February 22, 2005
Playing the Texas Enterprise Fund game

If you're not sure what Rick Perry's reelection campaign is going to look like this article should give you a pretty good idea: Jobs, jobs, jobs.

"We don't fund companies who already are planning to move to Texas," said Phil Wilson, Gov. Rick Perry's deputy chief of staff, who oversees Texas Enterprise Fund activities.

Given a peek into Texas' covert world of economic development, the Austin American-Statesman has found that of the 123 companies that have applied for money from the Enterprise Fund, only 17 have received any. That is proof, Perry's office says, that the fund is properly managed.

Of those that have been turned down, some were faltering businesses seeking a bailout. Others were ideas seeking a venture capital source. Others had bad business plans. Another wanted Texas taxpayers to retool its manufacturing plant.

Top aides to Perry say the rejections highlight the stringent checks and balances that have been built into the largely secret process of choosing which companies or projects will get Enterprise Fund money. Critics are adamant that the fund is viewed by companies as free money and that more regulations governing its use need to be written into law.

The Enterprise Fund was created in 2003 with $295 million that the Legislature took from the state's rainy day fund. It is overseen by Perry's Economic Development and Tourism Office and is to be used to close deals so that businesses will expand in Texas or move here.

When it was set up, it was the largest such cash fund in the country. With $212.4 million committed so far, Perry is seeking from lawmakers $300 million to replenish the Enterprise Fund and $300 million to establish an Emerging Technology Fund that would also be administered by his office.


"So far, 31 projects have received no consensus," Wilson said. An additional 43 have not located in Texas, such as Boeing Co., which was offered $45 million to come to the Rio Grande Valley, and Union Tank Car Co., which was offered a $2 million package to expand in the Houston area.

Among the 17 projects approved, 24,446 jobs are to be created during the next decade about $8,700 each for the state's expenditure of $212.4 million. Perry aides note that the return on that will be $6.3 billion in capital investment in Texas.

"That's a great return," Wilson said.

Those are going to be some strong selling points. Simple to explain, with numbers to go along with them, and who opposes job creation? I have a very low opinion of Rick Perry as a governor, but he's no slouch as a politician.

The case against is a bit more complicated.

Critics say that although safeguards may be a part of the review process, enhanced accountability and public disclosure are needed and other measures for review should be added.

"The Texas Enterprise Fund has the opportunity to travel a 'high road' economic development path, paving the way towards transparency, rigorous compliance, higher wages and guaranteed health insurance coverage," said a recent report by the Center for Public Policy Priorities, an Austin advocacy group. "Or it could continue to pursue a 'low road' economic development approach limiting public disclosure and reporting while subsidizing companies that don't pledge to create high-quality jobs."


If Texas must play the corporate incentive game, some lawmakers say, the safeguards are welcome.

But, said state Sen. Eliot Shapleigh, D- El Paso, there's a better way to attract business: "The state ought first to invest in education, its work force and infrastructure before subsidizing corporate entities."

In other words, we have only the Governor's word for it that the X dollars he's tossed around have led (or will lead) to Y jobs, and this isn't the best use of the money anyway. I agree with these points, but they're going to be harder to make. Listen up, Chris Bell, because in a year's time you're likely going to be hearing some variation on "While others did nothing but criticize, I got results. Look! Jobs! Everywhere!" What are you going to say to that?

Via Perry V. World.

Posted by Charles Kuffner on February 22, 2005 to Show Business for Ugly People | TrackBack

Here's what Chris Bell needs to say:

If you cut wages enough, you can always create jobs. But then people can't live. You wind up with your work force sleeping in their cars and eating at MacDonald's.

Instead, the state needs to be investing in education, work force, and infrastructure.

There is also the question of equity. An educated and trained work force in a region with superior infrastructure is a breeding ground for new businesses. Why should economic development money go only to existing corporations, many of whom will be out of state and even foreign-owned?

Economic development investment should go to home-grown business start-ups, to build jobs in Texas that will STAY in Texas.

Posted by: Demo Memo on February 22, 2005 1:03 PM