Houston Tax Breaks: New Wage Mandate

The City of Houston has issued only 21 property tax abatements since 2004. City councilmembers passed a new ordinance on Wednesday that changes how those incentives are awarded going forward.

The new rule requires companies seeking tax relief to offer workers prevailing wages or pay comparable to municipal employees. Businesses must also provide health insurance and maintain apprenticeship programs. Councilmember Alejandra Salinas, who helped draft the measure, noted that previous rules only encouraged these standards without making them mandatory.

“For too long, when we gave out tax abatements in the City of Houston, we encouraged but not required companies to meet certain wages and provide certain benefits. Now, that has changed,” Salinas said. “Now, that has changed, and it is law in the City of Houston that if you are going to get a tax abatement, then you have to provide prevailing wages or comparable wages to municipal workers.”

Enforcement will fall to city departments, which hold auditing powers to inspect company records. Firms must submit affidavits declaring they are meeting wage and benefit requirements. The Mayor's Office of Economic Development will oversee compliance under the updated rules.

Local news outlets reviewed city records and found multiple instances where the city extended deadlines for companies that could not meet original requirements. The ordinance applies only to tax abatements granted after Wednesday's vote.

The council voted to finalize the text of the ordinance. The Mayor's Office of Economic Development will begin applying the new enforcement mechanisms to future applications.