Over 20 years ago, the Texas Legislature passed the Texas Economic Development Act, which allows school districts to offer tax incentives for businesses that invest in their communities. The Act, commonly called "Chapter 313" because of its position in the Texas Tax Code, fundamentally improved the economic development landscape. Chapter 313 has been extended several times but is now set to expire December 31, 2022.
Competition to attract corporate locations, particularly high-profile locations, is typically intense, and decades of evidence has shown that communities must be proactive and innovative to increase their chances of success. Economic development programs can enhance opportunities and prosperity, but given the reality of scarce resources, communities must be efficient and analytical in their efforts. We recently produced a report, in conjunction with the Texas Economic Development Council, which is a framework for thinking about economic development (available free at www.perrymangroup.com). Here's a quick look at a few key points.
I was recently asked by the House Select Committee on Economic Competitiveness to offer a perspective on some of the issues affecting Texas' future performance. The Committee's purpose in the hearing was to address "principles that... should guide the state's pursuit of long-term economic growth." I am pleased that members of the legislature are thinking in these terms, as it is essential to long-term prosperity.
Legislative noise has been heard in Austin about eliminating the Texas Enterprise Fund, a key aspect of the state's economic development incentives. The Governor has asked that it be retained. Let me be very clear: scrapping this "deal closing" fund would be a major blow to the state's future competitiveness, with the potential for major fallout over time. It would be like killing the goose that has been laying golden eggs (the same is true for the incentives for film and television productions in Texas, but that is a topic for another time).