Travis County commissioners voted 4-1 to pause accepting new applications for economic incentive agreements, in keeping with the county’s updated economic development strategy—which prioritizes helping local small businesses scale up—and budget goals in light of the recently passed property tax revenue cap by the Texas Legislature.
“We simply cannot afford to give preferential tax treatment to our wealthiest corporate citizens, or prospective wealthy corporate citizens, under a 3.5% revenue cap,” County Judge Sarah Eckhardt said. “This is a like-to-have that we simply can’t afford under this new normal.”
Precinct 3 Commissioner Gerald Daugherty opposed.
Currently, the county oversees seven economic incentive—or tax rebate—agreements. The costliest agreement is with Samsung, a company to which the county has rebated $65 million since 2009. The agreement expires in 2027.
Since 2008, the county has rebated almost $75 million to the seven companies with which it has economic incentive agreements, according to a brief prepared by county staff. The remaining companies include Simon Properties, the developer behind the Domain; Apple; and Fotowatio Renewable Ventures Solar Farm.
“I think it would be a mistake by the county commissioners to put a moratorium on any consideration that may have the opportunity to bring as much as $2 million or more annually in new ad valorem [revenue]to the county, obviously saving taxpayers money over the long haul and obviously a way to grow new customers, is the way I like to use the analogy, versus just relying on existing customers to pay more,” Austin Chamber of Commerce President Mike Rollins said.
In February, commissioners considered a five-year economic development plan that prioritizes investment in residents and small- and mid-sized businesses rather than focusing on incentives for corporations.
Since then, the Texas Legislature has passed a property tax revenue cap of 3.5%, to take effect in October 2020.
Commissioners and staff have repeatedly stressed the need for the county to explore and develop non-property tax revenue streams to help offset the loss to property tax revenue anticipated once the cap takes effect.
“Staff believe that the focus of this program should be re-evaluated and tested in an era of very limited resources given recent legislation that artificially restricts the Commissioners Court’s ability to raise revenue for County services,” Community & Economic Development Specialist Brittany Nevins wrote in a July 30 memo to commissioners.
County staff initially recommended a moratorium “will help provide certainty to the [Austin Chamber of Commerce] and to companies seeking property tax rebates,” according to a brief.
Precinct 2 Commissioner Brigid Shea suggested a “pause” instead, after Daugherty objected to the word moratorium.
The county is not the only local government entity reconsidering these agreements in light of the property tax revenue cap.
In June, seven Austin City Council members said they support taking a look at potentially backing out of their own economic incentive agreements.
In addition to the pause, commissioners also directed staff to research revising the county’s economic development policy to align it with the aforementioned goals.