Some Texas Enterprise Fund recipients cut jobs, miss goals
By CHRISTY HOPPE / The Dallas Morning NewsDecember 19, 2007
AUSTIN - Almost one out of every three companies that has received state incentive money to create jobs has announced layoffs or been penalized for failing to meet employment goals, according to a study released Tuesday.
The governor's office, through the 4-year-old Texas Enterprise Fund, has awarded $360 million in grants to companies to encourage them to locate or expand their operations in the state.
But a study by the nonprofit Texans for Public Justice showed that eight of the 38 companies given grants have had layoffs in Texas or nationwide while three others have failed to meet thresholds for employment growth.
The total grants to those 11 troubled companies amount to $233 million - including $20 million to Countrywide Financial and $15 million to Washington Mutual, which have been hobbled by subprime lending practices.
Last month, Countrywide announced that it would fulfill its commitment to Texas to create 7,500 jobs even as it announced worldwide workforce reductions of 10,000 to 12,000 this year.
The Texans for Public Justice report also mentions $50 million that went to Texas Instruments Inc. but did not have a specific job goal. TI completed a $3 billion computer chip manufacturing plant in Richardson as promised, but the building has sat empty for 19 months waiting for market demand to justify filling the plant with equipment and employees.
In the interim, TI has announced about 500 layoffs in the Dallas area.
The study concluded that the close ties between the governor's office and the program present a conflict with its duty to "safeguard the funds and penalize lackluster performance."
Allison Castle, a spokeswoman for Gov. Rick Perry, said the TPJ study is flawed and untrustworthy because it is spearheaded by "a liberal group without any credibility."
She cited inclusion of TI as an example of the report's shortcomings because the TI contract did not call for a specific employment target.
And while not all of the companies have met their job creation goals, those given the grants have made capital investments worth almost $15 billion, she said.
"Texas is one of the best business climates - if not the best - in the nation according to numerous magazines, such as Forbes and Site Selection," Ms. Castle said. "The Enterprise Fund has helped close the deal."
Legislators have allocated more than $500 million for the governor's office to award through the Texas Enterprise Fund and its new sister, the Emerging Technology Fund.
Recently, NanoCoolers Inc., which received $3 million from the Technology Fund, declared bankruptcy.
Because of concerns over the state investment, House leaders have asked the chamber's Economic Development Committee to study the funds and how they are managed.
"I've got a lot of concerns," said Rep. Solomon Ortiz Jr., a committee member.
Among problems are provisions that mandate a return of state money if goals aren't met. "There's really no real teeth in those provisions for the state," he said. In addition, the governor works with an advisory committee, but has almost exclusive say over where the dollars flow.
"Everything is political by nature," said Mr. Ortiz, D-Corpus Christi. "As a legislator, we've got to do everything we can do to make sure that these funds that are taxpayers' dollars are properly allocated. It's not an easy fix."
