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Economic snapshot: Texas Enterprise Fund

Published on May 2016 | Categories: Types, Business/Law | Downloads: 16 | Comments: 0
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Texas became the No. 1 state in attracting new projects after Gov. Rick Perry made economic development a priority.

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ECONOMIC SNAPSHOT | TEXAS ENTERPRISE FUND

Perry’s incentive legacy
By MITCHELL SCHNURMAN
Business Columnist [email protected]

By KYLE ALCOTT
Staff Artist [email protected]

Texas became the No. 1 state in attracting new projects after Gov. Rick Perry made economic development a top priority. The cornerstone of his strategy was the Texas Enterprise Fund, a pool of money doled out to companies that brought investment and jobs. The “deal-closing” fund has awarded almost $500 million since 2003, and local tax breaks are on top of that. By the end of 2012, the state fund had helped attract 106 deals, $17.4 billion in investment and 66,000 direct jobs, according to Perry’s office.

North Texas bounty
Grant awards from the enterprise fund have been disbursed throughout Texas, but payouts and benefits have been concentrated in the metro areas. Dallas-Fort Worth had the most projects that won awards, and they accounted for more than 40 percent of state grant money. Dallas-Fort Worth region
BIG DEALS GRANT (In millions)

TOTAL GRANT AMOUNTS:
Austin Total grant amount:

Dallas-Fort Worth region Total grant amount:

$101 million
San Antonio Total grant amount:

$213 million

Texas Instruments/UTD Tyson Foods Comerica T-Mobile GE Transportation Golden Living Raytheon

$50 $7 $3.5 $2.2 $2.1 $2.1 $1

$72 million

Houston Total grant amount:

$52 million

Houston
UT Health/MD Anderson Citgo Petroleum Dow Chemical $25 $5 $1 $40 $21 $10.8 $22 $6 $1.2

TOTAL NEW JOBS
Dallas-Fort Worth

18,469
Houston

Austin
Sematech Apple Samsung

TOTAL PROJECTS
Dallas-Fort Worth

6,932
Austin

32
Houston

15 16 15

San Antonio
Rackspace Medtronic Continental Auto San Antonio

15,351 14,561

Austin

San Antonio

Note: Dallas-Fort Worth, Houston and Austin totals are through September 2012; San Antonio’s is through May 2012. Some projects are divided among more than one region and grants are contingent on meeting goals.

Tech leads the way
State incentives have drawn investments from many technology companies, including Apple, Facebook, eBay and T-Mobile. Older companies, such as Lockheed Martin, Allstate and Comerica, tapped them, too. These industry sectors won the most grants from the Texas Enterprise Fund from 2004 to 2012.

Busts and clawbacks
Some projects don’t deliver as promised, despite taxpayer help. Texans for Public Justice, an Austin watchdog, reported that 37 percent of recipients failed to hit job goals by 2010. The state amends some contracts and demands refunds. Clawbacks totaled almost $36 million, according to Perry’s office. Clawbacks, State grant Company
Bank of America* Triumph Aerostructures** Fidelity Brokerage $8.5 $3 $2 $1.2 $1 $1 $0.75
(In millions)

Projects that won grants
Medical, biotech: 14

High-tech manufacturing: 7 Financial services: 8

other repayments
(In millions)

Business, professional services: 9 Aerospace, defense: 8

$20 $35

$8.5 $7 $4.5 $3.2 $2.1 $1.2 $1 $0.64 $0.76

Food processing: 6 Heavy manufacturing: 5

Hewlett-Packard Maxim Integrated Nationwide Mutual SunPower Corp. VCE Lorimer

Software, information technology: 12

Chemicals, plastics: 8

Furniture manufacturing: 5
* Formerly Countrywide Financial; ** Formerly Vought

SOURCES: 2013 Legislative Report on Texas Enterprise Fund by Office of the Governor; the office’s May 31, 2013, reports on individual projects

The bottom line
“Rick Perry cannot sit back and say, ‘Texas is a real nice place.’ He has to come to the table and fight for projects. I’m not saying give away the bank, but this is all about competition. If Texas stopped competing, Louisiana would soak up a lot of business.” Loren C. Scott, consultant and former economics chairman, Louisiana State University “These incentives start to become an entitlement for corporations. It’s like handing out candy at Halloween. It doesn’t matter if a 19-year-old knocks on your door and has a sack of goodies. You still have to give him more candy.” “It would be nice if every community ended tax breaks and competed on public services. That’s not the real world. More than 20 states have deal-closing funds like Texas, so if we’re going to do incentives, why not go big?”

Don Baylor, senior policy analyst, Center for Public Policy Priorities

Mitchell Schnurman, business columnist, The Dallas Morning News

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