Gov. Greg Abbott says Texas will review its economic development program after the property tax break expires.

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Gov. Greg Abbott on Wednesday tried to reassure business leaders that state lawmakers will act during this legislative session to improve the state’s economic development tools after the popular corporate tax credit program expired last year.

He also said that Texas is already feeling the effects of losing the program, having recently missed out on a “massive” corporate project in New York.

Addressing the Greater Arlington Chamber of Commerce, Abbott appears to have made his most extensive public commentary on the future of Texas economic development after the end of the so-called “Chapter 313” program. Abbott nodded at the political implications of the topic, calling it “the elephant in the room”.

“Chapter 313 is no more, and yet there is a desire at the Capitol to make sure that Texas really remains number one for economic development,” Abbott said, “and we are working on it — and others at the Capitol are working on it.” — to ensure that in the future we have economic development tools that may not be exactly like 313, but keep Texas No. 1 in economic development.

Abbott didn’t specify what those new tools would be, but his comments are a spur to business leaders who are trying to bring Chapter 313 back in one form or another. The program was intended to attract large companies to Texas by reducing their local school district’s property taxes, but it has faced bipartisan accusations of “corporate welfare”. In 2021, the state Senate refused to consider a bill to extend the program, and for the first time in its 20-year history, lawmakers decided not to renew it.

Abbott briefly referred to the debate on the program in his State of the Union address on Thursday, saying that “in this session, local communities need new tools for economic development.” This comment and his Arlington remarks link him to State House Speaker Dade Phelan, R-Beaumont, who prioritizes resurrecting chapter 313. But they face a big hurdle from Lieutenant Gov. Dan Patrick, who presides over the Senate last month as well. boasted that he “killed” chapter 313 in 2021 because it was “misused”.

Abbott said Wednesday that the expiration of Chapter 313 influenced Micron’s recent decision to build a new computer chip manufacturing plant in upstate New York instead of Texas. Abbott said that because of this, Texas “lost to one of the worst states for business in America.”

“We bid for … a large semiconductor plant, but lost to New York for one reason: New York had the best benefits package,” Abbott said. “The CEO of Micron actually begged me because he really wanted to do business in Texas. … We gave every penny we could give, and New York literally offered billions of dollars more that we couldn’t keep up with.”

Abbott wasn’t as open about Chapter 313 when she was on the chopping block in 2021. He was noncommittal, for example, when he was asked in November 2021 if he would call a special meeting to restart the program.

Under the program, businesses could apply to their local school district for a 10-year rebate on their property tax bills in exchange for building or expanding in the community and, in some cases, creating new jobs. There was nothing wrong with school districts approving tax breaks because any lost income for public schools was made up by the state. But conservatives have denounced it as a corporate giveaway, with some liberals arguing that less money is left on the table for other public services like health care or public safety.

The issue remains politically sensitive, especially among Republicans, who have long debated what role, if any, the government should play in stimulating business relocation. Abbott’s archrival in 2022, Don Huffins, was quick to slam Abbott’s comments in Arlington, tweeting that “corporate wealth stands in the way of tax breaks for Texan families and free market competition for Texan companies.”

On Wednesday, Abbott appeared to be well aware of the program’s battered reputation. He jokingly told business leaders in Arlington that if they were to speak to legislators at this meeting on the subject, “never mention the number 313. It leaves people with a bad taste.”

Last week, more than 150 business groups, including the head of the Greater Arlington Chamber of Commerce, wrote a letter to lawmakers calling for “new, transparent and accountable economic development policies.” They didn’t use the term Chapter 313.

The program officially expired on December 31, 2022, the last day the controller was required to include companies in the program. The office has been overwhelmed with applications in the final months of the program, with two renewable energy companies suing after their applications were rejected due to the late rush. The Texas Supreme Court refused to intervene.

Disclosure: The Arlington Chamber of Commerce provided financial support to The Texas Tribune, a non-profit, non-partisan news organization funded in part by donations from members, foundations, and corporate sponsors. Financial sponsors play no role in Tribune journalism. Find their full list here.