Texas House Bill 5 is a ‘smart and timely solution’

The Texas House of Representatives’ Committee on Ways and Means heard testimony on the Texas Jobs and Security Act, or House Bill 5 (HB 5), on Monday, April 10, and Mike Rosa, Senior Vice President of Economic Development at the Dallas Regional Chamber (DRC), was one of just 11 people statewide invited to speak about the bill before the committee.

HB 5, authored by House State Affairs Committee Chair Todd Hunter, would create a new economic development incentive tool for Texas by allowing temporary, limited property tax abatements targeted to attract large, capital-intensive projects. The creation of such program is a key priority on the DRC’s legislative agenda. As Rosa sees it, such a tool is vital to keeping Texas—and the Dallas Region—competitive when it comes to attracting companies to put down roots.

“Passage of this bill is the engine my fellow economic developers need to hit the road and keep our competitors in the rear-view mirror,” Rosa told lawmakers. “It’s our job to be sure Texas remains the most dynamic, diverse, successful, and secure economy in America, providing jobs and opportunity for all.”

In his testimony, Rosa recounted his nearly four-decade career working in economic development in Texas. He recalled the tools and policies the state developed along the way that contributed to its strong, diverse economy. Texas has the ninth-largest economy in the world with a total value of $2 trillion. Site Selection Magazine recently awarded Texas the Governor’s Cup for the most business investment projects for the 11th year in a row, with Dallas ranked No. 2 in the nation for corporate facility investments.

Texas’ previous economic development incentive tool, the Texas Economic Development Act, expired at the end of 2022, and Rosa cautioned against resting on the state’s laurels in the wake of the program’s sunsetting.

“Texas winning has never been automatic or a ‘no-brainer,’ but it can seem that way when we’ve been at the top for a while,” Rosa said. “The high bar set by Texas inspires other states to compete. [Seven states] recently maximized their tax and incentive structures to pursue and celebrate big wins.”

Rosa shared that he sees corporate projects getting bigger and creating more jobs than ever before. While that is great for the economy, it presents a challenge for a state like Texas that HB 5 could alleviate by allowing school districts to grant property tax abatements in exchange for payments—and long-term tax base growth.

“This bill is a smart and timely solution to a current problem,” Rosa said. “Texas is a property-tax intensive state at a moment when many companies considering Texas—and many already here—must put massive amounts of taxable property on the ground to compete globally, while minding their bottom lines in doing so.”

Bill author Chairman Hunter said in his opening comments that HB 5 is intended to give Texas a tool to continue to build an innovative economy while ensuring proper reporting.

“The bottom line is we’re really trying to promote the economy of the future,” Chairman Hunter said, adding that HB 5 is distinguished from previous incentive tools through its stronger provisions for accountability and transparency and focus on manufacturing and supply chain security.

HB 5 would require companies approved for property tax abatement agreements to report the total number of jobs created by the project, total wages paid, and the total amount of the investment. School districts that enter into agreements would also have to report the total amount of payments and benefits received from the companies in lieu of property taxes.

Watch Rosa’s complete testimony here: 

HB 5, a priority of House Speaker Dade Phelan and a 2024-2025 Governor’s Budget item, was voted favorably out of committee on Monday, April 24, and is headed to the Texas House for consideration with a bipartisan slate of coauthors. The DRC encourages members of the Dallas Region’s business community to call their representatives to ask them to support the bill’s advancement. Contact the DRC Public Policy team to learn more and join the DRC’s efforts in Austin.