Home Future payments Black and brown students pay for this tax giveaway. Texas shouldn’t be expanding it.

Black and brown students pay for this tax giveaway. Texas shouldn’t be expanding it.



The Houston Chronicle’s “Unfair Burden” series showed how Texas businesses reduced their tax bills by more than $ 1 billion a year with just one business grant program.

Chapter 313, known for its place in the state’s tax code, costs more than $ 200,000 per job, primarily benefiting the oil and gas industry.

But there’s more to the story: This onerous cost falls hardest on school districts with large black and Latino student populations. Due to the racial nature of poverty in Texas, grants that go to large corporations weigh most heavily on students of color.

The Texas legislature was wise when it recently decided to end Chapter 313 by 2022. But bad ideas die hard: A proposal to extend the giveaway until 2024 has just been released as Senate Bill 26.

Section 313 gives businesses a 10-year tax break on new or expanding operations. School districts approve the agreements because the public treasury sometimes makes up the difference, using money from the general fund. That is, Texas taxpayers pay $ 1 billion a year to cover corporate property taxes, mostly for large corporations. But even when local district budgets are fully funded from the general fund, the rest of the state loses out because there is less revenue to pay for services that benefit all employers and workers.

We recently published a national study on this issue, and Texas stands out negatively. We found that even with the state compensation, Texas school districts lost $ 290 million in fiscal 2019 under the Chapter 313 program, a 54% increase from just two years earlier. That figure puts Texas ahead (along with large states like South Carolina, New York, Louisiana, and Pennsylvania) in the amount of school tax revenue lost due to tax breaks for businesses.

These are only aggregate state figures, however. On a per student basis, Texas had the highest shortfall of any state.

Some Texas school districts are losing huge sums of money. Eighteen have cut more than $ 6,000 per student per year. Another 34 districts lost between $ 1,000 and $ 6,000 per student, according to self-reported district data included in their annual expense reports. This is money that could go to special education personnel, add pre- and after-school enrichment, expand pre-kindergarten, or equip rural schools with much-needed high-speed internet.

After taking into account the size of the district, the data reveals that districts with higher proportions of black and Hispanic students tend to cut more taxes overall: a one percentage point increase in Black and Hispanic student body is linked to an additional $ 17,170 in reduced taxes.

The Gregory-Portland Independent School District, where 60 percent of students are black or Hispanic, lost $ 29 million in lost revenue, even after factoring in state and business compensation payments – the second highest of State.

According to the Texas State Comptroller, that same year Corpus Christi Liquefaction, LLC saw its property tax obligations reduced from $ 68.3 million to $ 9.1 million in that school district alone.

La Porte, Ingleside, Brazos, Webb Consolidated, and Floydada school districts also have a majority of black and Hispanic students and extremely high total and per student tax allowances. All five, plus Gregory-Portland ISD, are underfunded, according to data from Rutgers University.

In fact, 84 percent of Texas school districts remain underfunded, with an average gap between required and actual funding of $ 4,000 to $ 5,000 per student.

Chapter 313 has always been a losing proposition for Texas. It is inequitable by design, unfairly benefits the oil and gas industry, and diverts money from vital utilities. Instead of any expansion, Texas should reinvest that billion dollars a year to help small businesses, improve infrastructure, and invest in education and training for the jobs of tomorrow. No longer forcing Texas children to increase corporate profits, the state can strengthen its future workforce.

Wen is Tax Policy Coordinator and Martínez is Director of Communications for Good Jobs First, a nonprofit resource center that promotes fair economic development and corporate responsibility.



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