12.18.07

Perry’s Corporate Welfare Scheme Not Paying Off For Texas

Posted in Around The State, Bad Government Republicans, Had Enough Yet?, Right Wing Lies at 1:45 pm by wcnews

Via Texans for Public Justice ongoing series Watch You Assets:

State Development Fund Rewards Hype:
Incentives Great, Penalties Few For Companies That Overstate Their Benefits

Texas Governor Rick Perry uses the publicly financed Texas Enterprise Fund to pay companies to invest in the state and create new jobs here. At a time when both liberals and conservatives question the practice of doling out public dollars to private enterprises, the Enterprise Fund has awarded $233 million—almost two-thirds of its total grants—to companies that subsequently announced layoffs of some Texas workers or failed to create the number of jobs that they had promised in exchange for public funds. Penalties assessed on companies who don’t meet their employment goals are weak at best and sometimes companies can escape penalties altogether.

The governor’s four-year-old Enterprise Fund, along with its sister project, the Emerging Technology Fund, are facing growing public scrutiny. Last month Speaker Tom Craddick announced that the House Committee on Economic Development would conduct a review of the program’s effectiveness. “Some of the goals [of the projects] aren’t being met, but at the end of the day these companies don’t have penalties. They get a free ride,” says Corpus Christi Rep. Solomon Ortiz, Jr., who requested that the committee conduct the review. “We have to make sure we are good stewards of taxpayer dollars.” The committee will make recommendations to the full legislature in 2009.

Enterprise Fund recipients receive all or part of their grants upfront. The state can force a company that fails to meet its job-creation targets to repay some funds. But these “clawbacks” lack teeth. To date the state has enforced clawbacks on just three companies, which collectively have returned less than one percent of their Enterprise Fund awards. The absence of serious penalties creates incentives for companies to exaggerate the benefits that they offer the state in order to maximize the public funds that they receive.

Shocking, just shocking. These schemes rarely, if ever, pay off. A giveaway to corporations without accountability. Is that fiscally conservatives governor? Anyway, read the whole thing.

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