BILL ANALYSIS

 

 

 

C.S.H.B. 105

By: Guillen

Ways & Means

Committee Report (Substituted)

 

 

 

BACKGROUND AND PURPOSE

 

The 88th Texas Legislature passed H.B. 5, which established the Texas Jobs, Energy, Technology, and Innovation (JETI) Act and authorized a limited property tax abatement to attract capital intensive investments and job creation to the state. The bill author has informed the committee that, after JETI's implementation, other states have announced tax incentives that are more competitive than JETI's incentives and have ramped up their business recruitment and the author has further informed the committee that after one year the comptroller of public accounts has only received 14 applications with just two projects being officially approved. C.S.H.B. 105 seeks to address the non-competitive nature of the program, incentivize new dispatchable electricity projects, and make the program more attractive for capital intensive business investment.

 

CRIMINAL JUSTICE IMPACT

 

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

 

RULEMAKING AUTHORITY

 

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

 

ANALYSIS

 

C.S.H.B. 105 amends the Government Code, with respect to the Texas Jobs, Energy, Technology, and Innovation Act (JETI), to make certain revisions to JETI. Accordingly, the bill does the following:

·         includes as an eligible project under JETI a project for which an applicant agrees to make an investment in an amount of at least $750 million by the end of the first tax year of the incentive period prescribed by the agreement pertaining to the project, designates such a project as a "priority project," and expressly excepts such a project from a JETI jobs requirement;

·         requires the comptroller of public accounts to notify a public school district when an application to construct any project applicable to the district is received;

·         makes inapplicable to a project that is a facility related to the provision of utility services, including an electric generation facility that is considered to be dispatchable because the facility's output can be controlled primarily by forces under human control, the JETI requirement that the comptroller find, before recommending approval of an agreement under JETI,  that the agreement for a project is a compelling factor in a competitive site selection determination and that, in the absence of the agreement, the applicant would not make the proposed investment in Texas; and

·         changes the manner by which the average annual wage paid to persons employed by the applicant is calculated with respect to an agreement entered into under JETI between the governor, a public school district, and an applicant pertaining to a project, as follows:

o   clarifies that the average annual wage paid to all persons employed by the applicant be in required jobs in connection with the project;

o   replaces the requirement for the average annual wage of all such persons to exceed 110 percent of the average annual wage for all jobs in the applicable industry sector during the most recent four quarters for which data is available, as computed by the Texas Workforce Commission (TWC), with a requirement for the average annual wage of all such persons to be not less than 110 percent of the county average annual wage for manufacturing jobs in the county where the project is located during the most recent four quarters for which data is available, as computed by TWC; and

o   replaces the requirement for the applicant's average annual wage to equal the quotient of the applicant's total wages paid, other than wages paid for construction jobs, and the applicant's number of total jobs reported under applicable state law with a requirement for the applicant's average annual wage to equal the quotient of the applicant's total wages paid to all persons holding required jobs and the applicant's number of required jobs as certified under state law.

 

C.S.H.B. 105 applies only to an agreement entered into under the Texas Jobs, Energy, Technology, and Innovation Act pursuant to an application submitted under those provisions on or after bill's the effective date. Such an agreement entered into under those provisions pursuant to an application submitted before the bill's effective date is governed by the law in effect on the date the application was submitted, and the former law is continued in effect for that purpose.

 

EFFECTIVE DATE

 

September 1, 2025.

 

COMPARISON OF INTRODUCED AND SUBSTITUTE

 

While C.S.H.B. 105 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

 

The substitute omits the following provisions present in the introduced:

·         a provision that, with respect to the applicability of requirements relating to jobs and investment to which an applicant must agree in order to be eligible to enter into an agreement under JETI, changed the requirement that is expressly inapplicable to certain eligible projects from a jobs requirement prescribed under those provisions to a jobs and investment requirement; and

·         a provision that revised the definition of "qualified opportunity zone" by specifying that the area designated as such by the secretary of the U.S. Treasury included in the definition is an area designated as such as of January 1, 2026.

 

The substitute includes a provision absent from the introduced that requires the comptroller to notify a public school district when an application to construct an eligible project applicable to the district is received.

 

While the substitute and the introduced both make inapplicable to a project that is a facility related to the provision of utility services, including an electric generation facility that is considered to be dispatchable because the facility's output can be controlled primarily by forces under human control, the JETI requirement that the comptroller find, before recommending approval of an agreement under JETI,  that the agreement for a project is a compelling factor in a competitive site selection determination and that, in the absence of the agreement, the applicant would not make the proposed investment in Texas, the introduced also made the requirement for the finding inapplicable to a priority project, as defined by the bill.