Economic Development Corporation Report,
2018 to 2019Executive Summary

The Comptroller’s office administers the economic development sales tax program and offers various economic development tools and resources to assist businesses, local government entities and economic development professionals in expanding the Texas economy.

The Comptroller’s Data Analysis and Transparency Division supports local governments’ economic development efforts in Texas. The division offers technical assistance, informative publications, webinars and workshops on tax-related state and local economic development programs the Comptroller’s office administers. Division staff members collaborate with other state agencies to offer economic development professionals accredited training, including the Basic Economic Development Course and the statutorily required Economic Development Sales Tax Seminar. 

The Comptroller’s office also offers an online resource, Comptroller.Texas.Gov, which provides a wealth of information on state and local finances and numerous other tools and data sources to support economic growth in communities throughout Texas. Comptroller.Texas.Gov is a one-stop center providing key statistics affecting the Texas economy, including economic news, forecasts and more.

Due to the agency’s role as administrator of the economic development sales tax programs, the Legislature has charged the Comptroller’s office with compiling this informative report on economic development corporations (EDCs) each biennium.

History of Type A and Type B Economic Development Corporations

Since the adoption of the Development Corporation Act in 1979, Texas law has allowed cities to form EDCs to attract businesses and create job opportunities. The Legislature amended the act in 1989 and again in 1991 to allow eligible cities to adopt dedicated sales and use taxes to fund EDCs. In 2009, the act was recodified to Local Government Code Chapters 501 through 505. With the recodification, EDCs formerly known as 4A and 4B corporations are now referred to as “Type A” and “Type B” corporations, respectively.

The Difference Between Type A and Type B

The Type A corporation essentially is limited to funding industrial and manufacturing facilities, research and development facilities, recycling facilities, distribution centers, small warehouse facilities, military facilities, job training, targeted infrastructure, regional or national headquarters facilities, business airport facilities and port-related facilities. Expenditures for such infrastructure must be related to an authorized activity under the act.

The statute also allows a Type A EDC to undertake most Type B projects without having to change from a Type A to a Type B corporation. To make such a change, the city council must publish notice, hold a public hearing and obtain voter approval. Voter approval isn’t required if the Type A corporation is located in a city that also operates a Type B corporation and has a population of 7,500 or less.

At the end of fiscal 2019, 211 cities had Type A economic development corporations.

A Type B corporation offers greater flexibility in revenue use. Generally, allowable Type B expenditures include those available under Type A as well as projects that contribute to the quality of life in the community, such as park-related facilities, professional and amateur sports and athletic facilities, tourism and entertainment facilities, affordable housing or other improvements that promote new or expanded business enterprises that create or retain primary jobs. At the end of fiscal 2019, 516 cities operated Type B EDCs.

Cities must seek voter approval to levy a Type A, Type B or both economic development sales taxes. State law requires a city that adopts either or both to establish a corporation to administer and oversee the expenditure of the sales tax proceeds. A board of directors appointed by and serving at the pleasure of the city’s governing body oversees the EDC. The city must deliver economic development sales tax revenues to the EDC upon receipt of the funds from the Comptroller’s office. The EDC board of directors is responsible for all decisions regarding the use of these revenues and projects undertaken. The city council retains final oversight authority, though, and must approve the EDC’s programs and expenditures.

Reporting Requirement

In 1997, the Texas Legislature added a provision to the Development Corporation Act that requires EDCs to report their financial activities to the Comptroller’s office. In each even-numbered year since 1998, the Comptroller’s office has prepared a report for the Legislature summarizing the data submitted by EDCs during the preceding biennium. The statute requires all Type A and B corporations to file an annual report with the Comptroller’s office by April 1 of each year, with data from the previous fiscal year.

In December of each year, the Comptroller’s office emails a notice to all known Type A and B corporations, including those in cities that held successful elections for the adoption of one or both sales taxes in the prior year. The notice contains an electronic access code and instructions for filing the report.

The Act restricts the report length to a single page. To improve reporting efficiency and accuracy, each corporation may file electronically only via a secure website with a unique log-in code that changes annually. The form and reporting history for each corporation may be viewed on the Comptroller’s website.

In 2020, the Comptroller’s office introduced the EDC Report Data Dashboard. This visualization tool gives users the option to view individual corporation data or to create comparison reports for any group of EDCs for any fiscal year from 1997 to present. Data may be viewed, printed or downloaded in tabular and graphic format. The tool also has a directory of EDCs with contact information to facilitate better communication between EDCs, business prospects and the public.

The Type A and Type B Sales Tax Data and Analysis

Although 727 EDCs operated in the state in both fiscal years, EDCs filed 727 reports for fiscal 2018, but only 726 reports for fiscal 2019. The city of Robstown imposes a Type B sales tax, but did not file a report for fiscal 2019. Robstown is excluded from the analysis for that fiscal year.

State law allows cities to have EDCs not funded by sales tax. The city of Anna has a Type A corporation, and the city of Fort Worth has a Type B corporation funded solely by user fees and other miscellaneous revenue.

In all, total reported corporation revenue rose by 6 percent from the prior biennium, to more than $2.2 billion. In the same period, expenditures rose by 1.5 percent, to nearly $2 billion. This report provides a statewide analysis of EDC revenue, expenditures, capital assets, economic development objectives and year-end fund balances for fiscal 2018 and 2019. The full dataset is available at the EDC Report Data Dashboard.

Sources of Funds

In fiscal 2018 and 2019, sales tax was the major source of revenue for both types of EDCs. These receipts totaled $823 million in fiscal 2018 and accounted for 76.7 percent of all corporation revenues. Sales tax receipts rose to $865 million in fiscal 2019, and the sales tax’s share of total revenues declined to 74 percent. Sales tax proceeds increased a combined $42.1 million or 5.1 percent from fiscal 2018 to fiscal 2019. Average sales tax receipts per corporation increased from $1.1 million to $1.2 million. The median sales tax receipts during the two fiscal years were only $226,000 and $242,000, respectively, as the 40 EDCs with the highest sales tax revenue represent more than half of the combined sales tax revenue of all EDCs (Exhibits 1 and 2).

Exhibit 1: Source of Funds, Type A and Type B Economic Development Corporations, Fiscal 2018 and 2019
RevenueAll Corporations Type A Corporations Type B Corporations
Sales Tax $822,991,041 $865,075,555 $306,333,438 $316,668,914 $516,657,603 $548,406,641
State/Federal Grants and Matching Contributions $14,369,774 $8,864,263 $1,704,914 $636,861 $12,664,860 $8,227,402
Rental/Lease/ User Fees Income $25,660,112 $28,343,565 $8,513,476 $10,720,131 $17,146,636 $17,623,434
Bond Proceeds/Loans Obtained $112,816,013 $106,909,293 $38,314,812 $31,054,994 $74,501,201 $75,854,299
Other Revenue $96,907,948 $160,155,387 $50,720,139 $75,798,800 $46,187,809 $84,356,587
Total $1,072,744,888 $1,169,348,063 $405,586,779 $434,879,700 $667,158,109 $734,468,363
Number of Corporations 727 726 215 211 512 515
Median Sales Tax Revenue Per EDC $226,342 $242,025 $288,708 $198,767 $294,519 $202,687
Average Sales Tax Revenue Per EDC $1,132,037 $1,191,564 $1,424,807 $1,500,801 $1,009,097 $1,064,867

Exhibit 2: Source of Funds as a Percentage of total Revenue, Type A and Type B Economic Development Corporations, Fiscal 2018 and 2019
RevenueAll Corporations Type A Corporations Type B Corporations
Sales Tax 76.7% 74.0% 75.5% 72.8% 77.4% 74.7%
State/Federal Grants and Matching Contributions 1.3% 0.8% 0.4% 0.1% 1.9% 1.1%
Rental/Lease/ User Fees Income 2.4% 2.4% 2.1% 2.5% 2.6% 2.4%
Bond Proceeds/Loans Obtained 10.5% 9.1% 9.4% 7.1% 11.2% 10.3%
Other Revenue 9.0% 13.7% 12.5% 17.4% 6.9% 11.5%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

The second largest revenue source for all corporations in fiscal 2018 was bond proceeds/loans obtained. Combined, the category accounted for $112.8 million or 10.5 percent of revenue for Type A and B corporations in fiscal 2018. In fiscal 2019, bond proceeds/loans obtained fell to third due to a $63.2 million rise in the other revenue category. The other revenue share increased from 9 percent to 13.7 percent of revenue for all corporations from fiscal 2018 to fiscal 2019.

When examined separately, however, Type A and B corporations differed in their dependance on funds from other revenue and bond proceeds/loans obtained. For Type A corporations, other revenue was the second largest category in both fiscal years, rising from $50.7 million or 12.5 percent of revenue to $75.8 million or 17.4 percent of total revenue. Type A bond proceeds/loans obtained declined from $38.3 million or 9.4 percent of revenue to $31.1 million or 7.1 percent of revenue between fiscal 2018 to fiscal 2019.

For Type B corporations, revenue from bond proceeds/loans obtained exceeded other revenue by $28.3 million in fiscal 2018. However, in fiscal 2019 other revenue was the second largest source of funds for Type B corporations by $8.5 million over the bond proceeds/loans obtained category (Exhibits 1 and 2).


The 727 Type A and B corporations reported expenditures of $988.2 million in fiscal 2018. Expenditures by the 726 corporations reporting in fiscal 2019 rose by 1.5 percent to more than $1 billion (Exhibit 3).

Exhibit 3: Uses of Funds, Type A and Type B Economic Development Corporations, Fiscal 2018 and 2019
RevenueAll Corporations Type A Corporations Type B Corporations
Personnel $69,848,403 $69,471,844 $26,954,843 $28,646,201 $42,893,560 $40,825,643
Administration $67,904,950 $73,365,214 $23,915,145 $24,521,476 $43,989,805 $48,843,738
Marketing and Promotion $25,382,047 $32,179,592 $13,336,337 $19,834,517 $12,045,710 $12,345,075
Direct Business Incentives $129,310,203 $144,081,904 $84,401,206 $95,117,190 $44,908,997 $48,964,714
Job Training $5,106,446 $4,216,804 $2,731,324 $2,319,624 $2,375,122 $1,897,180
Debt Service $219,955,292 $267,770,480 $83,188,561 $131,247,952 $136,766,731 $136,522,528
Capital Costs $336,618,528 $265,390,943 $103,345,934 $43,465,976 $233,272,594 $221,924,967
Affordable Housing $1,802,663 $1,708,395 $226,737 $408,211 $1,575,926 $1,300,184
Payments to Taxing Units $40,730,382 $45,318,768 $5,005,231 $7,048,671 $35,725,151 $38,270,097
Other $91,565,445 $99,319,545 $27,864,373 $16,541,422 $63,701,072 $82,778,123
Total $988,224,359 $1,002,823,489 $370,969,691 $369,151,240 $617,254,668 $633,672,249

All corporations combined and Type A and Type B corporations separately reported increases in expenditures for administration, marketing and promotion, direct business incentives and payments to taxing units from fiscal 2018 to fiscal 2019. Similarly, all corporations combined and Type A and Type B corporations separately reported spending less on job training and capital costs.

Type A and Type B corporations saw divergent trends for each of the remaining expenditure categories. For example, Type A corporations boosted expenditures for personnel by $1.7 million, debt service by $48.1 million and affordable housing by $181,000. Type B corporations saw reductions in expenditures for personnel by $2.1 million, debt service by $244,000 and affordable housing by $276,000. Type A corporations decreased expenditures in the other category by $11.3 million from fiscal 2018 to fiscal 2019, while Type B corporations increased expenditures in this category by $19.1 million (Exhibit 3).

It’s often useful to examine expenditure categories as a percentage of total expenditures to see how categories are changing in relation to one another. Type A corporations spent a much larger percentage of their total expenditures on direct business incentives than Type B corporations.  In fiscal 2018 and 2019, the difference was 15.5 percent and 18 percent, respectively. On the other hand, Type B corporations spent a significantly larger percentage of funds on capital costs than Type A corporations. This category favored Type B corporations by 9.9 percent in fiscal 2018 and 23.2 percent in fiscal 2019 (Exhibit 4).

Exhibit 4: Uses of Funds as a Percent of Total, Type A and Type B Economic Development Corporations, Fiscal 2018 and 2019
RevenueAll Corporations Type A Corporations Type B Corporations
Personnel 7.1% 6.9% 7.3% 7.8% 6.9% 6.4%
Administration 6.9% 7.3% 6.4% 6.6% 7.1% 7.7%
Marketing and Promotion 2.6% 3.2% 3.6% 5.4% 2.0% 1.9%
Direct Business Incentives 13.1% 14.4% 22.8% 25.8% 7.3% 7.7%
Job Training 0.5% 0.4% 0.7% 0.6% 0.4% 0.3%
Debt Service 22.3% 26.7% 22.4% 35.6% 22.2% 21.5%
Capital Costs 34.1% 26.5% 27.9% 11.8% 37.8% 35.0%
Affordable Housing 0.2% 0.2% 0.1% 0.1% 0.3% 0.2%
Payments to Taxing Units 4.1% 4.5% 1.3% 1.9% 5.8% 6.0%
Other 9.3% 9.9% 7.5% 4.5% 10.3% 13.1%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

State law caps marketing and promotional expenditures by both Type A and Type B corporations at 10 percent of annual revenues, except under certain circumstances. The limit is 25 percent of revenues for a Type A city that:

  • has municipal limits including two counties;
  • has less than 24,250 residents, according to the 1990 federal census; and
  • is located within 10 miles of a federal military reservation.

Reports for fiscal 2018 indicate that 17 of the 215 Type A corporations spent more than 10 percent of their revenues for marketing and promotion. Two Type A EDCs exceeded 20 percent. Of the 512 Type B corporations reporting in fiscal 2018, 48 exceeded the 10 percent threshold and 25 exceeded 20 percent of revenues (EDC Report Data Dashboard).

In fiscal 2019, 13 of the 211 Type A corporations reported marketing and promotion expenses above the 10 percent cap, with four exceeding 20 percent. For the 515 Type B corporations reporting that year, 49 exceeded the 10 percent limit and 25 exceeded 20 percent.

The average expenditure for marketing and promotion for Type A corporations was 3.3 percent of total revenues for fiscal 2018 and 4.6 percent in fiscal 2019. For Type B corporations, the average was 1.8 percent of total revenues in fiscal 2018, declining to 1.7 percent in fiscal 2019.

While most Type A and Type B corporations appear to be complying with the limitation on marketing and promotional expenses, the act does not require a corporation to prove it qualifies for an exception to the statute, or provide any penalty for those that exceed the limit. Also note that some corporations exceeding the statutory limit may have carried forward unused revenues budgeted for marketing and promotion from previous fiscal years. Attorney General Opinion GA-0086 states that:

… a corporation that chooses to spend revenues for promotional purposes may spend up to 10 percent of its annual revenues for that purpose or may set all or some of these funds aside in a promotional purposes account. A corporation that set aside revenues in such an account could spend those past year revenues along with the allowable percentage of its current annual revenues for promotional purposes without violating the cap.

Primary Economic Development Objectives

In fiscal 2018 and 2019, most EDCs listed more than one primary economic development objective, with only slight variations in selections between fiscal years. Job creation/retention was the most commonly preferred objective for Type A EDCs followed by infrastructure projects. For Type B corporations, the top two choices were the same as those of Type A corporations, but the order is reversed. Sports facilities/recreation and tourism were popular third and fourth choices for Type B corporations, while relatively few Type A EDCs selected these categories (Exhibit 5).

Exhibit 5: Fiscal 2018 and 2019 Economic Development Objectives
ObjectiveType A
FY 2018
Type B
FY 2018
FY 2018
Type A
FY 2019
Type B
FY 2019
FY 2019
Job Creation/Job Retention 190 333 523 186 338 524
Tourism 41 219 260 44 224 268
Sports Facilities/Recreation 27 232 259 31 236 267
Infrastructure Projects 160 383 543 165 391 556
Other 24 104 128 26 102 128

Types of Capital Assets

In fiscal 2019, 536 of 726 corporations reported capital assets. The most common capital asset was land, including both acreage and lots, reported by 356 EDCs. Other capital assets included buildings (170), “other” (145), equipment (144), industrial parks/sites (132), commercial buildings (129) and recreational facilities (98). The number of reported assets exceeded the total number of corporations because many reported owning more than one asset type.

There was a significant difference between the share of Type A and Type B corporations reporting capital assets. In fiscal 2019, 169 or 80 percent of the 211 Type A corporations reporting owned capital assets, compared to 366 or 71 percent of the 515 Type B corporations. This disparity could be the result of some Type B corporations spending funds on assets transferred to the city upon completion, such as park-related projects.

Exhibits 6a and 6b compare assets owned by the two types of corporations in fiscal 2019. The largest disparity is found in categories pertaining to the ownership of real property. Ownership of industrial parks/sites was much more common among Type A corporations (17 percent) compared to Type B corporations (8 percent). Type A corporations also had a greater share in the categories of land and commercial buildings. Type B corporations more commonly owned recreational facilities, equipment and “other.”

Exhibit 6a: Capital Assets, Type A Corporations, Fiscal 2019
Asset Number Percent of total
Building 61 15%
Commercial Building 55 13%
Equipment 43 10%
Industrial Park Site 71 17%
Land 133 32%
Recreation Facility 10 2%
Other 39 9%
Total 412
Exhibit 6b: Capital Assets, Type B Corporations, Fiscal 2019
Asset Number Percent of total
Building 109 14%
Commercial Building 74 10%
Equipment 101 13%
Industrial Park Site 61 8%
Land 223 29%
Recreation Facility 88 12%
Other 106 14%

Corporation Fund Balances

Beginning in fiscal 2006, the Comptroller’s office asked each corporation to report its year-end unrestricted fund balance or unrestricted retained earnings (EDC Report Data Dashboard). These are funds that have not been formally designated by the board of directors for a project cost or other expenditure during the fiscal year. Fund balances may carry over from year to year and may be positive, negative or zero, depending on the accounting method used by the EDC.

In fiscal 2018, the 215 Type A corporations reporting had combined fund balances of $646.3 million. This total decreased to $623.3 million for the 211 Type A corporations reporting fund balances in fiscal 2019.

The 512 Type B corporations reporting in fiscal 2018 had total fund balances of more than $732.3 million. For fiscal 2019, 515 reporting Type B corporations recorded year-end fund balances totaling nearly $851.8 million.

In all, Type A and Type B corporations reported fund balances of nearly $1.5 billion at the end of fiscal 2019.

Growth of the Sales Tax for Economic Development

As many Texas cities reach the 2 percent local sales tax rate cap, growth in the number of new Type A and B corporations has stalled (Exhibit 7).

Exhibit 7: Number of Economic Development Corporations, 1997 to 2017
Year Type A Corporation Type B Corporation Total
1997 154 182 336
1998 167 233 400
1999 174 272 446
2000 189 301 490
2001 199 325 524
2002 203 352 555
2003 208 380 588
2004 209 397 606
2005 211 413 624
2006 215 419 634
2007 217 435 652
2008 219 447 666
2009 219 461 680
2010 219 470 689
2011 216 481 697
2012 215 488 703
2013 216 492 708
2014 214 500 714
2015 218 505 723
2016 219 511 730
2017 218 510 728
2018 215 512 727
2019 211 515 727

Between fiscal 1997 and 2019, the total number of EDCs rose by 391, for an average increase of 17.8 per year. Of this increase, 333 were new Type B corporations, for an average of 15.1 per year. For Type A EDCs, the average change was 2.6 per year, for a net increase of 57 corporations. Between fiscal 2018 and 2019, there was no net gain in the number of EDCs in the state. Instead, there was a net gain of three Type B EDCs and net loss of three Type A EDCs.

One factor affecting the rate of increase is competition from other types of sales tax. Sales tax ballot initiatives may take place up to twice per year if initiated by a city council or upon a successful petition by a community’s registered voters. The result may make it impossible to impose any further local sales taxes or may lead to the abolition of existing ones.

For example, in 2017, the city of Big Sandy abolished Type B sales tax and imposed a sales tax for street maintenance and repair. In 2018, the city of Lowry Crossing abolished Type B sales taxes and reallocated the revenue to a municipal development district. The next year, the cities of Sweetwater, Childress and Glen Rose also replaced their EDCs with municipal development districts.

By the end of fiscal 2019, 363 Texas cities had adopted the sales tax for property tax relief, 235 cities had adopted the sales tax for street maintenance and repair, 10 imposed sales tax to fund construction of sports or community venues, and 33 cities had adopted the sales tax for municipal development.

Corporation Fiscal Year

Most corporations adopted a fiscal year corresponding to that of their sponsoring city. Of the 726 corporations reporting in fiscal 2019, 684 or 94 percent listed Oct. 1 through Sept. 30 as their fiscal year. Fifteen, or 2 percent, used Apr. 1 through Mar. 31 as their fiscal year. Twenty-seven corporations adopted other fiscal years, accounting for the remaining 4 percent.

For more information about the authority and responsibilities of Type A and Type B corporations, refer to Comptroller publication #96-302: Economic Development Sales Tax, or contact the Comptroller’s Data Analysis and Transparency Division at 844-519-5672.