Home Latest News In Blow to Big Oil, Corporate Subsidies Quietly Die in Texas

In Blow to Big Oil, Corporate Subsidies Quietly Die in Texas


when the organizer set To reverse Texas’ giveaway program for the oil and gas industry, he had a long game on his mind. Over 20 years, the tax exemption program known as Chapter 313 distributed $10 billion in tax deductions to corporations operating in Texas – petrochemical firms were the biggest winners. This year, for the first time in a decade, the program was slated for reauthorization. The organizers decided to challenge it for the first time.

Beginning last week, as Texas’s biennial legislative session came to an end, organizers’ objectives remained modest. Doug Greco, principal organizer of Central Texas Interfaith, one of the organizations struggling to end the subsidy program, said, “We thought it would be a win if the two-year reunification passed so that we could tentatively organize the event.” can do.”

Last Thursday at 4 a.m., it became clear that something unexpected was happening: the re-authorization deadline had passed. “The bill never came,” Greco told The Intercept. Organizers remained vigilant until the legislative session officially closed at midnight on Monday, but the reauthorization did not materialise.

The lapse in authorization coincided with three other significant setbacks for the oil and gas corporations. a dutch court Governance That shale oil is responsible for its climate impacts and should reduce its greenhouse gas emissions. Exxon Mobil Shareholders is removed Two members of the corporation’s board of directors were ousted for their failures on the climate crisis. and Chevron shareholders voted to force the company cut its emission.

The failure to reauthorize subsidies in Texas came under the radar, with all four developments coming in a single day. Taken together, the moves demonstrate changing opinions about climate change and fossil fuel companies; One analyst described the news about Shell, Exxon and Chevron as “A new era begins for Big OilBetween court rulings, shareholder activism, and Texas legislators’ reluctance to continue unpopular handouts to oil companies, the public may no longer be ready to go on with business as usual for fossil fuel firms.

“People are no longer agreeing to the dogma that tax breaks create jobs. Many people see that the monarch no longer has clothes,” said Greg LeRoy, executive director of Good Jobs First, which tracks corporate subsidies. “These extractive industries have been extracting from the tax base as well. People feel it’s too corrosive.”

The loss of Texas Chapter 313 is the second recent victory in fossil fuel states against billions of dollars in oil and gas industry subsidies. Last fall, organizers in Louisiana backed a ballot initiative designed to counteract dramatic reforms to the state’s industry giveaway program. In a state that relies heavily on Republicans, the people voted for the constitutional amendment by a landslide.

Broderick Bagert, who helped organize the Louisiana effort, looks at what happened in Texas as part of a turning of the tide in a region where the industry has long ruled. “In many cases, it’s not that these battles are lost – they just haven’t been fought,” he said. “What you see for the first time are battles being fought.”

“These extractive industries have been extracting from the tax base as well. People feel it’s too corrosive.”

He said the politics of the problem is simple: “It stinks for the most powerful and wealthy institutions in our country and in our world to get special deals that the common people don’t. As it was coined that way.” , sudden politics that seemed impossible to resist to crumble and change before your eyes.”

Bagert noted that Louisiana and Texas are two of a handful of states whose industries will determine what our climate future will look like. “The question of these subsidies is being compounded by the question of whether these changes in energy production that we need to save the planet are being made in a timely manner to save the planet,” he said. “It all boils down to the cost of energy. Once industries have to bear the full cost of their production, including emissions and taxes and everything else that has been subsidized, it is no longer beneficial, and when things are starting to happen.”

How Texas Subsidies Broke Down

Texas’ Chapter 313 program allows corporations building new facilities to apply to local school boards for property tax exemptions. The school board rarely said no – likely because the local school district didn’t stand to lose the money. Instead, the property tax money that was waived would have gone to state funds, which should have particularly benefited over-expanded urban school districts. One Analysis Interfaith by Central Texas found these urban districts to be the biggest losers: Houston and Dallas school districts each lost more than $20 million annually from tax exemptions.

The oil, gas and petrochemical industries clearly won big. Two liquefied natural gas companies, Corpus Christi Liquefaction, a subsidiary of Chenier, and Freeport LNG top the list with more than $55 million in subsidies annually.

The subsidy program was designed to attract businesses that would not otherwise make their home in Texas. In deciding approval for the exemption, one condition was that the subsidy was a determining factor in whether a company would manufacture in the state. However, an analysis by Houston Chronicle Shown several examples of companies, such as pipeline giant Energy Transfer, announcing a project before applying for an exemption. And many subsidy recipients were doing Texas-specific projects – the result of the state’s fracking boom at Eagle Ford and Permian shale formations using Gulf Coast export facilities – so they were likely to set up ventures elsewhere if subsidies didn’t come through. Didn’t keep

The returns of the program were also not impressive. If measured by job creation, it costs the state at least $211,600 per job, according to the program’s calculations. Houston Chronicle.

“No one really questioned the program,” said Greco of the Central Texas Interfaith. The reauthorization was a once in a decade opportunity to challenge it. “We knew in our guts that the program was just a blank check, but we are also very calm about the realities of the Texas legislature.”

In Texas, the legislative session lasts only five months every two years. The clock was ticking.

An unlikely coalition that emerged from the political spectrum, including the right-wing Texas Public Policy Foundation, Progressive Every Texan, and Greco’s group, which does non-partisan political work among religious groups, began to organize against the subsidies.

When the session began, the bills on the table included one that would not only have offered a 10-year waiver, but would have expanded the program to provide rebates for repairs and modernization of facilities already underway. By the time a subsidy bill was passed in the House, organizers had reduced it to two years of beautification. In the Senate, oil and gas lobbyists were aiming to extend it to three years, which would take them to the next legislative session.

As legislators met in a closed session to scrap the bill, Greco heard from an aide. “One of my organizers said there were 20 oil and gas lobbyists standing outside this committee room,” he recalled.

“We know there’s going to be a big conversation on the interim – we’re not under the illusion that it won’t be a long-term fight.”

Former Government Rick Perry, an Energy Transfer Board member, tweeted His support for reauthorization. But the bill did not come as the last week of the session had passed. “It became clear that the program’s reputation had been damaged,” Greco said.

In 19 months, Texas’ subsidy program will end, but that doesn’t mean the fight is over. “We know there’s going to be a big conversation on the interim – we’re not under the illusion that it won’t be a long-term battle,” Greco said. However, organizers believe the subsidy’s defeat marks a change: “The table has been reset.”

The battle continues in the new area

Established in the state constitution itself, Louisiana’s industrial tax exemption program is even more deeply embedded in state policy than Texas’ Chapter 313 and has represented the rubber stamp even more.

In Louisiana, some regulations carried a load of tax exemptions and the State Board of Commerce and Industry would regularly approve a list of exemption requests “en globo”—all at once, during their meetings.

Organizers of the Bagarts Together Louisiana group note that the state has some benefits from the tax exemption. Jobs. The groups decided that the best approach to such deep subsidies was to take advantage of a loophole stating that exemptions could only happen “with the approval of the governor”. During John Bel Edwards’ campaign for governor in 2015, Louisiana organizers began to pressure him to withdraw approval. “To our surprise, Bel Edwards moved quickly after being selected,” Bagert said.

The summer after Edwards’ election, he announced that the program would be reformed. Instead of a rubber stamp from the state board, corporations must request exemptions from parish governing bodies, municipal governing bodies, school boards and sheriffs who will lose the property tax gifted in the exemption.

The oil, gas and petrochemical industry was blindsided, and lobbyists from the Louisiana Association of Business and Industry, the Louisiana Chemical Association, and the Louisiana Mid-Continent Oil and Gas Association have been fighting the change ever since the change went into effect. Bagert estimated that 20 to 30 pieces of proposed legislation in a typical legislative session attempt to undo the reforms.

“Their efforts to defeat the reforms have mostly been defeated.”

However, as in Texas, the mistake of reversing subsidies has changed the game. Now that some $350 million in new revenue is already flowing into the coffers of local governments, it will be politically difficult to restore subsidies, according to Bagert. Voters have repeatedly rejected the industry’s efforts. For example, industry groups bet big on the most recent gubernatorial race in 2019, backing Republican Eddie Rispon, but he lost. and a natural gas industry-backed ballot initiative for a new property tax exemption failed Among Louisiana voters last fall.

The industry hasn’t given up though – organizers have beat several bills this season and are still fighting One that would reduce transparency for the event – ​​the organizers note that they are on a better footing. “It’s around margin,” said Bagert of the industry, pushing. “Their efforts to defeat the reforms have mostly been defeated.”

Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of knews.uk and knews.uk does not assume any responsibility or liability for the same.

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