Business
11:44 am
Tue December 28, 2010

Scrapping Texas Enterprise Fund Could Disproportionately Hurt Austin

A state lawmaker wants to abolish the Texas Enterprise Fund and other pools of money Governor Perry can use at his discretion to attract investment. But doing so could disproportionately harm Austin, according to our analysis of a report released last week by Texas Comptroller Susan Combs.

State Rep. Lon Burnam (D-Fort Worth) filed House Bill 465 one week ago today. The legislation specifically calls for abolishing the Texas Enterprise Fund, the Texas emerging technology fund, the Pan American Games trust fund, the Olympic Games trust fund, and trust funds for major sports events, motorsports racing, and other non-sporting events.

"In this economic crisis, we don’t need to be spending anything that is suspect. We’re down to the bare bones," Burnam told KSTX, the NPR-member station in San Antonio.  "There’s too close of a relationship between money going out from the government to the private sector to money coming from that private sector going back to politicians."

But a report on economic incentives released last week by Texas Comptroller Susan Combs shows the Texas Enterprise Fund alone spent $72,700,000 to attract companies to Austin since 2004. KUT News' analysis of the report indicates that TEF spending led to the creation of 7,842 jobs in Austin and will lead to more than $3.8 billion in local capital investment by firms receiving the funds.

That means almost 18 percent of TEF funds have been used to recruit firms to Travis County, an area that is home to only 4 percent of the Texas population.

The Comptroller warns in the report that the Texas Enterprise Fund "appears less transparent" because of the "flexibility of the decision-making process."

Put another way, the Governor's ability to award TEF funds at his discretion opens him up to exactly the kind of criticism being leveled by Rep. Burnam. It's an especially poignant argument when the state is facing a budget shortfall that could exceed $25 billion.

It's also worth noting that Burnam's legislation would not abolish other economic incentive funds that are even more disproportionally beneficial to Austin. The Texas Moving Image Industry Incentive Program, aimed at companies making movies, TV shows, commercials or video games in Texas, would be spared under HB 465.

Slightly more than half of the $5.7 million in grants dispensed from the fund as of August 2010 went to productions that were made either partly or entirely in Austin. That amounts to $2,872,147 of $5,724,249 in grants.

You can read a .pdf of the Comptroller's report here.