AUSTIN (KXAN) — Austin Independent School District board members are set to make an important vote this week that could give a billion-dollar semiconductor company millions of dollars in tax breaks.

NXP, based in the Netherlands, already has two locations in Austin. It applied for Ch. 313 incentives with AISD in May, according to filings with the Texas Comptroller’s office.

In its filings, NXP said it wants to build a new, multi-story manufacturing plant at its east Austin location.

It said it could be a $2 billion+ investment, but approval of its Ch. 313 application is a factor in determining if it lands in Austin, another state or Asia.

“Alternatively, NXP could choose to partner with other semiconductor manufacturers in
Europe or Asia to develop joint manufacturing ventures or completely outsource the proposed
production increase, respectively,” the company said in its filings.

Opponents said it should pay all of its taxes.

“Everybody needs to pay their fair share: residents, small businesses and especially large businesses that have billion-dollar profit margins,” said Reverent Miles Brandon with Central Texas Interfaith and a pastor at St. Julian of Norwich Episcopal Church.

If the incentives are approved, the company could save $23 million to more than $140 million, according to an analysis by KXAN’s media partners at the Austin Business Journal.

AISD has until Dec. 31st to make its decision since state legislators decided to allow Ch. 313 to expire at the end of the year.

More money for AISD?

The Austin Chamber of Commerce and Opportunity Austin, an economic development initiative, have come out in support of NXP’s Ch. 313 application with AISD.

In a joint statement on Wednesday, the groups said the agreement is the first of its kind available to AISD in over a decade and would bring the district $63.5 million in funding not subject to state recapture.

The groups explained when people pay regular property tax bills, part of that funding goes to the state. Under Ch. 313, all taxes the company does pay stays within the school district.

“AISD will have the freedom to choose how to spend the money, including to increase teacher pay, add campus counseling resources, improve student outcomes or expand technical and career education,” the groups said in a statement. “In addition, the agreement would provide additional tax revenue for the district including $26.5 million to pay down its debt.”

Critics said taxpayers end up making up for those tax incentives by paying more in state taxes.

Central Texas Interfaith, Central Texas building trades and the Workers Defense Project are among the local nonprofits urging AISD trustees to vote “no” on NXP’s Ch. 313 application.

They call Ch. 313 a “failed corporate giveaway program” they helped end during Texas’ last legislative session.

“Not only do corporations get out of paying most of their property taxes [for 10 years] they would otherwise owe for our schools, but the state must replace that revenue with taxes collected from all Texans,” the groups wrote.

Supporters argue the agreement would require the Texas Comptroller and AISD’s financial and legal team to figure out if the taxes NXP does pay will outweigh its tax breaks.

They also said approving this agreement would not take away funding from schools because the funding wouldn’t exist without its presence.

“Chapter 313 generates money for the state by bringing in new taxpayers and tax dollars,” Kroeker said. “Any foregone taxes are revenues the state would never have collected otherwise.”

Critics call on NXP to approach the city and county for tax incentives, instead, since those entities have the power to put in job and safety requirements.

“They also have the newly passed federal CHIPS Act available for them to pursue public funding.  Unlike Chapter 313, these programs do not take potential funding from schoolchildren,” the group stated.

Kroeker with NXP said they’d need to show state and local incentives to qualify for CHIPS Act funding.

“Chapter 313 incentives are among the most significant of the few incentives available to manufacturing companies like NXP located in the city limits of Austin,” he explained.

He said incentives with the city and county are also uncertain.

“This is not a tax giveaway. This is a tax discount. They’re already paying some of the highest property taxes in the state of Texas,” Latson said.

According to filings, the comptroller’s office said NXP’s project “is reasonably likely” to still bring the school district enough tax revenue before 25 years to offset the operations and ad valorem tax revenue the district would lose, through discount, under the agreement.

Job creation?

In a written statement to KXAN, NXP’s head of U.S. regulatory and government affairs, Mark Kroeker, said their “proposal would create a minimum of 350 new jobs at NXP’s ATMC campus, with an avg. annual wage of $71,168.”

Brandon and critics argue the agreement doesn’t give school district officials the power to hold the company accountable for its numbers.

“There is very little power, none really some with the comptroller, none with school districts to hold these corporations accountable… to the job creation numbers,” Brandon said.

“While we want economic development and good jobs in Central Texas, Chapter 313 prohibits school boards from requiring high living wage and worker safety standards as part of these agreements, unlike city and county incentives in which good job standards can be negotiated,” the groups said in a joint statement in November.

Kroeker with NXP said all their manufacturing sites are certified for environmental and occupational health and safety management.

“In addition, as a precondition of all federal funding (per Davis-Bacon Act and US Department of Labor), the CHIPS Act will require awardees to pay federally-approved prevailing wage rates to construction workers on projects,” he added.

Strengthening the U.S. supply chain?

Supporters said expanding semiconductor capacity in Austin would help alleviate shortages and bring down the prices of products they’re used in.

“If we want to have advanced manufacturing in the United States, we need instruments like tax incentives to make it possible because right now it’s about 30% more to operate a plant here than it is overseas,” said Ed Latson, CEO of the Austin Regional Manufacturers Association, which also supports the agreement.

NXP has deep roots in the Austin area going back over 50 years and has had a rich history of engagement and advocacy in many different communities across Austin. NXP employs thousands of employees across its two sites, many of them are parents of past, present and future AISD students. NXP hopes to strengthen its long-term commitment to Austin as it expands its manufacturing footprint in the Austin community and create good-paying jobs with benefits.

Mark Kroeker, Head of U.S. Regulatory and Government Affairs, NXP Semiconductors