The 89th Session: Playing Defense to Protect Local Tools Our main goal coming into the legislative session was clear: protect the economic-development tools that allow local communities to shape their own futures. On that front, the session was a success. Throughout the 140-day regular session, numerous proposals threatened to limit local flexibility or weaken key economic development programs. Several bills targeted Chapter 380 and Chapter 381 agreements, which are powerful tools that allow cities and counties to negotiate economic development deals with businesses. These agreements can include tax abatements, cash grants, or infrastructure improvements in exchange for job creation and capital investment. When the Legislature created Chapter 380 agreements in 1989, they wisely built a flexible program that any community could use: large or small, rural or urban (or suburban), industrial-focused or tourism-focused. Opponents of these tools argued that they were being misused and pushed for overly burdensome requirements that would discourage investment. Economic developers and the business community responded that local control and flexibility are vital for competing with other states and countries for business investment. Thanks to coordinated advocacy efforts, including a coalition letter signed by over 50 local economic development organizations across Texas, none of these restrictive bills became law.
Texas Department of Agriculture also fell short. This program offers rural communities financial support for necessary infrastructure projects to attract new development. Historically, this program has enabled smaller Texas communities to share in the state's economic growth. Chairman Greg Bonnen (R-Friendswood) proposed using part of the state's Rainy Day Fund to invest in Texas-based companies, supporting local innovation and entrepreneurship. Our Rainy Day Fund is an important financial safety net for the state. It helps maintain "AAA" ratings from multiple credit rating agencies. That said, the roughly $27 billion in the fund can only be invested in low-risk assets that barely beat inflation. It is wise to invest a small portion of this fund in innovative Texas-based companies. Once these investments mature, the Rainy Day Fund will realize capital gains, thereby increasing the overall fund. Significant Wins: Infrastructure & Workforce Development Despite the defensive posture on economic development policy, the 89th Session delivered victories in areas that directly support economic competitiveness: infrastructure and workforce development. Senator Charles Perry (R-Lubbock) and Chairman Cody Harris (R-Palestine) tirelessly worked on a transformative investment in water infrastructure, which is critical for a state that is experiencing rapid growth and recurring droughts. Texas voters overwhelmingly approved Proposition 4 in the recent election, which will allocate $1 billion per year from sales tax revenue to water projects over the next 20 years. Additionally, Chairman Bonnen and Senator Joan Huffman (R-Houston) authored House Bill 500, which provides an immediate $2.5 billion investment for repairing existing water systems and developing new water supplies. Reliable water infrastructure is essential to our continued ability to attract projects like Graphic Packaging International. Energy infrastructure also received major support. Lawmakers allocated an additional $5 billion to the Texas Energy Fund, bringing its total to $10 billion. This funding supports dispatchable power generation and transmission infrastructure, which are vital to grid stability as Texas continues to attract energy-intensive industries such as data centers and advanced manufacturing.
Missed Opportunities: Where the Session Fell Short
While protecting existing tools was essential, the 89th Session missed several opportunities to improve our competitive edge. The Jobs, Energy, Technology, and Innovation (JETI) program, created in the 2023 legislative session to replace the now- abolished Chapter 313 program, has fallen short of expectations. These programs offer a school district the opportunity to abate a portion of its property tax levy for a business making a significant capital investment in the region. In the first 22 months since its launch, only a few projects used the program. In comparison, the previous Chapter 313 program typically supported about 20 projects per year. Despite recognition that reforms were necessary, lawmakers made no changes. Efforts to fund the Capital Access Program at the
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