How much does your city spend on corporate tax settlements? A new Texas database lets you search for it.

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Hundreds of cities and counties in Texas are spending taxpayer dollars on more than 2,700 incentive deals aimed at boosting the local economy, according to new data, under a state program that operates without limits and with little supervision.

The Texas legislature passed a law last year requiring local officials to report inducement deals to the state comptroller’s office, which released a report online database last week that allows the public to search for offers in their community. This is the most comprehensive effort by any state agency to determine how many of these local agreements exist and provide details of each contract to the public.

“This new tool continues my agency’s commitment to giving taxpayers a user-friendly view of how the government handles their hard-earned taxes,” said Texas Comptroller Glenn Hegar.

The incentive agreements were drafted under a pair of arcane Texas laws known as Chapter 380, for cities, and Chapter 381, for counties.

An investigation published last year by the Houston Chronicle found that both laws were passed during the 1980s recession without the typical safeguards lawmakers placed on other economic incentive programs. The laws place no limits on every transaction, require no job creation, and impose no penalties for non-compliance.

Cities and counties did not have to report their agreements to any clearing house, making in-depth analysis of the program nearly impossible. The new disclosure requirements offer the first statewide insight into how often the laws, which authorize unlimited grants or loans of public funds, are used throughout Texas.

The database shows that these laws have become local governments’ preferred economic development tool: there were more than 3,100 active incentive contracts in Texas as of September 1, 2021, when the new disclosure law took effect. Of these, 375 have since expired.

This is far more than other types of incentives in Texas that reduce property taxes for up to 10 years. Chapters 380 and 381, on the other hand, can indefinitely reduce any tax or fee that businesses pay.

The newly released database shows that hundreds of deals exceed the 10-year cap imposed by other incentive programs: 718 deals were 11 years or longer; 68 were over 30 years old.

The round rocks 60 year agreement with Dell Technologies is the longest in Texas. Since 1993, the city has paid out more than $164 million in sales tax rebates to the computer giant and plans to continue paying out incentives through 2053.

Dell generated $101 billion in revenue in the last fiscal year ending in January and made a profit of $4.6 billion.

Local officials who offer incentives to businesses under Chapter 380 defend the practice, saying it’s a key tool in attracting and retaining employers.

“When deciding where to locate its headquarters in the early ’90s, Dell could have gone anywhere,” Round Rock Mayor Craig Morgan said at a February 2020 comptroller’s hearing in Austin.

“He stayed in Texas — an action that over the past 25 years has generated more than $1.5 billion in direct sales tax revenue for the state of Texas. $1.5 billion,” he said. “Talk about fruitful.”

Missing details

It is still difficult to say exactly how much all the transactions collectively cost taxpayers. The database does not capture all the details of the agreements, including their financial value. Lawmakers demanded that copies of the agreements and a description of their “objective or scope” be disclosed – but not their cost.

Local governments have included summaries of the agreements, although some are only brief descriptions such as “grant payments” or “to encourage economic development”. When local officials tried to provide detailed details, they were often blocked by the database itself: descriptions are limited to 600 characters, including spaces.

It is also difficult to determine which companies benefit the most from these local incentive programs.

Names of recipient companies are listed, but not addresses, parent companies or contacts. Such information could help the public determine whether a company receives many tax breaks under different names.

These disclosures are among the items that the nonprofit Good Jobs First, an incentive watchdog group, lists in model legislation it is urging state and local governments to adopt.

“It’s great that there is now some sort of disclosure about which companies are getting these tax breaks and from which localities, but it’s a missed opportunity,” said Kasia Tarczynska, senior research analyst at Good Jobs. First. “It’s still impossible for a Texas resident to truly understand where their money is going and for what purpose.”

Local officials had to clearly enter a summary of each deal, Tarczynska added, so simple changes to the database could require those people to enter the maximum amount of the incentive and job creation information. and salaries.

A total of 279 cities and 63 counties sent deals to the Comptroller, with cities submitting more than 80% of all bids.

Chronicle’s survey last year found no shortage of blockbuster deals — 40-year incentives for resorts and corporate headquarters; 100% property tax refunds for decades; a $50 million grant to an entertainment venue.

And the database contains many household names with multiple agreements: Amazon, which generated $470 billion in revenue and $33 billion in profit in 2021, completed more than a dozen deals. Other large companies with five or more deals include HEB, Costco, Buc-ee’s, Texas Instruments, Samsung and General Motors.

Creative offers

Many cities also use local incentive laws to provide a large number of smaller, much more targeted tax breaks.

Indeed, local officials widely praise Chapters 380 and 381 for providing them with crucial flexibility to spur economic development, including not only large subsidies, but also small-scale improvements not suited to more standard tax abatements in 10 year.

“Part of the appeal of (Chapter) 380 is that it’s not just about property taxes,” Marty Wieder, Grand Prairie’s director of economic development, said in an interview last fall. A city may offer sales tax rebates, hotel occupancy tax incentives or smaller upfront grants, he said. The ability to make “creative deals” is essential.

Still, Weider said, local authorities should demand a strong return on their investment of taxpayer funds. “These must be defended,” he said. “We are the government closest to the people. Our citizens are people our council members see day in and day out. »

Colleyville found a creative way to offer incentives to local retailers: the town sent “gift cards” to all 25,000 residents and invited them to use them at local stores. Business owners who accepted the cards as payment were later reimbursed – through numerous small Chapter 380 grants – by the city.

Many cities reported deals related to building new homes or improving existing homes, with much of this activity centered in North Texas.

Richardson reported 290 agreements, the most of any government. More than 200 of them were part of this city’s long-standing program offering developers or homeowners tax relief for improving residential properties. Most of Farmers Branch’s 94 deals were part of a similar effort.

Other cities, including Bryan and Sulfur Springs, have approved dozens of agreements waiving permit fees for homebuilders.

Government entities face a penalty of $1,000 for failing to comply with reporting requirements. The law requires the controller to notify local officials of the oversight, and they have 30 days to resolve the issue.

Comptroller spokesman Kevin Lyons said advice from the public will likely play an important role in helping state officials find holes in the data.

“Obviously we don’t know the whole universe,” Lyons said. “There could be a town in Hudspeth County that has a 380 deal, and we wouldn’t know about it unless they told us.”

Lyons said anyone who notices a missing incentive deal can report the omission to the Comptroller’s Office by calling 844-519-5672.

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