While the debates over property taxes in the Texas Legislature are mostly held out in the open, the same can’t be said of negotiations surrounding property tax abatements under Chapter 312 of the Texas Tax Code.
Residents of Concho County learned this the hard way last summer. They found out about a special tax deal for the subsidiary of a big corporation when they read through a meeting agenda posted at the county courthouse 72 hours before the meeting.
In a county with a population of only about 4,000 residents spread across nearly 1,000 square miles, it was nearly impossible to organize opposition in three days. Those who could make it to Commissioners Court showed up to find out that the tax abatement agreement had been negotiated for months in secret. They spent two hours voicing their opposition in a public forum mandated by the statute, but the vote to enter into the agreement took place immediately after. Unsurprisingly, the commissioners sided with the corporation they had been working with for months behind closed doors.
It was a bitter moment for the residents who spoke in opposition. In rural counties, elected officials are often friends—they share the same pews on Sunday, have kids that attend the same schools, and eat at the same diners on the town square. Some felt the decision was a bad-faith deal, betraying their sense of neighborliness.
Residents of Wharton County had better luck. Cricia Ryan, a local landowner whose family has been involved in the crop dusting business, noticed a new meteorological tower nearby and started to investigate. As residents started talking, they discovered that many had been approached about leasing their properties to a new development seeking a special tax deal from the county.
Cricia and a few other locals organized opposition well in advance of a vote, held town hall meetings with hundreds in attendance, and successfully moved county commissioners to vote against the tax abatement. It took hours of work outside their regular jobs, talent in mobilizing their community, and a diverse strategy involving traditional activism and an online presence. It was an undue burden that, fortunately for those opposed to the tax deal, Cricia was willing and able to carry.
These two stories are familiar to many Texans. As I traveled this great state with my colleagues from the Texas Public Policy Foundation, we learned the common themes and heard the shared struggles residents faced in a system seemingly designed to thwart meaningful community involvement. This exposed a pressing need to reform the incentive that caused all the ruckus—Chapter 312 of the Texas Tax Code.
The different outcomes in Concho County and Wharton County prove that a longer period for the public to get informed and become engaged makes a difference. We recommend reforming the statute to include a 90-day waiting period between accepting the application for a Chapter 312 abatement and a vote to enter into the agreement. Texans deserve a fair chance to be a part of the process; 72 hours is not enough.
Public input is more powerful when the public is informed. As residents in Wharton and Concho can attest, the exemptions from Texas’ open meetings and public information laws for economic development projects created an uphill battle.
Texans deserve fairness. Closed-door meetings about secret deals give a business interest undue influence over the process and relegate public input to mere formality. The Legislature should repeal these exemptions, shining light on the process and allowing Texans to take part in good faith.
These reforms won’t fix all of the problems caused by Chapter 312. The best way to prevent these issues altogether would be to let the program expire. It is scheduled to do just that later this year, but I’m doubtful that the Legislature will find that politically palatable. I’m holding onto hope, but in the meantime, creating a fairer, more open process is a big step in the right direction.