Study: Tax breaks from Coastal Bend governments to local industry total $2.47 billion

PORTLAND — The unveiling and exchange of large novelty checks is a common ceremonial gesture among business leaders, including large industrial corporations, to mark their financial donations to specific causes.

In a cheeky spin on the practice, local environmentalists, during a media event at the Portland Community Center on Tuesday, presented a check of their own while showcasing the results of a newly released study that sought to quantify how tax incentives given to industrial corporations are costing taxpayers.

Made out to "Coastal Bend polluters," the mock check listed a $2.47 billion amount paid by taxpayers in Nueces and San Patricio counties, a figure the study says represents the financial incentives 18 local industrial corporations have netted over the years due to various tax-limiting programs.

"They are always presenting checks," said Errol Summerlin, a co-founder of Coastal Alliance to Protect our Environment, which commissioned the study. "Well, we're going to take this opportunity to present them a check."

The study, done by Canada-based firm Autocase, sought to quantify the total dollar amount of forgone tax revenues due to elected official-approved tax incentives given by cities, counties and school districts in Coastal Bend.

The study looked at 18 companies in the petrochemical and steel industry within the Coastal Bend that contribute to air and water pollution, and their use of three different tax incentive programs authorized by state law: Tax Code Chapter 313 — Value Limitation, Tax Code Chapter 312 — Property Tax Abatement Act and Industrial District Agreements.

The Chapter 313 program, named after a section of the tax code, yielded the highest amount of forgone revenues in the region, making up 70%, or $1.7 billion, according to the study. Under the Chapter 313 program, companies apply to the school district for a 10-year discount on their property tax bills in exchange for building or expanding in the community.

Forgone revenue for public schools is made up for by the state. Schools can also sign agreements directly with the companies for a supplemental payment for approving the tax break.

The study contends that the Gregory-Portland Independent School District in San Patricio County gave the most tax breaks, $1.3 billion, during the observed period. Cheniere, which the study pins as obtaining the largest tax breaks and is located within the school district, experiences breaks of $1.2 billion, or 50% of the forgone tax revenues identified by the study.

The Chapter 313 program has been criticized for lax oversight and seen by some as burdensome to state taxpayers. It is set to expire at the end of the year, but agreements struck before the end of the year will be allowed to proceed.

The study does not explore the impacts of the new jobs the corporations brought in due to the "availability of information and the fact that the majority of the years in the agreement period go well into the future upon which actual jobs cannot be verified," the study states.

The full study was published on a new website,, which is a collaboration between CAPE and environmentalist groups CHISPA TX and Texas Campaign for the Environment Fund.

Who did the study?

The study is the first of two the Coastal Alliance to Protect our Environment commissioned by Autocase — specifically, the company's economic advisory division.

Autocase, which has done work for the cities of Houston and San Antonio in recent years, has done a number of different studies across the U.S., including on the topics of climate adaptation, mitigation and resilience, aviation, real estate, multimodal transportation, the energy sector, water supplies, and wastewater and stormwater infrastructure.

The second study will be unveiled by year's end. Summerlin said it would focus on the regional water supplies and possible alternatives — both notable topics given the city of Corpus Christi's and Port of Corpus Christi's respective efforts to establish costly seawater desalination facilities to shore up the region's drought-prone water supplies. The regional water demand could outpace supply by the end of the decade if new water sources are not secured, according to the state's water plan for the Coastal Bend regional water planning area.

Summerlin said CAPE commissioned the two studies for a total of $150,000 after filing a grant application to do so. The backer who provided the funding for the studies wishes to remain anonymous, Summerlin said.

Corpus Christi Tax Abatement Economic Analysis Report (With Appendix Update) by callertimes on Scribd

Debate on tax breaks

The concept of tax breaks divides some of the public and colors public discourse when major industrial businesses, such as Cheniere, are the subject.

Proponents of tax incentive programs expect the benefits of economic development from the agreements to outweigh the costs in forgone tax revenues and spark further growth. However, opponents and skeptics, in part, worry the agreements may be more harmful than beneficial to the local residents and Texas taxpayers. Some argue the agreements are meant for little more than to subsidize the expansion efforts of wealthy companies with taxpayer money.

Iain Vasey, the executive director of the Nueces County Development Commission, said a governmental entity's ability to offer tax breaks is a key tool to attracting big businesses, which he said often shop for multiple locations across the nation depending on the industry. Such deals and their particulars can "make or break" whether a company will plant roots locally.

"You cannot assume that a project is going to come here," Vasey said. "A 313 is a critical part of this process to limit what the companies are paying to be competitive in this area. It is also important in ensuring the local school district gets to keep the lion's share of the tax that is paid versus sending it up to Austin to be divided among all of the school districts across the state."

The study does not account for when the tax breaks eventually expire. At that point, Vasey said, the businesses would face the full brunt of local property taxes and put up significant revenues for their respective taxing entities. He said that the plants in question will be in operation for decades to come and will "burn off" the forgone revenues in their later years.

Still, some see the tax breaks as ineffective and argue the corporations will be making their way to the Coastal Bend regardless of whether incentives are offered. Corpus Christi American Federation of Teachers President Nancy Vera, who is running for Corpus Christi City Council, said the forgone tax revenues identified in the study would've been better used by the school districts.

"I've never even seen a number this big," Vera said during a Facebook livestream while pointing to the $2.47 billion figure on the novelty check. "When you are looking at Corpus Christi Independent School District and other school districts, we don't have enough (funding) for our children … because we are paying all this money to our industry."

The release of the study came on the heels of a Nueces County Commissioners Court vote to establish a tax increment reinvestment zone, or TIRZ, south of Robstown should electric automaker Tesla select the location for its proposed $375 million lithium refinery. The TIRZ is needed in order for the Robstown Independent School District to fulfill the Chapter 313 tax breaks for which the Austin-based company is vying.

The Austin-based company is seeking about $16.2 million in tax breaks from the school district over 10 years for the refinery project, according to an Austin American-Statesman analysis of the application, assuming no change in the district's tax rate over that time.

Jim Lee, an economics professor at Texas A&M University-Corpus Christi, said this week that the Tesla application for tax breaks and others are part of a rush of applications coming in before the Chapter 313 program ends at the close of the year.

The Texas Comptroller’s Office lists 11 pending Chapter 313 applications, including the Tesla proposal, in San Patricio and Nueces counties. Cheniere has the most applications, with three pending with Gregory-Portland ISD for the upcoming stages of its multi-train Corpus Christi Liquefaction plant.

A total of 420 applications under Chapter 313 for school districts across the state are pending, according to the Texas Comptroller’s Office.

This article originally appeared on Corpus Christi Caller Times: Study: Coastal Bend industry has received $2.5 billion in tax breaks