A leading microchip company is eyeing central Texas as the site of a potential, $80 billion factory that would be subsidized by decades of tax breaks under a heavily criticized incentive program that’s set to end this year.
In a filing this month to the Texas Comptroller’s Office, the company, Micron Technology of Boise, Idaho, outlined proposals for a sprawling plant in Lockhart, a city of about 15,000 located about 40 miles southeast of Austin. Construction on the first of eight phases would begin in 2023, and the final phase would end in 2042, Micron officials said in their applications for tax breaks.
The eight phases of construction would each create 10 permanent full-time jobs, or 80 total, with salaries of about $71,000 — that is, if the company decides to build at all. Micron does not yet own the land on which it would build the project.
Micron has predicated the proposed facility on whether it receives hundreds of millions of dollars in tax breaks that, because of the phased construction, would allow Micron to avoid paying millions of dollars in annual taxes through the mid-century. The company justified the request by citing Texas' high property tax rates compared to other states. If not granted the breaks, Micron said it may build elsewhere — potentially overseas.
Micron, a maker of computer memory chips, earned profits of nearly $6 billion in its fiscal 2021 on nearly $28 billion in revenues.
Micron applied for the tax breaks through what's known as the Chapter 313 program, which limits or eliminates school property taxes as an incentive to build in Texas. The state then reimburses the school districts for the loss in revenues.
Micron said in a statement that it applied for tax relief ahead of the expiration of the program this year.
“Texas’ Chapter 313 program sunsets in December 2022,” a Micron spokesperson said. “Filing these applications some time ago allows us to preserve options for potential future expansion needed to meet long-term memory demand. We have not made any final decisions regarding the location, timing or scope of any expansion plans.”
The Chapter 313 program has long been derided by government watchdogs and elected officials on both sides of the political aisle because of its lack of job creation requirements, lax oversight and opaque guidelines that have made its true cost almost impossible to gauge.
Critics argue the program places an unfair burden on taxpayers because local taxing bodies are ultimately reimbursed from state coffers — while companies avoid huge tax bills for years, if not decades, into the future.
“It’s an almost all gain, no pain situation, because whatever (school districts) give up, the state is essentially reimbursing them for it,” said Brent Bennett, a policy director for the conservative Texas Public Policy Foundation. “And it has statewide implications because the school districts are not paying for these breaks — the state is.”
A recent Chronicle investigation found that taxpayers have been left to shoulder the program’s ballooning costs, even as many companies failed to create promised jobs. In 2019 alone, at least 30 companies failed to fulfill their job-creation promises but faced no repercussions. Their tax breaks stayed intact, and they paid no fines.
The Chronicle investigation also found that Texas taxpayers paid out roughly $211,600 in tax incentives for every one job created through the program, though other estimates have pegged the actual price tag significantly higher — at about $1.1 million.
Texas lawmakers opted last year to let the Chapter 313 program expire at the end of 2022 — setting off a rush of companies hoping to lock in deals while they can, but without officially committing to breaking ground in the state.
“There are just all of these perverse incentives built into this program,” said Dick Lavine, of the left-leaning policy group Every Texan. "It is costing a huge amount in foregone property tax revenue in order to do basically nothing for the people of Texas.”
(c)2022 the Houston Chronicle. Distributed by Tribune Content Agency, LLC.
