Honorable Morgan Meyer, Chair, House Committee on Ways & Means
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB105 by Guillen (relating to the Texas Jobs, Energy, Technology, and Innovation Act.), Committee Report 1st House, Substituted
Estimated Two-year Net Impact to General Revenue Related Funds for HB105, Committee Report 1st House, Substituted: a negative impact of ($4,658,000) through the biennium ending August 31, 2027.
However, the negative impact would increase to ($143.9 million) in the biennium ending August 31, 2035.
General Revenue-Related Funds, Ten- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026
$0
2027
($4,658,000)
2028
($12,770,000)
2029
($34,903,000)
2030
($48,178,000)
2031
($74,061,000)
2032
($69,635,000)
2033
($82,892,000)
2034
($67,000,000)
2035
($76,903,000)
All Funds, Ten-Year Impact:
Fiscal Year
Probable Savings/(Cost) from Foundation School Fund 193
Probable Revenue Gain/(Loss) from School Districts Levy Loss
2026
$0
$0
2027
($4,658,000)
($4,990,000)
2028
($12,770,000)
($22,054,000)
2029
($34,903,000)
($57,714,000)
2030
($48,178,000)
($86,775,000)
2031
($74,061,000)
($127,016,000)
2032
($69,635,000)
($137,872,000)
2033
($82,892,000)
($173,925,000)
2034
($67,000,000)
($183,283,000)
2035
($76,903,000)
($216,234,000)
Fiscal Analysis
The bill would add “Priority project” to the Texas Jobs, Energy, Technology, and Innovation (JETI) program as an eligible project. A priority project would be defined as an eligible project that agrees to make at least $750 million in investment by the end of the first tax year of the incentive period.
The bill would remove electric generation facilities and priority projects from the existing job requirements and would remove electric generation facilities from the compelling factor in a competitive site selection determination requirements.
The bill would amend the following wage requirements of the JETI program: • average annual wage requirements from all jobs to only the required jobs; • the wage standard from the applicable industry sector to the county average annual wage for manufacturing jobs in the county where the project is located; • include construction jobs in reported wages; and • the reporting requirements from all jobs to only required jobs.
The bill would only apply to applications submitted on or after the effective date.
The bill would take effect September 1, 2025.
Methodology
According to the Comptroller's office, the eligibility changes proposed in this bill could result in substantial growth in the JETI program. The bill would add “Priority Projects”; which are defined as projects that invest a minimum of $750 million by the end of the first tax year of the incentive period. Priority projects would be exempted from all program job requirements.
The bill would also remove electric generation facilities from the job and compelling factor requirements, and reduce the program wage requirements for all projects. Current JETI statute requires that wages for the total jobs in connection with the project must exceed 110 percent of the county average applicable industry sector annual wages. This bill would change the wage requirement from total jobs to only required jobs.
The Comptroller's office reviewed various pending Texas projects that meet the criteria for the proposed changes and identified 14 model potential projects with parameters that may not be eligible for the current program, but would likely be recommended under the proposed changes in the bill.
The model projects include: • Three projects eligible under both the priority project and wage changes; • Five that have not applied to JETI due to issues meeting the current wage requirements; and • Six utility projects that may not be eligible for a JETI recommendation under the current compelling factor requirements.
Based on publicly available information, the Comptroller's office estimated the project investment and market values, annual M&O taxes, and the annual M&O value loss due to a potential JETI limitation. This information was used to calculate the total estimated value loss to school districts. The Comptroller's office assumes an 8 percent annual growth rate.
According to the Comptroller's office, the largest impact would likely result from the priority project and wage exemptions.
Under provisions of the Education Code, the school district tax revenue loss is partially transferred to the state. The estimated cost to the Foundation School Program (FSP) is $4.7 million in fiscal year 2027, $12.8 million in fiscal year 2028, increasing to $76.9 million in fiscal year 2035.
Local Government Impact
The provisions of the bill apply only to school districts.