The effects of the Texas school property tax abatement program on public school finance

This report explores the relationship between school property tax abatements, property wealth, and industrial firm siting in Texas. Texas adopted its school property tax abatement program, known as Chapter 313, in 2001. This report employs a mixed-methods approach to evaluate the factors that predict districts’ participation in the Chapter 313 program in Texas, as well as to assess abatements’ effect on industrial firm investment. The study is modeled after an evaluation of the Indiana school property tax abatement program conducted by Dalehite in 2005. Using a quasi-experimental, propensity score matching research design, I find that industrial property wealth predicts abatement program participation throughout the lifespan of the program. A district’s donor status in the state’s redistributive school finance system as well as its urban status predict abatement program participation early in the program’s operation from 2003-2007. Lastly, I find no evidence of a relationship between abatement participation and growth in industrial property values. Findings suggest that some features of the Chapter 313 program may exacerbate inequity and confer a disproportionate share of benefits, such as payments-in-lieu of taxes and state aid subsidies, to property-wealthy districts. Moreover, the state is currently investing billions of dollars into the program without evidence that these investments produce the intended industrial property investment in Texas communities.