Brother Love and the Texas Salvation Show
The great Neil Diamond may have foretold the epitaph for the 88th Texas Legislature all the way back in 1977 when he sang about earthquakes, valley’s shaking and eternal hope.
Oh, and pack up the babies and grab the old ladies. Salvation is not impossible at this show, just unlikely.
The 88th Texas session started with great promise, mostly harmoniously and basking in the glow of a $33 Billion dollar budget surplus. But that loving feeling faded quickly. More on that later..
Make no mistake – there were victories. The 88th Legislature passed a budget. Granted, they had to. House Bill 1, the general approprations bill authorizes the state’s expenditures for the 2024-25 fiscal biennium and is the only constitutionally mandated legislation that lawmakers must pass. HB 1 does the following:
Spends $321.3 billion in all funds.
Commits $17.6 billion toward property tax relief. This represents well over half of the $32.7 billion fund balance going into this session.
Oh that — it won’t end. Lawmakers are still debating the final parameters of the property tax relief package in the first special session called by Governor Greg Abbott. Stand by..
Back on the ranch, the business community can celebrate bills that did get to the finish line related to job creation incentives, industry investments, technology infrastructure, education and workforce development.
Corporate Incentives
A priority for many business leaders was the passage of Chapter 403 property tax incentives for large manufacturing and energy projects. The legislation creating new abatements for school property taxes has since been signed into law by Abbott as House Bill 5.
The program serves as a successor to the Chapter 313 program that came to an end in 2022 and had been used in recent years by companies like Tesla Inc. and Samsung Electronicsto set up large manufacturing plants in the Austin area. The new incentives program is expected to take full effect January 1, 2024.
I previously wrote and posted about this program here: https://www.linkedin.com/feed/update/urn:li:activity:7072576014052163585/
Higher Education and Emerging Technology
According to “Texas 2036”, the 88th Legislature made a series of key investments in higher education and emerging technologies to keep Texas at the forefront of innovation and job growth in the years to come. The session’s key funding bills — HB 1, the state budget, and SB 30, the supplemental appropriations bill — directed significant dollars for investment in higher education, including:
$9.9 billion spent on formula funding across all public colleges and universities;
$1.5 billion for various state financial aid programs; and
$3 billion in seed funding for the new Texas University Fund, which will provide support for research funding for emerging research universities.
These dollars are designed to further development of a skilled workforce.
Fortunately, multiple bills on emerging technologies were also passed this session to encourage collaboration between higher education and industry. These bills are supported by an additional $1.7 billion, which includes:
$698.3 million for semiconductor development
$666.4 million for higher education electronics research and development; and
$350 million for aerospace research and development
Together, the $14.4 billion for higher education and the $1.7 billion for future technologies will support the state’s full potential for innovative technological developments.
Semiconductors
The Texas CHIPS Act launches the Texas Semiconductor Innovation Consortium, an organization that will work to advance semiconductor research, design, and manufacturing in the state, as well as the grant-making Texas Semiconductor Innovation Fund, which has $698 million in dedicated funding.
HB 5174 passed the Legislature and is awaiting the governor’s signature to become law. It would establish the Texas Semiconductor Innovation Consortium, which would take on the task of formulating the strategy for advancing the state’s leadership in semiconductor research, design and manufacturing. HB 5174 also directs $698.3 million to award grant funding for semiconductor economic development as well as research and design projects.
The state legislation complements the federal CHIPS Act passed last year and the state bill has been signed into law by Gov. Abbott and signals the federal government that Texas is ready to support the growth of the industry and allow Texas to leverage federal dollars.
The global demand for semiconductors – the computer chips that power modern technology like phones, refrigerators and cars – has only continued to grow. The federal CHIPS and Science Act and its $52.7 billion for semiconductor research, manufacturing and workforce development aims to help meet this demand.
Given recent announcements by world-class businesses, from the $17 billion Samsung semiconductor factory in Taylor to the $30 billion Texas Instruments plant expansion in Sherman, Texas has the potential to become a global leader in the semiconductor industry. However, drawing down the CHIPS Act federal funding will require coordinated and strategic planning and partnerships between colleges and universities, state legislators and agencies, and industry leaders.
In addition, SB 30 provides $440 million to the University of Texas at Austin to establish the Texas Institute of Electronics and $226.4 million to the Texas A&M University System for quantum and artificial intelligence chip fabrication and the Center for Microdevices and Systems. Both of these initiatives can lend to and benefit from semiconductor research and development.
Together with the consortium’s grant funding, colleges and universities’ formula and research funding as well as project-specific appropriations like that for UT Austin and the A&M System can be used to establish the public-private partnerships needed to meet the requirements of the CHIPS Act, thereby maximizing the state’s ability to draw down federal funding.
Tech Infrastructure
Urban and rural Texas will benefit from with a $1.5 billion appropriation to expand the state’s internet connectivity and bridge the proverbial “digital divide.”
The Texas Infrastructure Fund, as approved by the House and Senate, allocates $175 million to be invested in the state’s E-911 network and $75 million to fund a telephone pole replacement program.
It also dedicates $1.2 billion toward broadband deployment, which will yield business opportunities for service providers.
Workforce Development
House Bill 8 changes how Texas funds community colleges and will increase funding to two-year institutions across the state and toward an outcomes-focused, industry-aligned model. Educating students to take on essential roles in building the infrastructure needed to support continued growth in Texas.
Community colleges have become critical partners for many of the region’s largest employers. The legislation will also create scholarships to support high-demand industries so Texas has skilled workers to fill open positions.
Another legislative victory on this front was the decision by lawmakers to create a permanent endowment for Texas State Technical College — which has a campus in Williamson County north of Austin — and authorizing the creation of a new campus in Comal County or Guadalupe County, between Austin and San Antonio.
Texas- Big in Space
The state’s ties to the aerospace industry could grow with the creation of the Texas Space Commission and the Aerospace Research and Space Economy Consortium, a $350 million public investment program. Other industries where lawmakers laid out their intent to establish partnerships between colleges and universities and industry leaders are the aerospace and automotive industries. Texas is proactively staking its position as a leader in future technologies for both industries:
The NASA Johnson Space Center (JSC) is actively looking to expand available aerospace jobs in Texas, while business and city leaders have joined Texas 2036 in identifying the need for a Lone Star Space Plan.
North Texas is showcasing a partnership between industry, government and higher education with the University of North Texas conducting research and development on flying vehicles.
According to the Austin Business Journal, the Legislature recognized the need for strategic planning and organization to successfully foster these industries by passing HB 3447 to establish the Texas Space Commission and strengthen the state’s leadership in civil, commercial and military aerospace activity. HB 3447 provides $350 million to build facilities adjacent to the JSC and to create the Space Exploration and Aeronautics Research Fund.
Additionally, the Legislature passed SB 2144, developing the Advanced Air Mobility Advisory Committee. This committee aims to identify statutory changes needed to facilitate implementation of advanced air technologies in Texas.
HB 3447 and SB 2144 require close collaboration with Texas colleges and universities. The requirements include public-private research for technology development and education and training for workforce development. These legislative charges are another area where these stakeholders can leverage these higher education investments to ensure the success of the state’s strategic planning and research efforts on future technologies.
Although the Legislature appropriated funds to explicitly support its legislative charges relating to future technologies, it would be prudent for colleges and universities, industry leaders and policymakers to take advantage of the multiple streams of available funding in a coordinated manner.
The billions in higher education formula, financial aid and research funding approved by the Legislature can enhance the research and workforce development initiatives that will stem from the partnerships between government and industry, critical to Texas’ future growth.
In the final analysis, is Texas still the best place in America for business and keeping up with increasing national and international competition? Check that box.
With a final deal on property taxes, lawmakers can in fact salvage the embarrassment of riches and do something for the babies, old ladies, and the rest of us.