What Is the Texas Energy Center?

Gov. Rick Perry's Texas Enterprise Fund has doled out dollars and raised eyebrows. (Photo By Jana Birchum)

Is the Texas Energy Center a taxpayer-financed boondoggle for the oil and gas industry, or an economic development driver of new jobs and cutting-edge technology? Consider these facts:

• The TEC has received $3.6 million from Gov. Rick Perry's economic development slush fund and is guaranteed federal funding over the next decade as the "host facility" of a nonprofit consortium called the Research Partnership to Secure Energy for America, whose members include Halliburton and Fluor Corp. Former U.S. Rep. Tom DeLay is credited with slipping the consortium provision into an omnibus energy bill that Congress passed in 2005. The last-minute insertion prompted a written complaint from U.S. Rep. Henry Waxman, a ranking Democrat on the Government Reform Committee, who called it a "$1.5 billion giveaway to the oil industry, Halliburton, and Sugar Land, Texas."

• The founders of the TEC hold strong ties to former U.S. Rep. Tom DeLay.

• The TEC is managed by DeLay's friends at the Greater Fort Bend Economic Development Council. The TEC has no executive director, no Web site (the original Web site was taken down in 2005), and no proof of the 365 jobs it claims to have created.

• The TEC, the Fort Bend economic development council, the Fluor Corp., and a Halliburton subsidiary, Kellogg, Brown & Root, all lease office space at the same prestigious address (along with Sunoco Logistics and a TXU call center) – One Fluor Daniel Drive in Delay's hometown of Sugar Land.

That set of red-flag curiosities is among a growing list of concerns that state House Democrats started addressing in 2004, when Perry first dipped into his then newly created Texas Enterprise Fund and handed the fledgling Texas Energy Center its initial seed money, a check for $1.6 million. The governor followed up with a $500,000 taxpayer-funded Christmas gift in December 2005, and two months ago, on July 6 – just as another storm was brewing over a $1 million contract the state had with Washington lobbyist and former DeLay aide Drew Maloney (who also lobbied for the TEC) – Perry gave the TEC another $1.5 million.

House Democratic leader and TEC critic Jim Dunnam of Waco caught wind of the governor's latest giveaway just last week and promptly fired off a letter to Perry requesting "an immediate and thorough accounting" of every job that the TEC claims to have created. Dunnam also included copies of the TEC's 2005 tax filings with the IRS, which show no payroll expenses for the last year. "How can anyone claim that this entity creates jobs when it does not spend a dime on payroll?" Dunnam asks. He also said that the TEC has failed to honor its commitment to spend in excess of $20 million in capital investments, and the IRS filings confirm Dunnam's charge. Among other expenses, the tax-exempt TEC reported spending $202,583 on consultants and $16,000 on lobbying.

This isn't the first time Dunnam has questioned the TEC's operations, and certainly not the last time a Perry spokesperson will be accusing the Waco representative of making a "baseless, political attack" to undermine the success of the economic development fund. The governor's office insists the center is meeting its contractual obligations.

By most accounts, TEC is having a pretty good ride on the taxpayer's dime. After falling through on its commitments in exchange for the $3.6 million grant, the TEC was able to renegotiate its contract, which had originally required the outfit to create 1,500 new jobs by 2009 (since moved to 2015) and build a $20 million office center by January 2007 (also delayed to 2015.) What a deal!

Cabela's Inc., the outdoor retailer down the road in Buda, hasn't fared as well as Perry's oil and gas friends. Cabela's got a mere $400,000 from the governor's slush fund for new stores opened last year in Buda and Fort Worth. But with Perry eager to prove his critics wrong about the slush fund's lack of accountability, the state recently brought the hammer down on Cabela's, forcing the company to repay $28,552 and to forget about ever seeing the additional $200,000 it was promised. The reason? The Buda store fell just 86 jobs short of the 400 jobs it was supposed to have in place by now.

In comparing the TEC and Cabela's experiences with Perry's Enterprise Fund, the lesson here is that it pays to play. The oil and gas industry represents Perry's fourth-largest campaign contributor. Now some of the industry's key players have a tax-funded playground in DeLay's back yard. On the other hand, the outdoor recreational types who shop at Cabela's and provide millions in tax revenue to the state sporting-goods sales-tax fund, aren't exactly big movers and shakers at the Capitol. If they were, the cash-starved Texas parks – where the outdoorsmen pay fees to hunt and fish after shopping at Cabela's – would be on the receiving end of the money that helps fuel Perry's slush fund and other pet projects.