Perry's program: Business initiative or slush fund?With private funds, governor entertains, entices companies to Texas
By EMILY RAMSHAW / The Dallas Morning News
Sunday, August 12, 2007
AUSTIN - Bringing big business to Texas means spending big bucks.
Skybox seats at the Super Bowl and the NBA All-Star Game. First-class flights and hotel suites at the Ritz Carlton and the Four Seasons. And $15,000 worth of personalized cowboy boots and belt buckles, according to a Dallas Morning News analysis of top-dollar spending habits at TexasOne, Gov. Rick Perry's nonprofit economic development initiative.
Critics call the organization a glorified slush fund that wines and dines wealthy executives to persuade them to bring companies and jobs to Texas. And while it's funded by private donations and millions in corporate membership fees, some ethics watchdogs fear TexasOne allows corporations, which can't legally donate campaign funds, to buy face time at such events with the governor, his aides and others who make the state's economic development decisions, while getting a hearty tax write-off.
"What they're getting is extraordinary access to the governor by donating to a nonprofit," said Tom "Smitty" Smith, director of the Texas office of Public Citizen, a consumer advocacy group. "This is one of the new loopholes emerging as a way corporations can wield influence."
State officials argue it's par for the course when you're marketing the state's business climate to some of the nation's biggest or most promising companies. Clinching a deal often means courting executives with expensive attractions and luxury accommodations, they say, and giving them a chance to talk shop with Texas' best salesman - the governor.
"If that money produces hundreds of Texas jobs and millions in capital investment in this state, then that's a heck of a buy," Perry spokesman Robert Black said.
Phil Wilson, who ran TexasOne until Mr. Perry appointed him secretary of state in June, said that in meetings with corporate leaders, "there's a trust factor established that's intangible. You can't put a currency valuation on it."
The Legislature turned the state's economic development department over to the governor's office in 2003, and TexasOne, an arm of the Texas Economic Development Corp., was launched then.
The organization has raised more than $4 million by selling membership packages to more than 100 corporations, small businesses and local government groups. The businesses can claim a charitable deduction on their federal taxes, because the donation is to a nonprofit group.
Major companies, including AT&T and ExxonMobil, pay $50,000 a year for top tier memberships, while local governments such as the city of Farmers Branch and the Greater Irving-Las Colinas Chamber of Commerce pay $1,000 in entry-level dues. Almost every North Texas city with an economic development office or a chamber of commerce has a membership package, often funded with hotel-motel tax revenue.
The contributions fund "signature" events at the Super Bowl and all-star games - luxury outings where Mr. Perry can seal lucrative contracts.
TexasOne board president Robert Wingo said it's not all about parties and sporting events. Those outings are considered the "deal closers" after months of nationwide networking and recruitment meetings, he said, where TexasOne members connect with business executives considering relocating to Texas.
"We go into the marketplace to visit with companies we're aggressively pursuing. We go into communities to find out what it is that's going to make a difference," Mr. Wingo said. "Through no expense to the state, we've developed a system that allows us to entice people to come in."
Officials with TexasOne say the $2 million they've spent on company recruitment and "selling" Texas since 2004 has been directly responsible for attracting nearly 17,000 new jobs and more than $9 billion in capital investment.
Angelo Mozilo, the chief executive of Countrywide Mortgage, attended the 2004 Super Bowl as TexasOne's guest, and 10 months later, announced he was bringing 7,000 jobs to North Texas - the largest single job creation move in state history.
Ken Gray, the senior vice president of Hewlett-Packard, attended the NBA All-Star with TexasOne in February 2006 and spent more than $2 billion opening data centers in Austin and Houston later that year.
And Home Depot executives went to the Major League Baseball All-Star Game in 2004, then announced an $800 million investment in data-processing and distribution centers in Central Texas. Executives from the companies could not be reached for comment.
Critics say they don't mind recruitment efforts, but they see "gross excess" in the luxury items provided to executives.
There are the $25,000 skybox suites and $10,000 chartered helicopters, the $3,000 steakhouse dinners and champagne brunches. There are the $600 per night hotel rooms - with unlimited room service, valet parking and long distance calls. One party at the 2006 Rose Bowl, where the University of Texas won the national football championship, set TexasOne back $113,000.
Ethics experts say it's ludicrous to believe that big companies are contributing to TexasOne out of their concern for the state economy and not for undue access to the governor and his staff. By giving money to join, executives are invited to participate in recruiting other businesses.
"It's a place for corporations to write an easy check, an opportunity to stay in the face of politicians," said Craig McDonald, director of Texans for Public Justice, which studies the influence of money in politics.
"If this didn't work, the smart businessmen in Texas wouldn't be continuing to invest hundreds of thousands of dollars into this nonprofit," Public Citizen's Mr. Smith said.
Nancy Windham, director of business development for the Frisco Economic Development Corp., said cities and companies are actually joining to get access to each other.
"We could try to do this on our own, but what a greater value it brings when you do it collectively," said Ms. Windham, who credits TexasOne with helping the city land a T-Mobile facility in 2005. "I don't look at this as us buying our way into the governor's office. We believe in the program, and we're putting our money where our mouth is."
Mr. Wilson, who was the governor's deputy chief of staff until being appointed secretary of state, said that while many of the events are top of the line, "Texas hospitality" is key to facilitating deals.
Money is spent conservatively, he said, on the executives most likely to bring big business to Texas. As states like California, Florida and Pennsylvania continue to expand their own versions of TexasOne, Mr. Wilson said, it would be "unilaterally disarming ourselves" to scale back the program.
"This fat cat mentality, this, 'Gee, you're coming in with cigar-smoking, good-time guys,' that's not what this is," Mr. Wilson said. "You've got people in a decision-making role getting a chance to say, 'I went to Texas, I met the governor, I met business people, I had a good time. But more important, they've got some really unique things going on down there.' "
Some major events that TexasOne, Gov. Rick Perry's economic development group, has used to recruit companies to Texas:
2004 SUPER BOWL - HOUSTON
Mr. Perry and guests racked up more than $52,000 in hotel rooms, airfare, refreshments and 14 tickets to the Super Bowl.
2005 NASCAR EVENT - FORT WORTH
TexasOne spent nearly $35,000 on hotel rooms, a $10,000 chartered helicopter and custom-embroidered sports bags.
2005 ROSE BOWL - CALIFORNIA
Hotel rooms, an eight-piece dance band and a swanky pregame event set TexasOne back $113,000.
2006 NBA ALL-STAR GAME - HOUSTON
The game package cost nearly $46,000, including $15,000 in hotel rooms and a $25,000 suite at the Toyota Center.
2007 NHL ALL-STAR GAME - DALLAS
The nearly $30,000 tab included $525-a-night hotel rooms at the Mansion on Turtle Creek and "Texas: Wide Open for Business" custom hockey jerseys.
*71 pairs of Justin custom cowboy boots: nearly $10,000
*A custom belt buckle and box from Max Lang in Houston: nearly $5,000
SOURCE: Dallas Morning News research