88th Texas Legislature Update: Progress on Economic Development Incentives, Community College Finance Reform

By Morgan Christian, Director of Public Policy and Communications

The 88th Texas Legislature reached its halfway point Monday, March 20.  State lawmakers have a historic $32.7 billion budget surplus to work with this legislative session, and they will spend the next several weeks finalizing spending proposals that allocate $130.1 billion of the $188.2 billion that Comptroller Glenn Hegar forecasts will be available in general revenue for 2024-2025.

The budget isn’t the only issue lawmakers are tackling. Committees are holding hearings and considering testimony on a multitude of bills, and the DRC Public Policy team is closely tracking progress on a range of topics that would affect the Dallas Region.

Two priority issues on the DRC’s legislative agenda, economic development incentives and community college finance reform, have recently seen several key developments.

Economic Development Incentives

The Dallas Region has been a central player in the growth of Texas’ economy over the past decade-plus. When Site Selection Magazine recently announced Texas won the Governor’s Cup for the most business investment projects for the 11th year in a row, Dallas ranked No. 2 in the nation for corporate facility investments.

At the DRC’s State of the State Luncheon Wednesday, March 8, Gov. Greg Abbott touted the Dallas Region’s economic strength in front of more than 400 business leaders.

Gov. Greg Abbott addresses the sold-out crowd at the DRC’s 2023 State of the State luncheon.

“Last year was a banner year for Dallas, with a record for total jobs, a record for Texans employed in the Dallas metro, and an unemployment rate below the state average,” Gov. Abbott said. “You have a lot to be proud of because of what you’re doing right here in the greater Dallas area.”

Gov. Abbott emphasized the importance of strategic incentive tools to continue driving Texas’ and the Dallas Region’s economic development—a key priority for the DRC.

“We know for a fact that our local communities need new economic development tools from the legislature this session,” Gov. Abbott said. “And the good news is that there are already several promising proposals that have already been laid out.

Texas House Speaker Dade Phelan (R-Beaumont) has prioritized HB 5 by Rep. Todd Hunter (R-Corpus Christi), which would create a new economic development incentive tool for Texas. Known as the Texas Jobs & Security Act, the bill would allow for temporary incentives targeted to attract large, capital-intensive projects. Projects would fulfill transparency measures by reporting on the number of jobs created and the economic impact on communities.

“As Texas continues to grow and attract even more business that creates jobs and spurs local economies, our state must ensure that we have the kinds of tools to keep us competitive with others on a national and global scale,” Speaker Phelan said about the bill.

The DRC is actively advocating for these tools, including signing on to a letter sent to the Legislature by 177 trade associations, economic development entities, and chambers of commerce.

Gov. Abbott urged Dallas business leaders to continue leaning in.

“The truth of the matter is you have a very powerful role—you have a say in whether or not those economic development tools are going to pass,” Gov. Abbott said. “You have a state representative, and you have a state senator, and anybody who does not make a phone call to your state representative or state senator—you’re ceding to the voices against economic development the power and the potential of it not passing.”

Community College Finance Reform

Also at the luncheon, Gov. Abbott highlighted the importance of lawmakers’ plans on community college finance reform, another key DRC priority.

“I talk to CEOs all the time, especially those who make the decision to come to the state of Texas, and I ask them, ‘Why are you coming to Texas?’ Never have I had a conversation like that without the CEO adding, ‘Your workforce is better than workforces in other parts of the country,’” Gov. Abbott said.

In December, the Texas Commission on Community College Finance shared with lawmakers a set of recommendations that would help maintain the strength of Texas’ workforce through updates to the state’s funding model for community colleges. The proposals focused on three areas: outcomes-based funding, affordability, and investments in capacity.

Texas Higher Education Commissioner Dr. Harrison Keller estimates it would cost $650 million to fully implement the proposals during the 2024-2025 spending cycle. That funding is included in both the Texas House and Senate’s base budget proposals.

Two bills have been filed to implement the commission’s recommendations: HB 8 by Rep. Gary VanDeaver (R-New Boston) and SB 2539 by Sen. Brandon Creighton (R-Conroe). HB 8 is a priority of Speaker Phelan’s and was considered by the House Higher Education Committee in a hearing Monday, March 20. SB 2539 was considered by the Senate Higher Education Subcommittee Thursday, March 23.

The DRC’s Senior Vice President of Education and Workforce Jarrad Toussant testified in support of the proposed legislation in both hearings, while Tré Black, President and CEO of On-Target Supplies and Logistics and Chair of the DRC’s Education and Workforce Council, testified for HB 8 in the House hearing.

Gov. Abbott emphasized the importance of efforts to reform community college finance.

“This is just another way in which Texas will continue to lead other states in making sure that we have a highly skilled workforce that is going to be available for those who are trying to add even more jobs in Texas,” Gov. Abbott said, citing the Dallas Region’s leadership in higher education and high-tech job growth in particular.

Gov. Greg Abbott with DRC leaders and Board members.

Texas added more new jobs than any other state in 2022 — about 650,000 — Gov. Abbott said, driving its economy, which is the ninth-largest in the world with an annual GDP of more than $2 trillion. The Dallas Region had a large share of that job growth, adding more jobs between October 2019 and October 2022 than any other major metro.

“Working the way the Dallas Chamber has, with that type of effort, our collaboration, and these new, strong policies, I can assure you, Texas will continue to be the No. 1 economic destination in the United States of America,” Gov. Abbott said.

The State of the State Luncheon was presented by Toyota. Amazon, Oncor, and the University of Texas at Arlington were Silver Sponsors.