Texans for Public Justice: Enterprise Fund fails to meet job targets
Wed September 8, 2010 9:06 am

This is TPJ's summary of its report:

Two-thirds of the Texas Enterprise Fund (TEF) projects that faced job-creation targets by 2009 failed to deliver the jobs that they originally promised in exchange for $368 million in public funding, a new Texans for Public Justice study finds. This marks a sharp increase from the 42 percent of TEF projects that were so compromised just one year earlier.

The new TPJ study analyzes compliance reports filed by 50 TEF projects that faced job-creation targets by 2009. Thirty-three of these projects:

* Failed to deliver on their 2009 job promises;
* Were crippled by amendments that lower job targets or postpone job deadlines; or
* Were officially terminated before delivering the promised jobs.

As Governor Perry publicly touts the Enterprise Fund as a centerpiece of his reelection campaign, his office quietly works out of the limelight, negotiating amendments that rollback previous job-creation promises. The Governor’s Office has acknowledged amending at least 14 of the 50 TEF contracts (28 percent), with some troubled TEF recipients returning to negotiate multiple contract-weakening amendments.

Key findings of TPJ's analysis reveal:

* The Governor's Office awarded $368 million to 50 TEF recipients to create or maintain 49,581 jobs. In 2009 compliance reports, these projects claimed that they had delivered 30,381 jobs.

* Governor Perry declared in January that TEF had created 54,600 jobs since 2003. More than one-third of these are phantom job promises that have yet to materialize. A review of TEF compliance reports suggests that some never will.

* The 14 amended projects originally promised to deliver 9,793 jobs by 2009. Amendments slashed these 2009 job promises to 6,017 jobs. Over the entire lifetimes of these 14 deals, amendments cut their total job promises from 17,614 jobs to 12,729 jobs.

* The Governor’s Office fined 17 TEF recipients $2.8 million as of June 2010. This amounted to 2 percent of the $116 million in public funds that they had received from TEF to date.

* Many TEF projects have qualified for termination under a death-penalty clause that the Governor’s Office has enforced just six times.

* * * *

This information will come as no surprise to those of us who were in the hearing room for the House Appropriations Committee's interrogation of the governor's staff last spring about the performance of the Enterprise Fund and the Emerging Technology Fund (the latter concerning a $50 million grant to Texas A&M that did not follow prescribed rules). It was clear then that the TEF was not meeting its job targets. The risk with doling out hundreds of millions of tax dollars to corporations is exactly what came to pass: If the economy implodes, the jobs disappear, and so does the money.

Some critics have described the Enterprise Fund as a "slush fund." While some deals have raised eyebrows -- Bill White charged that Perry gave special consideration to a grant request from a company whose investors included a businessman linked to the land deals that enriched the governor -- there is nothing unique about the Enterprise Fund. Many states have such funds that are used to close deals that create jobs. Some of the deals were clearly ill-judged, such as one that brought a Countrywide call center to Midland. The local paper touted the deal as a triumph for then-speaker Tom Craddick. Alas, Countrywide was a major purveyor of subprime loans, and it collapsed in the resulting financial crisis. It was purchased by Bank of America. The call center was closed, the jobs gone.

The Enterprise Fund never escaped the perception that some deals were tinged with political favoritism. The Permian Basin fared particularly well during the tenure of Craddick, who, along with David Dewhurst, had to sign off on Enterprise Fund deals.

The Enterprise Fund is now unfunded. As part of its share of the 5% cuts required of all state agencies, the Governor's Office offered up the Enterprise Fund.

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