MARK PORTERIE — Texas Legislature Session bills could greatly impact Port Arthur education
On January 12, 2021, Texas began the 87th Texas Legislature Session. There are several House Bills (HB) that as a district, we are interested in their outcome.
Remote Learning Bill: HB 1468, Broadband Bill: HB 5 & SB 5, HB 1446, SB 506, and for me particularly, one of the most important is the Chapter 313 Agreement Bill: HB 1556.
Chapter 313 of the Texas Tax Code, serves as a major incentive to promote economic development in the state.
Texas’ relatively high local property taxes can serve as an obstacle to businesses considering whether to locate in our community. Chapter 313 allows school districts, under specific conditions, to limit the taxable value of a business with respect to Maintenance and Operation (M&O) taxes for a period of ten years.
For example, a qualifying business that is investing $200 million in capital improvements can apply for a value limitation that instead would cap its M&O taxable value at $30 million for ten years. After the ten years, the business would begin paying taxes on the full appraised value.
Interest and Sinking (I&S) taxes would be paid on the full value of the $200 million. The district receives payment from the taxpayer that makes up the loss of school revenue due to the reduced taxable value of the property.
Due to this being a state incentive, the 313 program is funded from the state, rather than local revenue. School districts can also receive annual payments of $100 per Average Daily Attendance (ADA) for a period of 10 years.
These payments to the district are not subject to recapture, are not considered tax revenue for school funding purposes, and can be used by the district without restriction.
The Port Arthur ISD has been a consistent supporter of Chapter 313 property value limitations since the program’s inception.
We thank and support our Representative Joe Deshotel for submitting the HB 1502, which provides the extension of the expiration of the Chapter 313 until 2032. We have approved 10 previous applications, including the MOTIVA Refinery, which was the first new refinery built in the United States in the last 25 years.
We currently have another application under consideration for a renewable fuels feedstock processing facility.
Our Board of Trustees has supported the Chapter 313 program because they feel that it is important for local businesses and the state of Texas as a whole. We have done so in a Port Arthur community where our student enrollment is overwhelmingly minority and economically-disadvantaged, located in an area known as the refinery belt of Southeast Texas.
At the same time, the local perception is that there are fewer benefits than we would like, from our industrial base. Our area is not perceived locally as an example of trickle-down economics.
Under our current and previous agreements, we have received needed funds through the supplemental payments to address our student needs and have been protected against revenue losses.
The local Interest and Sinking tax base has benefited from the project values, although repeated value appeals by the owners of current and previous Chapter 313 projects have diminished the impact of the I&S provision.
Based on our review of the newly proposed HB 1556, supplemental payments would be eliminated and revenue protection payments which are needed to protect us against state funding changes over a ten-year period, would be prohibited.
One concern about HB 1556 that we hope we could seek a clarification on is, whether exemptions may be layered through refinery turnarounds and expansions. If that is the case, it could eventually result in a full retreat by major industries from funding school district maintenance and operations expenses.
That would leave Port Arthur ISD with a tax base of small businesses and residential taxpayers going to the Legislature in hopes of expanded state support.
Another concern with the current Chapter 313 program is that the project values often fall far below those reflected in the application. This is a particular problem for districts levying I&S taxes for voter approved bonds.
Prohibiting value appeals during the exemption period could help stabilize these important I&S taxable values.
We have much to do within the Port Arthur Independent. We need your assistance and support! With that being said, it is my wish that you have a safe and wonderful Easter.
Dr. Mark Porterie is superintendent of schools for the Port Arthur Independent School District. He can be reached at firstname.lastname@example.org.
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