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Enterprise Fund Carrying Too Many Ones?

TPJ accuses Perry of over-inflating impact of TEF

By Richard Whittaker, 2:00PM, Wed. Jan. 27, 2010

Enterprise Fund Carrying Too Many Ones?

Ever the voice of fiscal responsibility, Gov. Rick Perry has announced that he will amend 11 project contracts issued through his job-creating Texas Enterprise Fund. But Texans for Public Justice say he's only doing it to blunt the impact of their new report criticizing the fund's efficacy and Perry's oversight.

Created by the legislature in 2003, the TEF is a fund administered by the governor's office intended to incentivize major employers to move to the state. In Austin, Home Depot, Samsung, Sematech and HelioVolt have all received grants. In a press release, Perry's staff announced that "TEF contracts are working as intended, rewarding job creation in Texas and protecting taxpayer dollars in the few cases where employers do not live up to contract job commitments."

However, the record for the local deals bears some examination. TPJ classifies Sematech's compliance with their deal as "weak," and Home Depot and Samsung as "troubled." Only HelioVolt gets the TPJ thumbs up, but they are also the only firm that is getting their contract amended.

TPJ accuses Perry's office of doing a shabby job on contract oversight. In their new report, Watch Your Assets, the group studied 45 TEF projects that received $363 million in public funds. Out of that group, 12 failed to reach their minimum contractual employment commitments. Even though there are clawback provisions, the state-imposed penalties on these 11 companies totaled $647,000 – roughly one percent of the $61.4 million they received.

They're also pretty tough on Perry's job creation claims. He says TEF contractees created 54,000 positions, but TPJ found that only there were only 31,319 actual jobs, and the rest are pledges. Take out 8,752 jobs with university projects (A&M’s Texas Institute for Genomic Medicine and UT’s Center for Advanced Biomedical Imaging in Houston) that get to include non-TEF funded positions, and several contracts that only require maintaining current staffing levels, and the actual job creation impact of the fund looks questionable.

But amending the contracts sounds good, right? Not so fast. Eight contracts have already been amended, which TPJ describes as the governor's office unilaterally diluting the terms of the deal so it's easier for ailing firms to stay in compliance. Even worse, he's used $161.5 million out of the state unemployment fund to bolster the initiative.

This is a politically complex issue for Perry. His career as governor is built on the mystique of the being Mr. Pro-Business Job Creator, but the small-l libertarian, anti-tax, freemarketeer end of his base loathes the whole idea of incentives. Meanwhile, there's a significant number of politicians on both sides of the aisle concerned about the governor getting to dispense corporate largesse. Last session lawmakers cracked down on Perry's ability to transfer funds between the TEF and his Emerging Tech Fund, but they'd initially discussed defunding it completely.

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