New Report: Tax Handouts to Wealthy LNG Developers Deprive Texas Communities and Schools of Needed Funds

"The People Always Pay" Exposes Harms of LNG Tax Cuts
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TEXAS - A new report out today details how the export industry for liquefied methane gas receives billions of dollars in tax breaks in Texas, depriving local communities of much-needed funds and school districts statewide of a key source of education funding. As Donald Trump praises LNG export projects and vows to undo safeguards that protect people from the worst pollution, this report brings much-needed scrutiny to the practice of giving wealthy LNG corporations millions of dollars per job, which sacrifices tax revenue for local infrastructure and services – from roads and bridges to hospitals and schools – and ultimately damages the working class this industry claims to help.

Using data and in-depth interviews with community members, The People Always Pay: Tax Breaks Force Gulf Communities to Subsidize the LNG Industry tells the story of how tax breaks result in economic and social harm in Gulf Coast states including Texas. It was recently submitted to the Department of Energy to inform the agency’s pending updated studies used to determine if an LNG project is in the public interest. 

As detailed in the report, LNG corporations create so few permanent jobs in exchange for these tax breaks that every single job costs the local community millions of dollars in subsidies to already-wealthy developers. On top of that, each Texas facility releases significant pollution responsible for numerous health conditions, poses explosion risks, uses precious water resources, disrupts local fishing and tourism industries, and threatens wildlife and ecosystems – all of which degrade the quality of life and raise the cost of healthcare, utilities, and county services for the same communities. 

LOCAL IMPACTS

The report looks at two primary tax abatement programs in Texas that have been granted to LNG export projects. Local entities are the ones voting on specific tax abatement measures, while the Republican-led Texas Legislature created the programs that open the door for corporate handouts.

  • Chapter 312 Property Tax Abatement Program: This program allows Texas counties and other local entities to abate up to 100% of a corporation’s property tax bill for up to 10 years. According to the report, in 2021, an estimated $9 billion of property had taxes abated under this program. The state does not disclose the value of specific agreements, so it is difficult to calculate the amount of particular exemptions.

  • Chapter 313 Value Limitation Agreement Program: Four Texas terminals receive $2.1 billion in tax breaks under this program. School districts let companies limit the taxable value of their property, and this lost revenue impacts Texans statewide due to the way the state redistributes school funding. The Texas Legislature recently voted to replace Chapter 313 with a new tax abatement program that offers similar corporate handouts – and it excludes solar, wind, and battery storage projects. Meanwhile, many school districts around the state face funding shortfalls and school finance is expected to be a huge issue in the upcoming 2025 Legislative Session. 

Impacted Texas communities include:

  • Brownsville (Cameron County): Point Isabel ISD rejected Chapter 313 tax abatements for the two LNG terminals proposed in Brownsville, which would threaten Indigenous sacred sites and ecosystems. Both developers, however, are continuing construction amid a recent court case loss and just got big deals from Cameron County under Chapter 312 to avoid paying property taxes.

  • Port Arthur and the Golden Triangle (Jefferson County): Despite the area’s chronic health issues and crumbling infrastructure, Golden Pass LNG and Port Arthur LNG avoid paying 100% of their property taxes for 10 years under a Chapter 312 agreement with Jefferson County. They also receive a combined $929 million in corporate subsidies under Chapter 313. Port Arthur LNG would receive a staggering $35 million for every one job it promises to create under Chapter 313. 

  • Freeport (Brazoria County): Freeport LNG’s Chapter 312 agreement with Brazoria County allows it to avoid paying 100% of property taxes over 10 years. An analysis discussed in the report has found that this results in nearly $149 million in avoided taxes. Freeport LNG’s Chapter 313 agreements amount to a $447 million subsidy – one-fifth of which could be averted if the terminal’s proposed expansion is never built.

  • Corpus Christi (San Patricio and Nueces Counties): A recent analysis detailed in the report estimates that corporate tax savings across all industries under Chapter 312 in Brazoria, San Patricio, and Nueces counties amount to $967 million. The ever-expanding Corpus Christi LNG terminal has Chapter 313 agreements that would grant a $762 million subsidy, $138 million of which could be avoided if its latest expansion is not approved. 

STATEMENTS

“People who live along the Gulf Coast know that we have a very special place to call home, but  unfortunately dirty LNG developers only see dollar signs when they look at our shorelines,” said Cyndi Valdes, an Ingleside resident and executive director of the Coastal Watch Association. “They come in promising the moon and stars and convince elected officials to hand out millions in corporate welfare, but all they deliver is a handful of jobs – far fewer than advertised – and pollution that harms our air and water and sense of home for generations. Looking at the communities targeted by LNG developers, you’ll understand that economic prosperity is only found in corporate boardrooms and shareholder conferences out of town. The  middle class and our coastal environment pay big for these disgraceful tax breaks.” 

“In Texas it is common to disguise corporate tax handouts as job creation – and that’s exactly what is happening in the Rio Grande Valley,” said Bekah Hinojosa of the South Texas Environmental Justice Network, which has campaigned against these tax breaks. “Cameron County, for example, voted to allow one fossil fuel developer to avoid paying 100% of its property taxes for 10 years – money that should instead be spent on critical community services. Tax breaks for LNG corporations result in pollution that causes numerous health conditions and premature deaths and degrades the environment and sacred land of the Carrizo Comecrudo Tribe of Texas. Meanwhile, they shift a huge burden to our low-income and middle-class people who must pay much more to get healthcare for themselves and their kids and to sustain basic county services. If the LNG industry wants to come in and ruin our air and water, tear up our roads, and deplete our water resources, they should at least pay their fair share of taxes.” 

“Last legislative session – despite our opposition with community and labor organizations – Texas legislators extended school property tax giveaways to LNG developers for another 10 years despite the fact that those companies would already locate along the Gulf Coast without the tax breaks. This was an especially bad deal considering that the LNG corporations will add an even bigger pollution burden to low-income communities,” noted Cyrus Reed, Legislative and Conservation Director of the Lone Star Chapter of the Sierra Club. “LNG developers in Texas can continue to seek corporate handouts without having to account for the pollution, safety, and climate risks they impose on folks. The Legislature also prevented renewable energy and battery storage companies from seeking these same benefits, even though they pollute less and bring down energy bills for consumers, showing just how much our Texas politicians continue to be influenced by oil and gas.”

“For communities situated near LNG export projects, there are few facets of life that are not negatively impacted by these facilities. Yet, local and state officials forgo vast sums of public money in tax giveaways, sacrificing everything from public health to local fishing and tourism industries, in exchange for inadequate promises of jobs or investment,” said Alison Kirsch, Sierra Club senior analyst and report author. “This lopsided deal with the industry means that communities are left cleaning up the mess, literally and figuratively, without proper resources.”

The People Always Pay is being released by Sierra Club with Better Brazoria, For a Better Bayou, Healthy Gulf, Ingleside on the Bay Coastal Watch Association, Port Arthur Community Action Network, Sierra Club Delta Chapter, Sierra Club Lone Star Chapter, South Texas Environmental Justice Network, and The Vessel Project of Louisiana.

Read the full report at sc.org/LNGtax

About the Sierra Club

The Sierra Club is America’s largest and most influential grassroots environmental organization, with millions of members and supporters. In addition to protecting every person's right to get outdoors and access the healing power of nature, the Sierra Club works to promote clean energy, safeguard the health of our communities, protect wildlife, and preserve our remaining wild places through grassroots activism, public education, lobbying, and legal action. For more information, visit www.sierraclub.org.