to leverage successes like these to bring emerging technologies and promote innovation across various sectors, supporting economic growth, job creation, and an improved standard of living for Texans.
Proponents of HB 5, including business and industry groups, contend the legislation would create “a modern economic development program” that “will allow school districts to offer limited, temporary property tax discounts to attract jobs and create future tax revenue for schools.”
Supporters also argue that an economic development program created by HB 5 would help Texas and the U.S. be better prepared for the next medical crisis or pandemic by reclaiming global manufacturing dominance. They point to the COVID-19 pandemic, the war in Ukraine and China’s aggression towards Taiwan as evidence that this program is imperative to national and energy security and supply chain resilience, arguing that Texas and the U.S. should not rely on other countries for economic and strategic needs.
The legislation also includes several accountability and transparency measures, a response to claims that the program was becoming bloated, ineffective, and unnecessary to attract projects. According to the bill’s supporters, measures include requiring companies to report project data, such as wages paid, to the state comptroller, and requirements for school districts to report payments and benefits received from companies and how payments were used. Further enhancements include claw back provisions if program goals are not met along with increased audit requirements.
“HB 5 will help Texas bolster our state’s economic security by helping to reestablish our global manufacturing dominance, reshore our supply chain, and ensure electric grid reliability. This legislation includes provisions that protect the interests of the state and participating school districts. Projects must be clear “wins” for Texas as the comptroller must find that the project will generate more tax dollars than the amount that will be discounted during the incentive period,” Tony Bennett, president and CEO of the Texas Association of Manufacturers.
Polling shows that Texans support the reforms and programs HB 5 proposes, including:
– 70%: Support continuing temporary property tax discounts.
– 84%: Believe that Texans are too reliant on other nations for essential goods.
– 77%: Think that a temporary tax discount is worth the return on investment.
“Texas has long been a business leader, recently winning Site Selection’s Governor’s Cup for the 11th year in a row and being named the Best State for Business for a record nineteen years in a row by Chief Executive Magazine. Undoubtedly, countries and businesses choose to relocate or expand in Texas because of our low taxes, reasonable regulations, and skilled workforce—but all of this is at risk,” continued Staples.
Proponents of House Bill 5 (HB 5) argue that it is crucial that Texas creates a new economic development tool. Other states and countries are using similar tools to attract businesses and for Texas to remain an economic leader, HB 5 supporters stress the need for Texas to do the same.
“Other states and nations are competing fiercely to land large projects, and in the past year alone, Texas has lost out on major projects because we lack an economic development program. To remain competitive, attract investment, create jobs, and generate tax revenue for our local communities and school districts, Texas must use the tools that other states and countries are using,” said Todd Staples, president of the Texas Oil & Gas Association.
“The Texas economic model is like a three-legged stool. It requires no state income tax, a light regulatory touch, and effective economic development incentives. If we want to keep our trophy case full, the Texas Legislature must create the right tools to attract large capital-intensive investments, bringing jobs and revenue for years to come,” Glenn Hamer, president and CEO of the Texas Association of Business.
HB 5 emphasizes the importance of embracing technological advancements, a crucial aspect for the progress of Texas in the digital age. Recent hi-tech projects that have been attracted to Texas largely because of economic development programs include Tesla, Toyota and Samsung. HB 5 seeks to leverage successes like these to bring emerging technologies and promote innovation across various sectors, supporting economic growth, job creation, and an improved standard of living for Texans.
Proponents of HB 5, including business and industry groups, contend the legislation would create “a modern economic development program” that “will allow school districts to offer limited, temporary property tax discounts to attract jobs and create future tax revenue for schools.”
Supporters also argue that an economic development program created by HB 5 would help Texas and the U.S. be better prepared for the next medical crisis or pandemic by reclaiming global manufacturing dominance. They point to the COVID-19 pandemic, the war in Ukraine and China’s aggression towards Taiwan as evidence that this program is imperative to national and energy security and supply chain resilience, arguing that Texas and the U.S. should not rely on other countries for economic and strategic needs.
The legislation also includes several accountability and transparency measures, a response to claims that the program was becoming bloated, ineffective, and unnecessary to attract projects. According to the bill’s supporters, measures include requiring companies to report project data, such as wages paid, to the state comptroller, and requirements for school districts to report payments and benefits received from companies and how payments were used. Further enhancements include claw back provisions if program goals are not met along with increased audit requirements.
“HB 5 will help Texas bolster our state’s economic security by helping to reestablish our global manufacturing dominance, reshore our supply chain, and ensure electric grid reliability. This legislation includes provisions that protect the interests of the state and participating school districts. Projects must be clear “wins” for Texas as the comptroller must find that the project will generate more tax dollars than the amount that will be discounted during the incentive period,” Tony Bennett, president and CEO of the Texas Association of Manufacturers.
Polling shows that Texans support the reforms and programs HB 5 proposes, including:
– 70%: Support continuing temporary property tax discounts.
– 84%: Believe that Texans are too reliant on other nations for essential goods.
– 77%: Think that a temporary tax discount is worth the return on investment.
“Texas has long been a business leader, recently winning Site Selection’s Governor’s Cup for the 11th year in a row and being named the Best State for Business for a record nineteen years in a row by Chief Executive Magazine. Undoubtedly, countries and businesses choose to relocate or expand in Texas because of our low taxes, reasonable regulations, and skilled workforce—but all of this is at risk,” continued Staples.
