20-Year Texas Oil Subsidy Quietly Dies as Legislative Session Ends

Texas Oil Subsidy Quietly Dies

A 20-year-old tax break for oil and gas companies in Texas quietly met its end last Thursday. In the previous two decades, a provision of the Texas code known as "Chapter 313" has provided $10 billion in property tax relief to corporations in Texas, primarily petrochemical firms. This year, the program came up for reauthorization, and activists were poised to fight tooth and nail to ensure it died. But the reauthorization never came up, and the legislative session ended with no mention of Chapter 313. It completed a trifecta of big wins for environmental activists, including a Dutch court ruling against Shell and ExxonMobil shareholders booting two members from the company's board.

Why This Matters

Texas has long been a "safe space" for the oil industry. Politicians in the state have fought hard to ensure that oil and gas would have easy access to the state's land and resources at the expense of public and environmental health. Experts say that the fact that the program quietly died is a sign of changing attitudes around fossil fuels and climate change. "People aren't persuaded by the dogma anymore that tax breaks create jobs. Too many people see that the emperor doesn't have clothes anymore," said Greg LeRoy, executive director of Good Jobs First. Losing Texas as an ally is a significant blow to the oil industry, and if it can happen in Texas, it can happen anywhere. The Biden FY '22 budget also proposes to nix federal tax breaks for oil and gas.

Striking Change

Chapter 313 was designed to attract businesses to Texas by allowing companies to apply to local school boards for a property tax waiver, which was almost always granted. School districts suffered greatly, and analysis by Central Texas Interfaith found that Houston and Dallas Independent School Districts each lost more than $20 million annually due to the program. Promises of job creation also fell flat, and estimates say that each created job cost the state $211,600. "It was being abused by the school districts and the corporations," said State Senator Juan "Chuy" Hinojosa. We have known this for years, and every year a promise is made -- a promise is not kept -- that it will be reformed, that they will deliver the jobs. They have not. It was time to end it."

"No one had really questioned this program," said Doug Greco, the lead organizer for Central Texas Interfaith. "We knew in our guts that the program was just a blank check, but we also are very sober about the realities of the Texas legislature." So, an unlikely coalition banded together to prevent reauthorization. The conservative Texas Public Policy Foundation, the progressive Every Texan, and the non-partisan Central Texas Interfaith organized against the subsidy, which had been proposed for another ten years. By the time it passed the house, it was down to a two-year renewal. But Greco's coalition was up against 20 oil and gas lobbyists, all working to increase that timeframe. "We thought it would be a victory if the two-year reauthorization passed so we could organize in interim," said Greco. Despite support for the renewal from former Texas Governor Rick Perry, the bill was never brought to a final vote.

Even as advocates celebrate, Greco says more work must be done. "We know there's going to be a big conversation over the interim -- we are under no illusions that this is not going to be a long-term battle." Other states have similar subsidies. In Louisiana, the Industrial Tax Exemption Program is even more entrenched than Chapter 313, and although some successful reforms have been made, the battle between oil and environmentalists rages on. Experts say that last week's victories for environmentalists, however, is an omen for the oil and gas industry. "This really is the start of a new era for Big Oil," said Clark Williams-Derry, an oil analyst at the Institute for Energy Economics and Financial Analysis. "You can't shrug this off as having had a bad day."