Much of the chatter in the business lobby over the past few days suggests that Facebook executives were not happy at all with Tea Party Sen. Konni Burton’s argument that the state needs to “stop throwing our tax dollars to big business.”
In this op-ed, the Republican from Colleyville argued that the City of Fort Worth, which she represents in the Texas Senate, should not have offered a $146.7 million tax exemption to Facebook to locate a data center in Cowtown.
Burton also said The Legislature was wrong to pass a bill that would allow large data centers, like the Facebook one, to get a sales tax abatement for 20 years.
Presumably to help mollify Facebook’s leadership, Gov. Greg Abbott on Wednesday released this video of his participation in the Facebook groundbreaking in which he said “Lower taxes mean more jobs.” The video says Texas is “wide open for business,” à la Rick Perry.
When asked if Burton was taking issue with Gov. Abbott on this, the senator answered simply “yes.”
It is difficult for some observers to imagine that a senator often described as one of the “the most conservative lawmakers in Austin” would actively argue against her community taking steps to be as competitive as possible in attracting high-quality jobs to her district. After all, bragging about the state’s economic prosperity is one of the Texas Tea Party’s favorite talking points. What they either deny or simply do not understand is that the so-called “Texas Miracle” is the result of a mixture of policies that has for years included economic incentives.
This deal with Facebook makes sense for multiple reasons.
Without the Facebook project, Fort Worth collects less than $3,000 in in taxes per year on the property. After it is built, the city will collect an estimated $2.4 million annually on the same property and project. That means that with the incentive, the city will receive nearly $50 million.
There are also strings attached. In order to get the projected maximum incentive from the city, Facebook is required to invest about $2.5 billion during the next two decades. The school district in the area, the Northwest ISD, is projected to collect $150 million in property taxes during the 20-year period of the sales tax abatement.
The Texas House sponsor of the bill that helped make the deal possible, Rep. Charlie Geren, R-Fort Worth, said that “in order for the City to gain $2.4 million annually from a project without an incentive, that project would need to be appraised at over $275 million on the tax rolls. A single project of that magnitude has not materialized in Tarrant County without an incentive in the last 25 years.”
Sen. Burton might have been better informed about the deal had she not banned lobbyists who represent local governments from her office, including those representing the largest city in her district as well as school districts. She also apparently gave the cold shoulder to the Fort Worth Chamber of Commerce during the legislative session.
Sen. Kelly Hancock, R-North Richland Hills, carried the bill in the senate to extend tax abatements for large data centers. The bill had no fiscal note. On social media, Sen. Hancock has pointed out that even Empower Texans – the group primarily funded by Midland oilman Tim Dunn that has consistently supported Sen. Burton – has recently praised Gov. Abbott’s handling of the Facebook deal.
One of the sticking points in the negotiations was apparently that Facebook wanted both the sales tax exemption as well as Chapter 313 funds, in which the company could have negotiated with local school trustees to get a break on the valuation of their property. Under Chapter 313 of the state tax code, local districts that offer a break like that for a business are made whole through offsetting payments from the state.
Perhaps the most credible point in Sen. Burton’s argument is that the company had narrowed its decision to four finalists and three of them were in Texas. “The company was already likely to come to our state,” Burton said.
But, as one lobbyist who has handled telecom issues for decades told Quorum Report, “Hell, they could put that data center in India and it wouldn’t make a difference to the company. You don’t have any choice but to compete in a global marketplace.”
State Rep. Jason Villalba, R-Dallas, has been one of the most outspoken Republican supporters of state government taking an active role in recruiting more job creators to Texas.
“I am confounded how some elements within the Party of Reagan can voice opposition to state investments that have quantifiably grown our economy and have resulted in the creation of high-paying, Texas jobs,” Villalba said. “For some, the conservative principle of limited and efficient government has been replaced with ineffective, non-existent government. That is neither conservative nor Republican in my book.”
Copyright July 15, 2015, Harvey Kronberg, www.quorumreport.com, All rights are reserved. Reprinted with permission.