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Monthly Archives: July 2013

With Governor Perry’s announcement today that he’ll serve out his term through 2014 but won’t seek re-election, it’s timely to look back on highlights from the 83rd Texas Legislature, how the state is positioned in key areas, and the public policy climate that will almost certainly be the foundation for his future plans.

Taxes

The Legislature cut taxes and fees by $ 1.3 billion, a figure that includes a $ 300 million rebate to electric consumers.

House Bill 500 permanently exempts businesses that have less than $1 million in gross receipts from the state’s franchise tax (also referred to as the “margins” tax) and provides a $ 1 million expense deduction for small businesses.

The Legislature also cut business taxes by an additional $ 714 million on a temporary basis– by 2.5% and 5% over the next 2 years – some targeted to specific industries.

An additional $ 350 million in tax incentives was passed. Effective September 1, companies can take a sales or franchise tax credit for research and development. There are also incentives for bringing large data centers to Texas and encouraging investments in cable TV, internet access, and telecommunications.

Incentives for re-locating and expanding companies

In total, Texas has 23 different incentive programs for companies of all sizes – those now in Texas and those re-locating here.
The Legislature extended the Texas Economic Development Act – Chapter 313 agreements – that allows school districts to reduce a company’s property valuations up to 90 percent for 10 years.
Companies like Samsung, Toyota and Apple and others have used these breaks to re-locate to Texas or expand. Texas-based companies are also eligible for incentives.

As of September 1, companies can also deduct their moving expenses from the franchise tax.

The Legislature added $ 50 million to the existing $ 7 million in the Texas Emerging Technology Fund, targeted to early-stage companies, re-appropriated $ 120 million in unspent balances for the Texas Enterprise Fund (the “deal closing” fund generally for larger expansions or re-locations), and added $ 95 million in film and video incentives (contingent on adequate tax receipts).

The Major Events Fund was extended to help communities host high-profile events like the Super Bowl, All-Star games, NCAA events, Formula One, as well as smaller conventions if they meet a $1 million threshold in additional revenue.

Education

There is a clear sense that with the current surplus in the Texas budget – estimated at about $ 8 billion at present — now is the time to invest in education.

CEO’s, entrepreneurs and investors — particularly those from the coasts — tell me that education is the most critical investment in a healthy economic future (which sounds logical as long as that state doesn’t tax and regulate its companies to death).

This session, lawmakers approved an additional $ 3.4 billion for schools for the current biennium.

They also reduced requirements for standardized tests from 15 to five needed to graduate from high school and added options to the uniform 4×4 graduation plan that allows students discretion in choosing a course of study to help with career training. For example they may select an ‘endorsement’, such as Business and Industry or STEM as a specialty on top of the foundational courses.

For the first time since 1995, charter schools may expand but school choice for parents of public school students – now commonly referred to as scholarships rather than vouchers – was not approved.

In higher education, a measure requiring universities to offer students the option of a fixed rate tuition for four years was passed, as was a new UT system university and medical school in south Texas.

The University of Texas system, Texas Tech, Texas State, University of Houston and University of North Texas systems have announced fixed rate tuition programs. Related, thirteen Texas institutions are offering $ 10,000 degree programs.

Infrastructure

The Legislature approved $ 2 billion to help local governments build pipelines, desalination plants, and other water projects, subject to voter approval in November.

Funding for roads and other transportation projects totaled just over $ 800 million, including about $ 425 million to fix roads stressed by heavy gas production in energy regions of Texas.

Another $ 4 billion for road construction now being considered in a special legislative session

Workforce training

The Texas Fast Start program will accelerate training for workers by allowing them to advance through classes as they master the related skills.

The Texas Workforce Commission and Texas Higher Education Coordinating Board will collaborate with community colleges and technical institutions to create programs for high demand fields as identified by local employers.

The state will also continue to offer grants to buy equipment required to teach technical classes.

And five (5%) percent of the state’s skills development fund will be available for joint-credit courses at high schools and post-secondary institutions leading to licenses and certificates required for technical jobs.

In sum, while the Governor didn’t announce today what those plans may be, my best guess is that it will have something to do with this — http://www.texaswideopenforbusiness.com — and recognition like this:
http://chiefexecutive.net/texas-is-the-best-state-for-business-2013

Craig Casselberry
512-762-7366
cc@quorumpublicaffairs.com

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