Texas Extends Tax Break That Helped Make It a Renewable Energy Powerhouse

Texas Governor Greg Abbott has signed a pair of bills extending a property tax abatement that helped make the state a wind and solar energy powerhouse while also providing greater transparency for the program.

The extension of the tax abatement, known as Chapter 312, came after a concerted effort by the Texas Public Policy Foundation, a conservative think tank, to cut the renewable energy industry out of the program.

The Texas legislature established Chapter 312 in 2001 after several lawmakers expressed concern that the state’s high property taxes were making it difficult to attract large economic development projects.

The Texas Public Policy Foundation objected to the tax abatement on principle, seeing it as an example of government imposing itself on the market, and it particularly objected to its use to foster the growth of the renewable energy industry, which it says has skyrocketed in Texas thanks to state and federal handouts, like the federal production tax credit and Texas renewable portfolio standard.

According to the Foundation, in 1999, Texas accounted for roughly 7.4% of the wind energy generation in the United States. Today, it says, the state accounts for 25% of the wind energy generation in the nation.

As a result of all this growth, the implementation of Chapters 312 and 313, which are local property tax abatements for wind and solar farms, have imposed a cost of $2.5 billion on the taxpayer, the foundation said.

In the end, the group’s opposition failed, and a proposed amendment that would have blocked local governments from offering abatements to wind and solar facilities also failed, with eight Republicans in the state Senate joining all 12 Democrats.

One of the bills signed by Governor Abbott extended the Chapter 312 property tax abatement for 10 years, to Sept. 1, 2029. The other bill, HB 3143, is the transparency piece.

It adds new requirements regarding a public hearing and a notice period. Specifically, the bill states that before the governing body of a taxing unit may adopt, amend, repeal, or reauthorize guidelines and criteria, the body must hold a public hearing at which members of the public are given the opportunity to be heard.

The agreements that are being considered must be published at least 30 days before the scheduled meeting date. It must include the name of the owner, the name/location of the reinvestment zone where the property will be, the nature of the improvements or repairs covered by the proposed agreement, and the estimated cost of the improvements or repair. The bill also states that taxing units that have a website must post the current version of the guidelines of the tax abatement.

According to a recent report in the Houston Chronicle, Texas is the largest producer of wind energy in the United States, generating about 18 percent of its electricity from wind.

Texas has more than 20,000 megawatts of installed wind capacity, which could rise to 38,000 megawatts by 2030, according to the U.S. Department of Energy. 

Solar energy, however, has developed more slowly in Texas, despite the abundance of sunshine. Texas installed about 2,500 megawatts of solar capacity in 2018, but that was enough to make it the sixth-largest state when it comes to the harnessing of solar energy.