HOUSTON, Texas (KTRK) — When companies want a tax break from the City of Houston, they promise to create jobs and invest in the city’s development. But those promises have not always been kept, and now the city council is moving to change that.
The Houston City Council is set to vote Wednesday on an update to its tax abatement ordinance. A tax abatement is a tax break the city offers to encourage companies to move to Houston. Taxpayers cover the difference, and in exchange, companies promise to build, invest, and bring jobs to the city.
Council Member Alejandra Salinas, who helped create the updated ordinance, said that instead of allowing companies to make promises, the city wants to enforce requirements on those getting breaks.
“If a company is going to get a tax break, they really have to make a strong commitment of making actual promises to the community of creating real jobs, with good wages, good benefits, and good programming by the people who will be employed by it,” Salinas said.
Salinas said most Texas cities have similar ordinances, and updating Houston’s would put it on equal footing.
“They’ve actually created a lot more jobs with these requirements in place than we have without these requirements in place,” Salinas said.
The Mayor’s Office of Economic Development is currently responsible for making sure tax break deals are followed and would continue to be under the updated ordinance.
ABC13 reviewed city records and found that since 2004, only 21 tax breaks have been awarded.
Eyewitness News also found multiple instances where the city extended and pushed back investment deadlines when it determined companies getting breaks could not meet them, letting the companies off the hook.
At one point, the city had the ability to go after companies who did not abide by the tax break rules and recover money, but that was never enforced.
Salinas said it is up to the office’s discretion to audit companies that receive breaks.
“It’s also on council members to make sure they hold the department to account and ensure they are following up with them, and if they are not, making sure we raise public awareness to make sure they did do so,” Salinas said. “But we couldn’t work this hard to pass these reforms to not make sure departments follow through.”
ABC13 reached out to Mayor John Whitmire and the Office of Economic Development to ask how they ensure companies that pay less in taxes follow the rules. Neither responded.
Because the office did not respond, it is unclear whether officials plan to change their review process if the ordinance passes.
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