Friday, August 2, 2019 by Jack Craver

Commissioners approve ‘pause’ on economic incentives

Looking ahead to years of belt-tightening due to property tax limits put in place by the state, Travis County leaders say the county may not be able to afford offering tax incentives to companies to create jobs locally.

The Commissioners Court voted 4-1 Tuesday to stop accepting applications from companies seeking to participate in the county’s economic incentive program, which offers tax abatements to employers that create a certain number of new positions and invest a certain amount of money locally.

The court also instructed county staff to research ways to revise its economic incentive policy to “align it with the court’s goals” to focus on supporting local small businesses, rather than large corporations.

Suspending applications does not dramatically change things. Since 2008, the county has provided $75 million worth of tax breaks to seven companies. The vast majority of that, $65 million, has gone to Samsung.

While some members of the Austin City Council have suggested the city should consider withdrawing from long-term incentive deals, none of the commissioners suggested scrapping the county’s existing incentive agreements.

Mike Rollins, CEO of the Austin Chamber of Commerce, asked the court not to place a moratorium on incentives. The use of tax incentives to attract business to the area will ultimately produce more tax revenue for the county, he argued.

Commissioner Brigid Shea hinted that businesses unhappy about the potential loss of incentives should have joined local elected leaders in lobbying against the revenue limits the Legislature approved in May. When asked about his organization’s position on the issue, Rollins said they had remained neutral.

County Judge Sarah Eckhardt stressed that the action was not political retribution. The county simply can’t afford to provide more tax breaks to “our wealthiest corporate citizens.”

Eckhardt also challenged the effectiveness of giving tax breaks to large companies that are generally looking to locate downtown. Tax abatements are an effective tool, she argued, in incentivizing companies to locate in areas that are otherwise considered undesirable, such as brownfield sites or low-income areas.

“I will tell you, if the chamber says, ‘I’ve got 1,000 manufacturing jobs that want to locate in southeast Travis County, and they’re going to hire straight out of our workforce development programs, but they’re going to need a tax abatement for a 10-year period to make this deal,’ that’s something that we would look at. We don’t see that very often,” she said.

Commissioner Gerald Daugherty, the only one who voted against the measure, said that Travis County should not take economic growth for granted, despite recent prosperity.

“I do think that there are a lot of people in town that think that we are fat and sassy, and you know, why bring any more people? You know, it generally revolves around transportation. And people get pretty agitated about, good God, the last thing we need is more businesses coming to town,” he said. “But you know, that’s really shortsighted and misguided.”

Daugherty asked that the term “moratorium” that was originally included in the recommendation by county staff be replaced with something he considered gentler. The court agreed to use “pause” instead.

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Key Players & Topics In This Article

Economic Development Incentives: This is shorthand for a series of programs designed to lure business to a given region. In Austin, the program tends to take some form of tax-based incentives. These can include rebates or grants that are often tied to a set of stipulations. These tend to include local hiring goals, same-sex partner benefits, or, more recently, wage floors for construction workers who build facilities for the incoming organizations.

Travis County Commissioners Court: The legislative body for Travis County. It includes representatives from the four Travis County Precincts, as well as the County Judge. The County Judge serves as the chair of the Court.

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