Texas gubernatorial candidates scrutinize governor’s business incentives
By Matthew Waller
AUSTIN, Texas — When it comes to business incentives administered through the governor’s office, the two front-running candidates to lead the state have had their concerns about the office’s programs.
Texas Attorney General Greg Abbott, the top Republican candidate for governor, told The Associated Press when he first got started on the campaign trail that the state shouldn’t be “in the business of picking winners and losers.”
His tea party supporters are also concerned about programs such as the Texas Enterprise Fund and the Texas Emerging Technology Fund, which provide millions of dollars as deal closers to bring new business to Texas or help them expand in the state.
The funds have been called “corporate welfare” and “crony capitalism,” by critics, while the governor’s office has touted their job creation strengths and positive financial effect on the state.
State Sen. Wendy Davis, of Fort Worth, the top Democratic candidate for governor, meanwhile has filed legislation that mandates an audit of the enterprise fund.
“Senator Davis believes Texans deserve transparency and accountability with their tax dollars. She supports the premise of the Texas Enterprise Fund and has taken steps to make it more accountable to taxpayers so that companies receiving funds create the jobs they are promising,” Davis’ campaign spokeswoman Rebecca Acuña said in an email. “Senator Davis believes that in order to create high-wage jobs here in Texas, the state should restore funds to public education.”
If elected, either of the two might quietly let the funds hum along while they use them as leverage to compete for jobs with states across the country, political observers have noted.
At a campaign stop recently, well after his main primary opponent Tom Pauken dropped out of the race, Abbott said he would as governor consider what is effective in the governor’s office.
“We will explore all options to find out which (incentives) are the most effective at attracting jobs here,” Abbott said. “A lot of that is based on mathematical calculations. We’ll explore what works, what doesn’t work.”
Abbott focused on keeping taxes low.
“There are several different ways of approaching the job growth perspective. One reason why Texas is growing jobs is our government structure is superior to the government structures of other states,” Abbott said. “We’re always looking for ways to make Texas even more competitive. We’re looking at ways we can even further decrease the tax burden. Having a low tax structure is one of the best economic incentives that will attract businesses here.”
The state created the Texas Enterprise Fund with money from the so-called Rainy Day Fund in 2003, allowing the governor’s office to offer companies money to expand or relocate in Texas.
According to the 2013 Legislative Report on the TEF, that estimated $500 million has resulted in a commitment from more than 100 projects, drawing about $17.38 billion in capital investment and about 66,094 new direct jobs.
Texans for Public Justice, an Austin nonprofit that researches lobbyists and the intersection of corporations and politics, has attacked the TEF as a slush fund. The organization has said company owners give donations that make their way to the governor’s office. A 2011 study from the group states that 43 companies that got $333 million in TEF grants gave nearly $7 million to Perry’s campaign committee and the Republican Governors Association.
The governor’s office said Perry has supported an audit of the fund for transparency.
Perry got the Texas Emerging Technology Fund created in 2005. The $485 million fund, according to the 2013 report to the Legislature, awards money for commercialization at universities, creating new clusters of industry, workforce development and “growing an entrepreneurial ecosystem.”
The report boasts that the fund has brought $2.2 billion of follow-on funding and created 2,685 jobs.
“We don’t believe as conservatives that the state has any business to pick out winners or losers,” JoAnn Fleming, the executive director of Grassroots America — We The People, a tea-party-centric organization that has endorsed Abbott. “We believe in a truly free market.”
She said she believes that Abbott will be sympathetic to their cause. Those with her organization have been reaching out to Abbott to address the concerns of a nonlaissez-faire government.
“I think there is a new era that is about to unfold in Texas,” Fleming said.
Southern Methodist University political science professor Cal Jillson, however, said that once the politicians take office, they might see the need for the funds and let them keep working.
He likened the scenario to President Barack Obama having campaigned on intentions to shut down Guantánamo Bay and make other moves to curb overseas militarization but then largely continuing with the programs when he reached office.
“I think you can see the same thing out of Abbott and even Davis,” Jillson said. “Everyone is measured on how effective they are in growing jobs.”
Jillson said Davis might try to cut back on the fund and propose using it for something like prekindergarten education.
“As the Democratic challenger, she is going to be opposed to much of the Republican policy,” Jillson said.
Political science professor Mark Jones with Rice University said the funds might continue, but in a more muted fashion.
“Certainly the golden days of the Texas Enterprise Fund in particular and the Texas Emerging Technology Fund are over,” Jones said. “I would expect that in the future the incentives allocated, tax breaks, are not going to be as large, and the recipients are going face a heightened level of scrutiny. It’s not going to the freewheeling system we’ve seen over the past decade.”
Bill Miller, an Austin government affairs lobbyist, agreed.
“I think what’s in place will not change,” Miller said. “How future decisions are made, they’ll leave their mark on that, but they won’t change what’s already in place.”
Reprinted with permission from the San Angelo Standard-Times.