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Texas Enterprise Fund

House passes its budget

Mostly shenanigan-free, with a nice little side order of shade for a few people who deserve it.

After 15 and a half hours of debate on hundreds of amendments to the Texas House budget, lawmakers in the lower chamber passed the two-year, $218 billion document, with 131 votes in favor and 16 votes against.

The House vote included using $2.5 billion from the state’s savings account, colloquially known as the Rainy Day Fund. State Rep. John Zerwas, R-Richmond, thanked lawmakers for exhibiting “true leadership” with their willingness to tap the fund, “instead of electing to use an unconstitutional transfer from the transportation funding.”

That was a jab at the Senate, which last week approved its version of the two-year budget using a $2.5 billion accounting trick to free up funds dedicated to highway spending. The House must now work with the Senate, which is under the leadership of Lt. Gov. Dan Patrick, who vehemently opposes using the Rainy Day Fund, to reconcile their budget differences.

House lawmakers, debating the budget late into Thursday night, took several jabs at Patrick and other statewide elected officials throughout the evening.

Included in the fray were Gov. Greg Abbott, who saw one of his prized economic development programs defunded; Patrick, who heard a resounding “no” when his favored proposal to subsidize private school tuition with public funds was put to a vote; and Attorney General Ken Paxton, who lost more than $20 million from his agency’s budget for lawsuits.

On the winning side of the House budget debate were child welfare advocates, who saw funding for foster care and Child Protective Services tentatively boosted; social conservatives, who scored $20 million for the Alternatives to Abortion program; and the lieutenants of House Speaker Joe Straus’ leadership team who, in a display of unity, easily brushed aside most challenges from far-right Republicans.

Statewide GOP leaders took some of the heftiest blows in the House chamber. Lawmakers there voted to strip $43 million from the governor’s Texas Enterprise Fund, the “deal-closing” fund the state uses to lure businesses from elsewhere, and divide it into two equal pots: one for Child Protective Services and foster care funding, the other for a program that pays for disabled children’s physical, occupational and speech therapy services. Both are hot-button issues that have dominated the House’s budget negotiations during this legislative session.


Private school subsidies, a pet issue of Patrick and his Senate, also suffered a perhaps fatal wound on Thursday. House lawmakers voted 103-44 to prevent state money from being spent to subsidize private school tuition in the form of vouchers, education savings accounts or tuition scholarships. The proposal’s author, state Rep. Abel Herrero, D-Robstown, said it was “in support of our public schools and our neighborhood schools.”


Paxton’s attorney general’s office also saw funding gutted by House lawmakers who opted to instead fund programs that serve vulnerable children. Foster care funding would receive $21.5 million that was previously intended to pay for Paxton’s legal services budget under a proposal by state Rep. Ina Minjarez, D-San Antonio, that passed 82 to 61.

See here for more on the Enterprise Fund de-funding, which made me smile. Despite promises of shenanigans and roughly a gazillion amendments filed, there was more good done to the budget than bad. Which is not to say it’s a good budget, but it’s far from the worst we’ve ever seen. Take your positives where you can.

Especially when they involve Dan Patrick getting pwned.

In late March, lobbying group Texans for Education Opportunity used an online campaign to generate thousands of letters to 29 state representatives lobbying them to back education savings accounts, one of the subsidy programs in SB 3. Though the group claimed the letters were credible, the letters stirred up suspicion after no representative could find a constituent who remembered adding their name to that correspondence.

Of the 29 representatives targeted in the campaign, 26 voted Thursday to block money from funding “private school choice” programs.

RG Ratcliffe called it a “mugging”. As former Houston Rockets radio announcer Gene Peterson used to say, how sweet it is. Also, too, going back to the first story, there’s this:

Stickland had filed an amendment defund a state program for the abatement of feral hogs, which he’s become known for championing at the Legislature each session. Stickland railed predictably against the program, calling it “ridiculous” and a waste of money.

“It has not worked, and it never will work,” Stickland said, his voice rising.

That apparently offended rural lawmakers, notably state Rep. Drew Springer, R-Muenster. In response, Springer attached an amendment to Stickland’s proposal that would cut the same amount of funding for the Texas Department of Transportation, but only for roads and highways in Stickland’s hometown of Bedford.

Stickland took to the back microphone to cry foul.

“Someone else has chosen to make a mockery of this system and play gotcha politics,” he said before being interrupted. Laughter had erupted in the gallery.

“It’s funny until it happens to you,” he continued.

Springer and Stickland then confronted each other on the middle of the House floor and had to be separated by colleagues. Springer’s amendment ultimately passed, 99 to 26, forcing Stickland to withdraw his own proposal to which it had been attached.

What is best in life is to crush your enemies, see them driven before you, and hear the lamentations of Jonathan Stickland. And Briscoe Cain, too, the Chester to Stickland’s Spike, except without the victorious denouement for Chester. Look, just because the House passed a budget doesn’t mean this is the budget we’ll get. The Senate passed a budget, too, and there are lots of differences to be worked out between the two. The final version will be different, and some of the things we are cheering now may be undone in that. But that’s no reason not to cheer for the things that deserve it now. The Observer and the Press have more.

Business as usual with the Texas Enterprise Fund

Raise your hand if this surprises you.


In July of 2013, Gov. Rick Perry announced that he had closed another deal. Chevron would build a 50-story tower in downtown Houston next to one of its existing office buildings. The $662 million capital investment was slated to create 1,752 high-paying jobs.

“The state is providing $12 million through the Texas Enterprise Fund to close the deal on this expansion and job creation,” Perry said in a press release at the time.

A Chevron executive added: “our new office building underscores Chevron’s long-term commitment to Houston and Texas.”

Nearly three years later, 1600 Louisiana Street, where the 1.7 million square foot building was supposed to rise in the Houston skyline, remains a grassy lot. The company, it turns out, was not actually required to build its new tower in exchange for drawing state funds.

What’s more, Chevron has announced layoffs of more than 1,500 workers in Houston over the past year, prompting questions about whether the petroleum giant employs fewer area workers than it did before Perry allowed it to tap taxpayer funds.

And yet Chevron remains in full compliance with its Enterprise Fund agreement with the state, according to Gov. Greg Abbott’s office. A close examination of the 14-page contract reveals language so vague that the company does not legally have to deliver on much of what it promised publicly.

Texas has doled out more than half a billion dollars through the Texas Enterprise Fund since 2003, with dozens of firms agreeing to create jobs in Texas in exchange for a subsidy. The fund has long been championed by Perry as a way to reel in businesses that might otherwise land elsewhere. It drew close scrutiny two years ago, in the Republican’s final days in office, after an audit found the fund riddled with weak oversight. Critics honed in on the news that grants were awarded to companies that didn’t formally apply and that state agencies repeatedly failed to check whether companies were adhering to their contracts.

There’s more, but you get the idea. I’ve written plenty about the Texas Enterprise Fund and its various cousins; go search the archives if you want a taste. I’m just going to say now what I said before about tax breaks that the city hands out: There’s a place for this kind of economic incentive, but there ought to be an annual review of each deal, with a public accounting of what was promised, what’s been done, what’s still left to do, and what the timeline is for doing them. For the TEF, there needs to be a better process for deciding how they are granted as well. I don’t think any of this is rocket science, or particularly controversial. Ultimately, it’s up to the voters to elect people who will make that a priority, and then to hold them to that promise. Until that happens, why should anything change?

TOP releases report on inefficiency of development tax subsidies

From the inbox:

[Thursday], the Texas Organizing Project and the Workers Defense Project released a report on the ineffectiveness of tax subsidies in cities across Texas, and proposed ways to increase requirements for such deals in Houston to offer benefits in the form of good paying jobs with community investment for Houstonians.

The report, compiled by the Workers Defense Project, looked at corporate tax subsidies throughout the state, including Houston, and found that Texas’ cities are giving away huge subsidies without enforceable community benefits agreements.

“Today, we are asking the hard, critical questions,” said Lola Garcia, a community leader with the Texas Organizing Project, “Economic development for whom? For out-of-state multi-billion dollar companies and wealthy developers? Or for neighborhoods and Houstonians in need?”

After analyzing Houston’s tax subsidy deals, contracts and compliance records, researchers found that Houston’s tax subsidy programs have failed to deliver on their promises of equitable development, specifically, they:

  • Failed to create good jobs that pay well;

  • Failed to incentivize affordable housing, and instead contributed to the gentrification of our neighborhoods; and

  • Failed to create a level playing field for small and local businesses to access these programs.

“It’s time to address the city’s long history of picking winners and losers through tax give-aways that fast-track gentrification and fail to provide any direct benefits to neighborhoods most in need of a lift,” said Tarsha Jackson, Harris County director for TOP. “The good news is that we have the opportunity to change this narrative, to redesign the programs, raise and clarify the city’s expectations and criteria for developers seeking multi-million dollar tax deals.

“We know Mayor Turner is committed to creating good jobs for Houstonians, and this research can help us set new standards on economic development projects.”

Get the full report here: The Failed Promise of the Texas Miracle: Corporate subsidies in the Lone Star state.

And here’s the executive summary:

Over the last year, researchers from the Workers Defense Project and the University of Texas at Austin have undertaken a study of tax subsidies and other economic incentives utilized at the state and local level to spur economic development in Texas. Researchers sought to understand the role economic incentives play in the Texas economy by examining how these programs have fulfilled or failed to fulfill their promise of creating high-quality, high-paying jobs and increasing local tax revenue. While there are over a dozen kinds of giveaways to businesses in the form of tax breaks, loans and grants in Texas, our research team conducted a thorough case study of one of the least transparent local programs: Chapter 380 (city) and Chapter 381 (county) agreements, which provide grants, tax breaks, and low-cost loans to corporations. To understand the impact of these economic programs, our research team combed through thousands of pages of contracts and compliance records from three Texas cities and county governments: Austin & Travis County, Houston & Harris County, and Dallas & Dallas County.

Researchers also examined data from over a dozen local, state and federal agencies including city and county governments, the U.S. Census Bureau, the U.S. Department of Education, the Bureau of Economic Analysis, and the State Auditor’s Office, among others. Additionally, researchers reviewed existing studies from numerous academic sources on the impact of economic incentives, as well as existing data on state incentive programs, including the state-level equivalent of Chapter 380/381 agreements: The Texas Enterprise Fund.

To provide context for the use and impact of Texas’ economic incentive programs, we have structured this report around the three pillars necessary to build a strong economy: good job creation, investment in education and training, and fair market competition. Researchers found that while the Lone Star State has made substantial investments to attract Fortune 500 companies to the state, it has failed to invest in Texas businesses and workers, and left many homeowners footing the bill for billions that have been doled out to big business. This study seeks to provide in-depth analysis to how these tax subsidy programs work, how they have failed or fulfilled their promise to Texans, and to provide robust solutions to ensure that our state builds a strong economy that puts Texas business, workers, and taxpayers first.

I’m not opposed to the idea of economic incentives. There does need to be a good, measurable return on the investment, there needs to be a way to enforce the agreements, and the benefits need to be distributed equitably among the population. There’s plenty of room to do all of these things better. The full report is here, and the Austin Chronicle, the Press, and KUHF have more.

More on the initial bill filings

From the Trib, a sampling:

As of Monday afternoon, a bill repealing the Texas Dream Act, which allows undocumented immigrant students to pay in-state college tuition rates, had yet to emerge. Lt. Gov.-elect Dan Patrick promised while campaigning that he would work to repeal the act. The bill could part of legislation that is reserved for priorities set by the lieutenant governor.

All bills can be seen on the Texas Legislature site. Here’s a list of other noteworthy legislation filed Monday: 


State Reps. Dan Flynn, R-Canton, and James White, R-Woodville, filed legislation, House Bill 106 and House Bill 164, respectively, that would allow Texans to openly carry handheld guns. 

House Bill 176, filed by Rep. Tim Kleinschmidt, R-Lexington, would create the “Second Amendment Preservation Act,” which would say a federal law “that infringes on a law-abiding citizen’s right to keep and bear arms under the Second Amendment to the United States Constitution or Section 23, Article I, Texas Constitution, is invalid and not enforceable in this state.” 


Senate Joint Resolution 12 and Senate Bill 139, filed by Sen. Charles Perry, R-Lubbock, would eliminate diversions from the state highway fund to the Department of Public Safety to ensure those funds are only used on road construction. Currently, part of the state highway fund is paying for state highway police. 


Senate Bill 66, filed by Sen. Juan “Chuy” Hinojosa, D-McAllen, would require schools to stock EpiPens, and that employees are trained in how to use the medical devices that combat serious allergic reactions.

Senate Bill 96 and Senate Bill 97, also filed by Hinojosa, would introduce regulations of vapor products, or  e-cigarettes, in Texas. SB 96 prohibits the use of vapor products on school property, while SB 97 would apply many of the regulations on cigarettes to vapor products.

House Bill 113, filed by Rep. Allen Fletcher, R-Cypress, would make it illegal to perform an abortion based on the sex of the child.

House Bill 116, filed by Rep. Trey Martinez Fischer, D-San Antonio, would expand Medicaid eligibility in the state. 


Sen. Judith Zaffirini, D-Laredo, filed several higher education related bills. Senate Bill 24 would increase the orientation training for university system regents, while Senate Bill 42 would prevent the governor from appointing a student regent if that person did not submit an application to the university or its student government. Senate Bill 23, also filed by Zaffirini, would make pre-kindergarten available to all 4-year-olds in Texas and make half-day pre-K available to 3-year olds who meet certain at-risk measures.

Senate Bill 150, filed by Sen. Kel Seliger, R-Amarillo, would fund 64 construction and renovation projects at higher education institutions across the state. It would cost $2.86 billion.

House Bill 138, filed by Rep. Dan Flynn, R-Canton, would stop independent school districts from banning schools from posting the Ten Commandments in classrooms. 


House Bill 76, filed by Rep. Celia Israel, D-Austin, would allow citizens to register to vote online. 

Sen. Sylvia Garcia, D-Houston, filed three bills in an attempt to increase civic engagement in Texas. Senate Bill 141 would create a voter education program in Texas high schools, Senate Bill 142 would allow deputy registrars to receive their training online, and Senate Bill 143 would notify voters who were rejected while registering of what mistakes they made on their registration forms. 

House Bill 111, filed by Rep. Trey Martinez Fischer, D-San Antonio, would create same-day voter registration. 

Energy and Environment

Senate Bill 109, filed by Sen.-elect Van Taylor, R-Plano, establishes new deadlines for processing water rights permits in Texas. In a statement on Monday, Taylor said the bill was aimed at bureaucracy that is preventing parts of North Texas from accessing water.

House Bill 224, filed by Rep. Ryan Guillen, D-Rio Grande City, would change the name of the Railroad Commission of Texas to the “Texas Energy Resources Commission.” Similar legislation has failed in the past.


House Bill 55, filed by Rep. Armando “Mando” Martinez, D-Weslaco, would allow money from the Texas Enterprise Fund to go to veterans hospitals in the state. The Texas Enterprise Fund became embroiled in controversy this past election season, when it was revealed that several recipients of the fund never formally submitted applications.

House Bill 92, filed by Rep. James White, R-Woodville, would change the legal definition of an “illegal knife.” 

House Bill 150, filed by Rep. Dan Flynn, R-Canton, would nix daylight savings time in Texas.

House Bill 161, filed by Rep. Lyle Larson, R-San Antonio, would allow counties to house prisoners in tents.  

There’s plenty more, some good, some bad, some bat$#!+ crazy, some blatantly unconstitutional, many with no hope of ever getting a committee hearing. As always, I’ll do what I can to keep track of ’em as we go. The Chron, Stace, Grits, Juanita, Newsdesk, and the Observer have more.

Gov debate II: That’s more like it

The second Governor’s debate was a lively affair.

Sen. Wendy Davis

Sen. Wendy Davis

Republican Attorney General Greg Abbott, who has mostly avoided direct confrontation with his opponent in the race for Texas governor, took a hard swing at Democratic Sen. Wendy Davis over her ethics as a lawmaker in a televised debate Tuesday night.

And she let him have it right back.

While clashing over tax incentives doled out at both the state and local levels, Abbott accused Davis of using her role as a Fort Worth city councilwoman to pad her own pocketbook. Specifically, he said she made money on an economic development deal involving the sporting goods store Cabela’s, because her title company got a piece of the action during a time that she was serving on the council.

That exchange in the second half of the hour-long discussion was easily the most heated moment the two have shared in either of the two statewide debates, and it represented a far more personal and hands-on attack from Abbott, who has generally left the campaign dirty work to surrogates.

“When you used those incentive funds to attract Cabela, and then closed the deal, it was your title company that benefited by closing that deal,” he said. “So you personally profited. You were able to use your title company …”

He never got to finish his sentence. Davis, in keeping with her aggressive posture from the last debate, cut Abbott off and stopped just short of calling him a liar.

“Mr. Abbott, you are not telling the truth right now, and you know you are not telling the truth. I did not personally profit from that,” she said.

Then Davis pivoted to the latest controversy involving incentives at the state level — contained in the bruising audit from the state’s deal-closing Texas Enterprise Fund — and revelations that much of the tax subsidies were doled out to companies with little oversight.

“You were the chief law enforcement officer over the Enterprise Fund. It was your responsibility to make sure that the tens of millions of dollars that were going to these companies were resulting in jobs, and you failed to do that,” she said.

When he was given a rebuttal opportunity, Abbott went back for more.

“I would like to respond by knowing how much your title company received by closing the Cabela’s deal that was granted an award from the Texas Enterprise Fund,” Abbott said.

Davis said the title company in question, Republic Title, which was run by her husband, “was not my title company.” She said she earned a salary that was “never depending on any deal that ever closed.” Davis finished her remarks by turning the attention back to Abbott and said he should have done more to stop misspending inside the Texas Enterprise Fund.

“Mr. Abbott, this is about your failure,” she said.

Video of the debate is here. By all accounts I’ve seen, the format was better and so was Davis’ performance than in the first debate. Here’s The Observer:

On the issues, Abbott and Davis made stark distinctions. Neither could really answer a question about how they’d fund their education plans, though Abbott at least had a dollar figure for student spending that made it appear that he had given it some thought. But Davis hit Abbott hard. It was ludicrous, she said, for Abbott to keep saying he would make Texas schools No. 1 while defending huge cuts to funding and refusing to commit to providing more resources.

“Mr. Abbott, you’re talking out of both sides of your mouth,” she said. “You say you want to make Texas No. 1 in education. You cannot accomplish that goal without making the appropriate investments.”

On immigration, Abbott committed, after some pushing, to not vetoing a bill from the Legislature that would eliminate in-state tuition for undocumented migrants. There’s been a question about how Abbott would interact with a Lt. Gov. Dan Patrick. Killing in-state tuition is one of Patrick’s top priorities, and Abbott’s on board, apparently.

The Chron story also noted Abbott being in tune with Dan Patrick on this, and they included Davis’ answer in which she said she would veto such a bill. Perhaps someone ought to let the Latino voters that Abbott is trying to woo know about this. On a side note, Davis’ attacks on Abbott over his less-than-transparent actions with the Texas Enterprise Fund led to AG candidate Sam Houston pledging to make Enterprise Fund applications public if elected, as well as a hilariously over-the-top non-responsive answer to the question by his opponent, Ken Paxton. Gotta love it when candidates are in tune with each other.

Back to the Observer:

But the best part of the debate might have been the discussion over Medicaid expansion—at about 29:30 in the video above. Medicaid expansion is, quite literally, a matter of life and death, one of the most serious issues in the race. If Medicaid isn’t expanded in Texas, a quantifiable number of people will suffer and die—unnecessarily. But it hasn’t come up in the race as much as it might.

Abbott said he’d ask the feds to give Texas its Medicaid dollars as a block grant to be spent as the state sees fit, which few think is a realistic possibility. He assured listeners that he “wouldn’t bankrupt Texas” by imposing on Texas the “overwhelming Obamacare disaster.”

Davis laid out a forceful argument for Medicaid expansion. “I have to laugh when I hear Mr. Abbott talk about bankrupting Texas,” she said. “Right now Texans are sending their hard-earned tax dollars to the IRS, $100 billion of which will never come back to work for us in our state unless we bring it back. As governor, I will it bring it back. Greg Abbott’s plan is for you to send that tax money to California and New York.” Abbott’s rebuttal left Davis smiling from ear to ear. The whole fairly long exchange is worth watching.

The Observer also has video embedded, if you’d rather click over there. This was the last debate, which while a shame is at least two more than we got in 2010 and one more than in 2006. What did you think? PDiddie, Burka, Newsdesk, Campos, and Egberto Willies have more.

Abbott’s Enterprise Fund issues

It’s a bit of a problem for him, isn’t it?

Still not Greg Abbott

While critics were hounding Gov. Rick Perry a decade ago about his job-luring Texas Enterprise Fund, his lawyers went to Attorney General Greg Abbott to block the release of applications that supposedly had been filled out by the entities requesting taxpayer subsidies.

Abbott’s office, tasked with deciding which government records have to be made public, told Perry’s lawyers they must keep the applications secret under exemptions to state transparency laws, according to attorney general rulings and news reports.

Now, though, information contained in a blistering state audit shows that at least five of the recipients that were named in Abbott’s 2004 rulings — and which got tens of millions of dollars from the fund — never actually submitted formal applications. And if no applications ever existed, it’s not clear what Abbott was telling Perry he had to keep secret or why the public is just now learning that millions were awarded without them.

This is the sort of thing that people have in mind when they say the optics of something don’t look good for whoever. Stuff like this doesn’t help, either.

Republican governor nominee Greg Abbott has collected more than $1 million in campaign contributions from beneficiaries of a state business fund cited in a scathing audit for lax oversight of taxpayer dollars.

State law requires Abbott as attorney general to monitor state accounts and recover misspent money.


While state law requires that “at least monthly the attorney general shall inspect” state accounts, an Abbott spokesman said the state auditor has primary responsibility to check on funds.

Jerry Strickland of the attorney general’s office said Abbott has recovered millions of dollars in cases that have been referred by the comptroller during his tenure.

“Attorney General Abbott has successfully collected more than $740 million in funds owed to the state of Texas since 2003,” said Strickland.

None of that money involved the Texas Enterprise Fund, which has distributed $500 million since it was created 2003.

That may just be the weakest response to a reporter’s inquiry about a Bad Thing in the history of spokespeople. Pick a better boss to work for next time, Jerry.

One never knows how the public will respond to stories like these, or if they’re even aware of them. At least this one’s an easy one to tell – Rick Perry gave away hundreds of millions of your tax dollars in grants to big companies that didn’t even ask for them, and Greg Abbott said it was okay for him to not tell anyone about it. The word coverup does trip off the tongue easily enough.

Democratic gubernatorial candidate Wendy Davis accused her Republican opponent Monday of using his power as attorney general to “orchestrate a cover-up” of misspending inside the Texas Enterprise Fund that, according to an audit, handed out taxpayer subsidies to businesses with little oversight.

Davis seized on reports over the weekend detailing Attorney General Greg Abbott’s decade-old rulings that various Texas Enterprise Fund records be kept secret. Abbott’s office, in charge of ruling what government records must either be released or withheld, found that numerous “applications” for the grant money were exempt from state transparency laws.

But a damning new state audit found that many of the companies never submitted applications, making it unclear what applications Abbott sought to block. Davis claims to have found the answer: She is accusing Abbott of declaring the records to be secret in order to hide what the audit turned up years later — a lack of oversight over millions of dollars in grant money.

“We need an independent investigation by appropriate state or federal authorities regarding the actions by the attorney general and the attempts to use the power of his office to cover up the transfer of millions of taxpayer dollars to companies whose applications he knew didn’t exist,” Davis said Monday at a news conference in Fort Worth.

Representatives of the Abbott campaign for governor and the attorney general’s office did not immediately return phone calls.

Not even to give a perfunctory quote about how Greg Abbott has always done whatever it is he says he’s done to protect our interests? My, my, they must be in a tizzy over there. This could really be something.

The growing scandal over the mismanagement of the Texas Enterprise Fund is having a major impact in the state’s political races, and has the potential to upset the conventional wisdom as we move into the final six weeks of the political season, officials tell Newsradio 1200 WOAI.


One Republican Party consultant, who asked not to be named, told Newsradio 1200 WOAI that this could be a ‘game changer’ in the race for governor, which has repeatedly shown Abbott leading Davis by between 8 and 12 percentage points.

“People can understand that this represents the concerns they have that politicians don’t take their tax money seriously,” the consultant said. “This reaffirms the attitude that ‘it’s not real money’ because it comes from the taxpayer.”

The expert added, “misusing and mismanaging taxpayer money is something that will stick with conservatives. They won’t like it at all.”

It’s a little premature to call something a “game changer”. If we’re still talking about this a week from now, if we haven’t been distracted by some other shiny object, then maybe. Believe me, I hope that’s an accurate assessment. I’ve just seen too many other “game changers” turn out to be not so much to get too giddy just yet. The best thing that can happen is for more information about this to come out, to add to the existing story. We’ll see about that. Burka, Trail Blazers/a>, and PDiddie have more.

Another look at Perry’s slush fund

Like everything with Rick Perry, there’s less to it than meets the eye.

Corndogs make bad news go down easier

Even corndogs don’t taste better than corporate subsidies

Texas Gov. Rick Perry has distributed $205 million in taxpayer money to scores of technology startups using a pet program designed to bring high-paying jobs and innovation to the nation’s second most-populous state.

But a closer look at the Texas Emerging Technology Fund, one of Perry’s signature initiatives in his 14 years as governor, reveals that some of the businesses that received money are not all they seem. One actually operates in California. Some have stagnated trying to find more capital. Others have listed out-of-state employees and short-term hires as being among the jobs they created.

A few have forfeited their right to do business in Texas by not filing tax reports.

An Associated Press review of the program found that some of the same companies credited with creating a share of the program’s 1,600 new jobs have actually stalled and in some cases blamed Perry’s office for their struggles.


The tech fund works like this: In exchange for money, startups give the state an equity position in their businesses. If the companies are successful, the state recoups its investment or even makes a profit. If they go bankrupt or shut down – and at least 16 have so far – the dollars are lost.

Those failures represent only a fraction of the fund’s full portfolio of more than 130 companies, some of which are clearly thriving. Venture capital funds are risky by nature and often endure losses. About 1 in 4 venture-backed startups fail, according to industry groups. Some studies put the rate of flops much higher.

But questionable job-creation figures and undisclosed business struggles in the fund’s annual report heap fresh doubts about transparency onto the fund, which has long been criticized as too opaque, including in a scathing 2011 report by state auditors.

Julia Sass Rubin, a venture capital expert at Rutgers University who studies economic development, said the lack of transparency runs counter to the private sector, where investors get more detailed information about performance.

“If this were a traditional venture capital fund, this would never fly,” Rubin said.

Funny how the private sector is so much better at doing everything, except giving money to the private sector. The lack of transparency with the Emerging Technology Fund, as well as the Texas Enterprise Fund, is a feature, not a bug.

Targazyme Inc. is one example of a problematic startup. On paper, the San Antonio-based startup is developing stem-cell breakthroughs with 14 employees and the help of $1.25 million in state funds. But the rural address listed for its Texas headquarters is actually a weedy horse pasture. During a recent visit by a reporter, the ex-husband of the CEO was warning his guest to watch for rattlesnakes.

Targazyme founder Lynnet Koh said her company is moving forward but that she left Texas because Perry’s office withheld additional funding, a complaint echoed by other recipients. She now lives in California and said many of the jobs created by the company were short-term hires outside Texas, none of which is mentioned in the fund’s 2013 annual report.

“If you ask me on a scale of 1-to-10 satisfaction with the state, I give it a zero,” Koh said. “Never, ever. Not for any money in the world would I do business with ETF.”

So I guess these are some jobs Rick Perry didn’t manage to steal from California, despite his best efforts. It’s like noting makes any sense anymore. Scott Braddock has more on a tangential subject.

Once again, where are the jobs Rick Perry was trying to poach?

Politico revisits a familiar subject.

Corndogs make bad news go down easier

California corndogs are the best

Since as early as February of last year and as recently as April of this one, Perry has made eight trips to six different states, all of which have one very particular thing in common: They’re run by Democratic governors. Perry has used his visits to hammer on a consistent theme: Texas is a great state for business; the state he’s currently in is not; so wouldn’t it make sense then for all those companies that aren’t currently located in the Lone Star State to correct their error? Earlier this month, Perry made plain the politics behind his accumulated frequent-flier miles. “Blue-state governors need to be looking over their shoulder,” he told a Fox News panel.

Perry’s focused national tour is built around a message that’s tailor made for a presidential campaign whose central issue will likely be a lagging economy. The “Texas miracle,” the idea that Perry’s policies produced job growth in the worst climate since the Great Depression, first emerged in his initial failed campaign and has lived on ever since, buoyed by the fact that the state’s unemployment rate remains below the national average. But as any number of progressive-minded opponents will tell you, that “miracle” is most likely due in large part to the state’s wealth of fossil fuels. Hardly an advantage Perry can claim credit for. But tempting CEOs to relocate southward? For that he’ll gladly take an attaboy.

Poaching companies is nothing new. States have been bad-mouthing and out-bidding each other for decades in the hopes of luring more business, often with little to show for it. But according to Greg Leroy, the executive director of Good Jobs First, a D.C.-based non-profit devoted to exposing what it considers the folly of government subsidies often given in the name of attracting companies, Perry’s campaign stands on its own. “I’ve been covering this for 30 years and there’s no precedent for what he’s doing,” says Leroy. “Nobody’s been as aggressive. Nobody’s done it as personally. He’s really taking it to a new low.”


The ideological fuel powering Perry’s trips out of state says that, unlike the weather, that vague term known as a “business climate” can be engineered, and that no one’s done a better job of parting the clouds than Texas. But Leroy and nearly a century’s worth of data suggest otherwise. As does the most recent pelt in Perry’s poaching tour, which also happens to be the biggest such prize in his political career.


Then, in late April, Perry got the big score that seemed to justify all his travels when Toyota announced it had selected Plano, a Dallas suburb, as the home of its new North American headquarters. “Toyota understands that Texas’ employer-friendly combination of low taxes, fair courts, smart regulations and world-class workforce can help businesses of any size succeed and thrive,” a glowing Perry said the day the announcement was made.

Toyota was a coup for two specific and related reasons. It meant 3,000 new jobs for Texas and 3,000 fewer for California, the state where Perry’s trip had begun and Exhibit A in his campaign against what he sees as business-killing taxation and regulation. It seemed the epitome of a red state offering safe harbor to a beleaguered company that had finally had enough abuse at the hands of a grubby-handed blue state. Yet just a few days after the announcement, Toyota began quietly offering a counter-narrative.

In an extended interview with the Los Angeles Times, Toyota’s North American chief executive Jim Lentz gave a more nuanced explanation for why the company left California. The true reason for his company’s move, Lentz explained, came down to something much simpler: not sending the wrong signal to his employees. Toyota, Lentz said, wanted to consolidate management that was spread out over three states. Choosing California was never an option because it was already the home of Toyota’s sales and marketing and Lentz said that he didn’t want to give the impression to the rest of the company that “sales was taking over.”

“It may seem like a juicy story to have this confrontation between California and Texas,” Lentz told the Times, “But that was not the case.”

That left four candidates: Plano, Charlotte, Denver and Atlanta. In an op-ed he published a week later in the Dallas Morning News, Lentz mentioned that low taxes were part of a “wide range of criteria” that led him and his company to choose Texas, but he also made a point to mention that the decision was a matter of “simple geography.” Greater Dallas is in the Central Time Zone, has a nearby airport with direct flights to Japan and sits close to the multinational’s large American base of manufacturing. In other words, Texas was not, as Perry would have it, the most desirable choice because of taxes, regulation or the $40 million in subsidies it offered as a cherry on top. Instead, Toyota picked Texas in large part because of the one enormous advantage the state has enjoyed ever since the signing of the Treaty of Guadalupe-Hidalgo: It sits smack in the middle of the country.

Yes, the Toyota story started falling apart even before the ink was dry on Perry’s self-congratulatory press release. I’m glad Politico followed up on that angle – and there’s still more to it, which we’ll get to in a minute – but as has been the case with all of these stories, no one ever seems to ask the question: where are the jobs Perry has been so busy trying to poach? Toyota was looking like the first real coup, before it all came crashing down in a landslide of boring corporate minutiae, but what else is there? I have long been of the belief that the answer is basically “nothing”, but it would be nice to have some newsgathering organization try to figure it out for themselves.

As for the other angle on Toyota, here’s the Observer.

Rick Perry’s office refuses to release any information about the $40 million it’s offering Toyota to relocate to Texas, despite providing the Observer with similar information last year for a $12 million grant to Chevron.

The Observer and the Houston Chronicle both filed open records requests with the governor’s office after Perry announced in April the $40 million incentive grant to Toyota from the Texas Enterprise Fund. The governor’s office promotes the Enterprise Fund as a “deal-closing” program that helps bring jobs to Texas. But in some cases evidence suggests that the fund does little but line the pockets of companies planning to move to Texas anyway. For example, the Observer reported last year Chevron already had plans to develop an office tower in downtown Houston, provided scant justification that it was considering other locations in its application and told the governor’s office that it planned to use the $12 million grant to pay for employee relocation perks.

It would be interesting to know if something similar happened with the Toyota grant. Especially since company executives have said the $40 million Texas Enterprise Fund grant had little to do with the relocation from California to Plano.

I can’t be the only one who thinks that if there was something in this information that made Rick Perry look good he’d have released it by now, right?

One place where a little austerity would do some good

Rick Perry’s slush funds get no love in the opening budgets.

The House and Senate’s initial two-year budgets would force Perry’s deal-closing Texas Enterprise Fund to exhaust its last $7 million and throttle back on state film incentives and subsidies for major sporting events.

The Emerging Technology Fund, which subsidizes high-tech commercial ventures, would face slightly less dire prospects. The 8-year-old effort, which a Dallas Morning News investigation in 2010 found had awarded more than $16 million to firms with investors or officers who are large Perry campaign donors, has an estimated $120 million of existing money.

Lawmakers’ initial budgets would let it spend down that sum in the next two years.

“The Legislature is tired of seeing some of these programs being used the way they’re being used — or the appearance that they’re being used for that,” said House Appropriations Committee Chairman Jim Pitts, R-Waxahachie. “By zeroing those things out, the Legislature will have a way to look at these programs.”

In the past, Perry generally has succeeded in defending the programs, except in 2011’s budget-cutting session, when the Enterprise Fund and tech fund received no new money.

This year, though, Perry isn’t facing criticism only from Democrats, who say education and social services should get the first call on limited state dollars.

The Republican governor also is dodging charges of crony capitalism that were bandied about in his failed run for president last year and recently aired by Rep. David Simpson, R-Longview, in his failed bid to become Texas House speaker.

Last spring, Texans for a Conservative Budget, a coalition of a half-dozen groups, urged lawmakers to consider eliminating dozens of programs, including the Enterprise Fund and tech fund.

Of course, as we know, these budgets are “just a starting point”, so Perry isn’t going to have to beg for loose change on the streets for his pet projects just yet. I could live with the continued existence of these funds if there were some actual oversight on them, and more stringent rules and sanctions for the job creation requirements of the grants. But just not giving them any more money works for me, too.

From the “If pigs had wings” department

It’s never a bad time to construct a counterfactual.

How could you not take this guy seriously?

What if Rick Perry had never said, “Oops”? What if he could have, for Christ’s sake, just remembered that he had wanted to gut the Department of Energy? What if he hadn’t climbed into a tan coat and Brett Favre jeans and released that abominable Youtube video — you know, the gay one.

In other words, what if Rick Perry hadn’t been Rick Perry? If Rick Perry wasn’t Rick Perry, then Rick Perry would have been a pretty strong Republican presidential nominee. Way stronger than Mitt Romney.
Here’s why: Texas — and Houston in particular — is dominating right now. Americans at their core care about few things. The economy, jobs, and the housing market. It’s that simple. They don’t want to lose their jobs, or their home’s price to dissolve into the mist.

And if that’s the barometer, Perry would have had some staggering statistics to brandish. Texas added 12,500 non-farm jobs in May, the Texas Workforce Commission reported last week. It was the 22nd straight month of growth. What’s more, the state has added nearly 290,000 private sector jobs. This, while the U.S. unemployment rate languishes at 8.2 percent. Texas’ rate, meanwhile, hovers in the mid-6s.


So what does all that mean? It means that Perry — for all his failings — is in possession of one formidable record of enabling job growth during a time of malaise and tepid economic recovery.

It also means: Thank Allah Rick Perry is Rick Perry. And he’s not in this race.

No question, Texas’ unemployment rate and record of job growth is what made Rick Perry look like a formidable candidate on paper a year ago. You know how it went from there – insert your favorite sports cliche about why they play the games instead of deciding the winner subjectively. As much fun as it is to write alternate histories, there are two things to keep in mind here.

1. Sure, Perry was a knucklehead who stuck his foot in his mouth with regularity, but his “Oops” moment didn’t kill his campaign by itself. Perry had come under vicious attack in the primary for his HPV directive – one of the very few decent things he has done as Governor, though of course it was done for the purpose of enriching a crony – and for his 2001 signing of a state level DREAM Act, which granted in state tuition rates to public universities to the children of undocumented immigrants. In fact, it was his “have a heart” comment in response to criticism of this law that was the start of Perry’s downward spiral. Point being, even candidates who look strong on paper have vulnerabilities that will be exploited, and their strength in one area may not help them against attacks in another.

2. One result of Perry’s swift, gaffe-abetted implosion is that the job creation record that was the centerpiece of his candidacy never really got poked and prodded by his Republican rivals, and it was light years away from being addressed by President Obama’s campaign. There’s plenty to attack about his ecenomic record – many of the jobs that were created are low wage/low skill; much of Texas’ growth has been fueled by immigration; the tools Perry has had at his disposal to lure businesses to Texas – the Texas Enterprise Fund and Texas Emerging Technology Fund – are rife with cronyism and unmet job creation metrics, and even if they weren’t it’s not like this kind of zero-sum strategy translates to the national level; Texas’ consistently low levels of educational achievement portend future economic disaster, and Perry’s response to this was to push for historic cuts in public education funding. And so on and so forth; I’m sure there would be more, probably including some things we’re not familiar with.

Now maybe these things would resonate with a general election audience, and maybe they wouldn’t. Maybe Perry would have a strong counter-argument to them, or would be able to divert attention from them by making successful attacks of his own. We’ll never know. My point here is that everyone looks good on paper until the other side gets to have a say about it. Perry was gone from the race long before Team Obama ever got to ask the rest of the country if they wanted to be more like Texas or not, much as they’ve been framing Mitt Romney’s time at Bain Capital as something less than desirable. If it had become clear that Perry would have been the contender, Obama would have had a strategy for dealing with him and for turning his strengths into weaknesses. Again, maybe it would work and maybe it wouldn’t. We’re choosing our own adventure here, so there is no “right” or “wrong” answer. It’s just that saying the strengths Rick Perry had as a candidate going into the Presidential race would still be serving him as well as they did before he announced his candidacy is leaving the analysis short and ignoring what has happened with the guy who did survive the primary.

Comcast SportsNet Houston

This would be cool.

Coming to Houston?

The NBC Sports Group is seeking about $2 million in state and local support to bring a major production studio and 135 jobs to downtown Houston.

The operation would be for Comcast SportsNet Houston, a new regional television network that will broadcast Astros and Rockets games beginning in the fall.

The media company has identified 40,000 square feet of space in the Houston Pavilions for the operation, which would include two production studios, two control rooms and other broadcast-related facilities, according to a document obtained by the Chronicle. Some $16 million would be spent on equipment, furniture and other interior improvements.


If Houston isn’t chosen, a smaller facility with 25 employees will operate the network here.

The smaller studio, however, would limit it to Rockets and Astros games, while the larger alternative would allow the network to cover local college and high school sports, as well as local and state charity events, sports-related fundraisers and originally developed and produced programming and talk shows, according to the application.

The additional 110 technical production and digital media jobs would amount to more than $7 million in annual payroll.

A hundred and ten good paying jobs in downtown Houston? Expanded coverage of local sports? A shot in the arm for the Pavilions? What’s not to like?

Last month, NBCUniversal Media LLC submitted an application to the Texas Enterprise Fund requesting $1.2 million for the operation.

Yeah, the Texas Enterprise Fund. That sound you hear is me grinding my teeth. The Enterprise Fund is a wasteful, crony-tastic slush fund for Governor Perry. And now I get to root for it to succeed in this endeavor. Ain’t karma a bitch? If the stupid thing is going to exist, the city of Houston may as well derive some benefit from it. On the plus side, if it fails at least I can go back to hating on it with a clear conscience. Got to find the bright side where you can.

Why is stimulus by one type of government better than the other?

Perhaps someone should ask that question at the next Republican Presidential debate, which they seem to have every week or so.

Gov. Rick Perry’s record of creating jobs with taxpayer money is coming under greater scrutiny because of his presidential campaign.

Perry is trying to deflect criticism of inflated job numbers and cronyism from the right and the left, from The Wall Street Journal to The New Republic and, of course, from his presidential rivals.

This is hardly news in Texas, where the Legislature this year ordered greater oversight of Perry’s management of economic development funds in the wake of a critical audit and outside evaluations of his jobs record. But past criticisms are amplified by presidential politics, particularly when some conservative voters are questioning the wisdom of spending taxpayer dollars to choose winners and losers in the business and technology arena.

Perry’s use of tax dollars for job creation is even being compared with the Obama administration’s $535 million loan guarantee to the failed solar company Solyndra.

During this week’s GOP presidential debate, Perry said it was OK for him to do it, but not President Barack Obama.

“I don’t think the federal government should be involved in that type of investment, period,” he said. “If the states want to do that, that’s fine for states to do that.”

I get that this is a “federalism” issue for Perry, insofar as he actually understands these things, and I get that Republicans hate the federal government – well, they hate it when they’re not in charge of it, anyway. What I want to know is whether there’s any actual economic argument here on Perry’s part. Is there any reason beyond his own political self-interest here to claim that only state governments, and not the federal government, should use public money to spur job creation? If the claim is that one has a better track record of results than the other, which may be implicit here, is there any empirical evidence to back that up? I suspect the answer is No, and I daresay that in the godforsaken event that Rick Perry gets elected President he’ll find ways to steer money to his cronies in the name of job creation. I just would like to see him get pushed on that, for the entertainment value if nothing else.

Another way to put this is to say that Perry isn’t arguing he can do a better job creating jobs than President Obama, he’s saying he shouldn’t be allowed to try it at all as President because it’s best left to the states. Again, I’m sure the first time he proposed a business tax cut of some kind and claimed it would help create jobs, it will be because he’ll also claim that’s totally different from any other method of using taxpayer money to create jobs. Or something, I have no idea what twisted rationale he’d come up with. Not that it really matters, because as this story shows he’ll just make up numbers to support his claims anyway. Read the rest for the details on that.

Senate not inclined to accept Amazon’s bribe

Good for them.

It looks like the Texas Legislature is likely to say no — at least for now — to’s proposal to bring 5,000 jobs to the state in exchange for a temporary break on collecting sales tax.

State Sen. Bob Deuell, R-Greenville, said this morning that the odds were slim the deal with Amazon would survive in the legislative conference committee report that would have attached the language to Senate Bill 1.

SB 1 is the fiscal matters bill being debated in the Legislature’s special session, and is a must-pass measure essential to balancing the state’s 2012-13 budget.

Deuell is a member of the conference committee working to iron out differences between the House and Senate on SB 1.

“I don’t think this offer from Amazon is going to be on the conference report. I don’t see us accepting that offer on the Senate side,” Deuell said. “I’m just speaking for myself, but I think the consensus on the Senate side of the conference committee is not for it.”


Deuell said he doesn’t see a reason the state should allow Amazon to avoid collecting sales tax.

“That’s why we have a sales tax,” Deuell said. “We don’t have an income tax — and I’m not advocating for that – so we have to have (sales) tax. That’s a mainstay of our economy.”


Deuell also said he was skeptical of Amazon’s ability to deliver on its promise of 5,000 jobs and $300 million in capital investments by the end of 2013.

“I don’t see how in the world they can provide 5,000 jobs at distribution centers. Those operate very efficiently, with computers and mechanized things,” Deuell said. “I don’t want to doubt their word and their intentions; I just don’t see how they bring 5,000 jobs to the state.”

See here for the background. I’m glad to see someone besides me express skepticism about the job creation claims. We’ve already seen with the Texas Enterprise Fund that such promises of jobs for kickbacks are written on sand. Why should we take Amazon’s word for it and complicate our tax structure for their benefit? Much simpler to do what we wanted to do in the first place and make them follow the law and pay their fair share.

UPDATE: If we were skeptical of their claim about creating 5,000 jobs, why would be any less skeptical about a claim of creating 6,000 jobs? Or 10,000? Hell, let’s make it ONE MILLION JOBS! When we get to that, let me know.

Sacrifice is for the little people

You almost have to admire the gall.

Milton Rister, director of administration in Gov. Rick Perry’s office, just asked Senate budget writers for a net increase of $81.5 million in state funds for the next two years.

If I took accurate notes — and Finance Committee Vice Chairman Chuy Hinojosa, D-McAllen, chided Rister for not submitting his requests in writing — Perry wants:

* $50 million restored to the Enterprise Fund, not raked off for Lt. Gov. David Dewhurst’s and Committee Chairman Steve Ogden’s favorite jobs programs at the Texas Workforce Commission and another one at Comptroller Susan Combs’ shop.

* $15 million more for the Emerging Technology Fund, which helps high-tech start ups but has been criticized because award recipients have been stalwarts of Perry’s political fundraising operation.

* $20 million more for film, TV and video game incentives.

* Authority to spend $10.2 million from court fees for criminal-justice grants.

*Ability to spend $11.3 million of hotel-occupancy tax on economic development efforts.

That adds up to $106.5 million but Rister said Perry’s willing to give up half of the $50 million the Senate budget gives him to assist local governments during disasters. Rister also asked for the same authority the Legislature has to transfer unspent money between two year budget cycles.

Apparently, the idea is that these little slush funds Perry controls are good for job growth. How you can believe that while pushing budgets that would result in the firing of 100,000 teachers, among other things, is a special talent on loan to our Governor. Here’s more about this, with Sen. John Whitmire playing the “you’ve gotta be kidding me” role.

[Whitmire] elicited testimony from Rister that the governor’s office has $265 million in unspent money in the Enterprise Fund, Emerging Technology Fund and other programs that it would like to carry over to the next two year cycle — and maintain as a sort of emergency account.

“How would that be different from a rainy day fund?” Whitmire asked. “Would that be kind of your rainy day fund that you want us to allow you to use?”

Whitmire: We’re going to be spending millions of dollars on tourism and movie production, but we’re going to be cutting back on Medicaid, letting teachers go, [cutting the Texas] School for the Deaf and autistic children? … Help me understand how you sit there and ask for those kinds of feel-good programs that might create some jobs but at the same time, we’re letting medical students go, residential residents go, state employees.

Rister: The priorities that the governor has outlined to us are job creation.

Whitmire: Even though … we’re letting teachers go, TxDOT is going to let engineers go, medical professors are going to be going? So how do you balance the two?

Rister: It’s a tough balance. … The governor has put a priority on bringing jobs to Texas. … Growing our economy is the way we get out of the recession. …

Whitmire: But UT Southwestern Medical [Center] yesterday told us that in the Dallas area, with the cuts under Senate Bill 1, they’ll lose over 1,000 employees, over 1,000 jobs … in Dallas. So we’ve got to take money from them to allow you to try to increase movie production and tourism. I don’t think the people of Texas that I represent would understand that.

In a just world, this would be the beginning of the end for Rick Perry. In the world we actually inhabit, I’ll be happy if the Senate simply thumbs its nose at him. Abby Rapoport has more.

The state of the state

Is strong, according to Rick Perry. So strong, in fact, that we’re going to kick the legs out of social services, because clearly we don’t need them.

When the state faced a budget crisis in 2003, Gov. Rick Perry’s office released a budget proposal that was full of zeros, stating that each agency would have to justify every dollar they spent. In 2011, the Governor has taken a different approach, releasing a budget with numbers.

Perry’s budget proposal slashes spending on the Health and Human Services Commission (providing about half of what the agency requested), the Texas Commission on Environmental Quality (providing only two-thirds of what the agency requested) and the Public Utilities Commission (only giving the PUC about 10% of what the agency requested).

Health and Human Services provides the state funding for Medicaid and Children’s Health Insurance Program. TCEQ regulates polluters, such as coal power plants and oil refineries. The TCEQ has been engaged in a long running battle with the EPA, which has long held that the TCEQ is far too lax when it comes to enforcing environmental law. The Public Utilities Commission regulates the state’s utilities and power grid. The state’s grid suffered from rolling blackouts during one of the coldest weeks in recent memory in Texas.

What’s a few blackouts among rugged individuals? Naturally, Perry doesn’t share in the sacrifice he’s calling on others to make, as his budget (a copy of which you can see here) calls for more money for his slush funds the Texas Enterprise Fund and the Emerging Technology Fund. He also extracts some revenge on the Historical Commission for not giving his wife what she wanted in the reconstruction of the Governor’s Mansion. Classy.

You can read the full text of Perry’s remarks here if you really want to. My reaction is that the Lege is already working on budget proposals, and they’ve already heard a lot of testimony from people who would be directly harmed by them, about which the Governor might know something if he weren’t off traipsing around the country. He still wouldn’t care, of course, but at least he might know. Other reactions of which I’m aware:

Texas Liberal

Texas Watch

BOR, which has a few more reactions from others here

State Sen. Kirk Watson

Texas Forward

Various other legislative Democrats

The Texas State Teachers’ Association

State Rep. Armando Walle

State Rep. Garnet Coleman

State Rep. Mike Villarreal

Paul Burka and Patricia Kilday Hart, who notes that Perry essentially refuted the idea of tuition deregulation in this speech

State Sen. Jose Rodriguez

State Rep. Lon Burnam

In the Pink


State Rep. Ana Hernandez Luna

State Rep. Carol Alvarado

Abby Rapoport

Nick Anderson

More Enterprise Fund failures

There sure are a lot of them.

Gov. Rick Perry’s office has rewritten three more contracts for companies that are struggling to create the promised number of jobs after getting millions of taxpayer dollars from the Texas Enterprise Fund.

The Associated Press has been tracking the problems of enterprise fund companies and amendments to their contracts for more than two years.

In response to the latest questions from the AP, Perry’s office said Lee Container Corp., Albany Engineered Composites Inc. and Vought Aircraft all fell short of their job creation goals and got their enterprise fund contracts changed this year. Those contracts were amended since the governor told the AP in response to queries in January that 11 other job creation contracts were also changed to make them more favorable to the companies and give them more time to create jobs.

Vought’s initial state contract was for $35 million, while Albany Engineered Composites’ was for $1 million and Lee Container’s was for $300,000.


According to information from Perry’s office this week, Lee Container Corp. was granted an extra five years to create the 105 jobs it promised; Albany Engineered Composites Inc. had its job creation target reduced from 337 to 137 and the amount of taxpayer money it is getting reduced from $1 million to $300,000; and Vought Aircraft slightly lowered the number of jobs it had in place at the start of its contract.

All three companies had to pay “clawback” fees to the state in 2009 or 2010 — ranging from $19,000 to nearly $1 million — for failing to meet deadlines for creating jobs. Vought, meanwhile, stated in a Securities and Exchange Commission filing this year that it may not be able to satisfy its $35 million enterprise fund commitment and could have to pay back some or all of that money over the next nine years.

So what they got was a no-risk interest-free loan, much of which will likely never be paid back even if they ultimately fail to create a single job, as the case almost surely will be with Lexicon. Something that I’ve never understood about the Texas Enterprise Fund is why exactly a guy like Rick Perry, who claims to be a champion of the free market, thinks it’s a good idea for the government to be picking winners and losers in the business world like this. Why not leave job creation to, you know, the free market? You tell me what the answer to that one is. Maybe Perry just wants to prove by example that Governors should not engage in this kind of meddling. Local Texans has more.

The unemployment tax and the Enterprise Fund

We know that unemployment insurance taxes have gone up, and we know that the increase is more than it would have been had Governor Perry not rejected $555 million in stimulus funds for unemployment insurance. But there’s another way in which Perry’s policies have adversely affected the unemployment insurance situation. As the Bill White campaign documents in this white paper on payroll taxes (PDF), the Perry slush fund known as the Texas Enterprise Fund has been siphoning money away from the unemployment insurance trust fund since 2005.

The Enterprise Fund has been a bone of contention since its creation in 2003. From the beginning, it’s been a mix of cronyism and bad economics, typified by the Lexicon case. Now taxes that businesses have paid that could have supplemented the trust fund or provided for training of people who have lost their jobs have instead gone to the Enterprise Fund, where they may have been used to support a competitor of theirs. Nice thing to contemplate when your taxes have gone up, and gone up more than they needed to, in a recession, isn’t it? That’s what Rick Perry’s leadership has given them. A press release from the White campaign that calls on Perry to restore the $161.5 million in diverted dollars to the unemployment trust fund and calls for an independent audit of the Enterprise Fund is beneath the fold.


The recession and the Texas Enterprise Fund

A report worth reading from Texans for Public Justice:

The global recession that hit Texas in 2008 is playing havoc with Governor Perry’s signature business-incentive program: the Texas Enterprise Fund (TEF). A review of 45 TEF projects that received $363 million in public funds reveals that an increasing number of TEF recipients defaulted on their job commitments in 2008—with even more defaults expected to be reported in the 2009 compliance reports that TEF is now beginning to receive.

Run out of the Governor’s Office,1 TEF has been a centerpiece of Perry’s administration, with the governor often convening media events to unveil TEF awards. The political role of the program has become more problematic in the last year. As a brutal economic downturn coincides with Perry’s reelection campaign, the governor has not publicly addressed his job program’s mounting woes. Instead, his office has quietly redefined success. When the 2008 recession struck, the Governor’s Office increasingly amended TEF deals to ease the contractual requirements of what a recipient must do to hold onto its public funds. In its first four years of operation, TEF formally amended just one development deal.2 Since the recession struck in 2008, Governor Perry has signed amendments diluting six additional development contracts.3 While the governor, House speaker and lieutenant governor all approve TEF grants, the Governor’s Office said it acts alone when amending the deals.

The whole report is worth your time to read, as is this DMN story about the report and reactions to it.

White gets down to the business of being a candidate

Bill White spent his first full day as a former Mayor in the Rio Grande Valley. It was a productive trip for him.

Power brokers in one of the state’s most Democratic regions Tuesday pledged to throw their weight behind Bill White’s bid for Texas governor.

“I can’t think of a better group than this one that has networks and influence throughout the region,” the former Houston mayor told a breakfast gathering that included U.S. Rep. Rubén Hinojosa, D-Mercedes, state Sen. Eddie Lucio, D-Brownsville, and a raft of state representatives and judges, city mayors and community activists.

The breakfast was the first of a day of events for White’s debut in the Rio Grande Valley. Gov. Rick Perry, running for a third term, also appeared in the Valley to announce grant awards.

White’s pitch and platform focused on Perry fatigue, blaming the incumbent for the state’s dismal high school and college graduation rates, college tuition hikes, months-long waits for food stamp applicants, and the Valley’s lack of an interstate highway and veterans hospital.

There was a lot more than that, some of which is in a press release that I’ve reproduced beneath the fold. The Rio Grande Guardian goes into more detail.

After a luncheon at the Tierra Santa Golf Club in Weslaco, White, a former mayor of Houston, told the Guardian he backed moves by the Valley legislative delegation to have Texas Enterprise Fund monies appropriated for a Valley veterans’ hospital.

“The first thing I would do as governor is see what can be done to get a VA appropriation,” White said. “But if we don’t get that I would look at sources of state and local funding to create a veterans’ facility, which is well needed. I agree with the Valley delegation that we ought to consider use of the Enterprise Fund.”

The idea of using enterprise fund monies for a Valley veterans’ hospital was first proposed last month by state Rep. Armando “Mando” Martínez, D-Weslaco. It won immediate support from the two American GI Forum chapters in the Valley.

The push for a VA hospital for the Valley has been the number one issue for the region’s 100,000 veterans for decades. Every municipal government in the region has signed resolutions in support. However, the VA has pushed back, arguing that there are insufficient veterans to warrant a hospital. The nearest VA hospital is 250 miles away in San Antonio.


“Governor Perry gave $15 million of those enterprise funds to Countrywide Financial, which was the largest sub-prime lender, to create new jobs. Well, there are no new jobs because the company went under. I don’t think we should have been rewarding firms like Countrywide Financial. I think we ought to create more jobs by providing services to our veterans,” White said.

I’m thinking that’s an issue that will resonate. All in all, that was a pretty good day for White.

Reading these stories got me thinking about a couple of things. One is the concept of coattails, and whether Bill White may have them. I think it’s important to remember that there are two types of “swing” voters, as Chris Bowers wrote in a post I can no longer find. One is the stereotypical “independent”, who may vote for an R or a D in a given race depending on a variety of factors. White starts out at least as someone who can get people like that to vote for him, but in doing so there is no guarantee that they would then vote for any other Democrat. The potential exists for him to have some kind of halo effect on at least some of these voters, but I would expect that to be limited.

The other type of swing voter, however, is the person who will consistently vote for one party, even a straight-ticket vote, but who may or may not show up in a given election. Clearly, plenty of these people exist, which is why we get 8 million votes in a Presidential year and 4.5 million votes in a non-Presidential year. Where White has the potential to boost his ticketmates is with these voters, more than a few of whom, one presumes, live south of I-10.

The other thing is whether the enthusiasm White has unquestionably generated in the Valley will carry over to parts farther west along the border. Rick Perry has done very well getting endorsements from sheriffs and Mayors along the border in years past. If White can put a dent in some of that support, it would be a nice coup for him, at least as far as the narrative of the race goes, even though it’s not all that much in terms of raw votes. I happen to think that “Perry fatigue” is going to be a big factor this year, and something like this would be a bit of corroboration for that thesis. I could be wrong about this, and certainly the “friendly incumbent” tradition may make this a tough sell. But I think it’s worth watching anyway. Click on for White’s release.


A&M and the Emerging Technology fund

Loren Steffy tells us about politics infecting research at Texas A&M. And Rick Perry is involved. Shocking, I know.

In January, the state awarded A&M $50 million from the Emerging Technology Fund, which purports to benefit private-sector technology startups, for the National Center for Therapeutics Manufacturing, which plans to develop new vaccines.

Unfortunately, the infusion of taxpayer money is showing some disturbing symptoms that have been found in other state economic development deals: a web of political relationships and arrangements with financially shaky companies with ties to key decision makers in the process.

Funding for the therapeutics center is drawing scrutiny because of a power struggle between the university’s main campus in College Station and the A&M System, which oversees 10 other campuses statewide. Chancellor Mike McKinney, who runs the system, ousted A&M president Elsa Murano in June, partly because of a dispute over who should control research budgets. Provost Jeffrey Vitter quit last week.

As I wrote a few weeks ago, the NCTM project was the biggest grant ever for the tech fund, which is overseen by Gov. Rick Perry, an A&M alum.

About the time the governor’s office and the A&M System began discussing the grant, the fund’s director, Mark Ellison, quit to become A&M’s associate chancellor for economic development. Ellison told state lawmakers investigating the grant earlier this year that he wasn’t involved in the discussions.

The grant given to A&M caused a stir in the Lege because it was done by Governor Perry with essentially no oversight. An amendment was added to the budget bill that would require such grants to be approved by the 10-member Legislative Budget Board, but offhand I don’t know if it survived into the final bill. There was also an attempt to zero out the Emerging Technology and Texas Enterprise funds in the event Perry vetoed the bill to accept stimulus funds for unemployment insurance, but as that bill never made it to his desk it became a moot point. So as far as I know the underlying political issue still exists. As for A&M, they have plenty of other problems to deal with right now, many of which are related to the Governor’s office. Funny how that’s so often the common thread in these stories, isn’t it?

Perry’s salvage job

How can you tell that sine die is approaching? Governor Perry starts getting involved in the legislative process.

Perhaps state lawmakers are fatigued by Gov. Rick Perry’s long tenure or maybe they’re just balking at his leadership, but the Republican-led Legislature this year has turned its back repeatedly on the governor’s decisions and policy positions.

The Senate has rejected a Perry appointee to the parole board as incompetent for the job. His nominee for Board of Education chairman is in grave danger. The House last month stripped Perry’s office of most of its funding in the budget debate, and the money had to be restored in a joint conference committee.

House lawmakers also voted to abolish the Texas Department of Transportation, which is chaired by Perry’s former chief of staff, and replace it with an elected commission. Not to mention the controversial $555 million in federal stimulus money that Perry wants to reject and lawmakers seemed poised to accept.

Publicly, Perry responds by exuding a “what-me-worry?” attitude.

“I don’t ever get concerned about what goes on in the Legislature,” Perry said recently. “I’ve been doing this for 20 years. It ebbs and flows.”

However, this past week, the governor engaged in a major effort to salvage his legislative agenda and public persona.

Perry threatened a special session if his emergency item on windstorm insurance reform does not pass. In state and national publications, he sought to clarify his nationally publicized remarks on Texas secession from the union. And Perry lobbied lawmakers on the House floor for passage of major restrictions on top 10 percent admissions to state universities — a bill that had not been on Perry’s list of priorities previously.

I suppose this is a companion piece to one from a week ago, during which time the McLeroy nomination got re-animated though not necessarily resuscitated. We still don’t know the status of the Texas Enterprise Fund in the budget, and the unemployment insurance bill still hasn’t passed, thanks in part to the ongoing chubfest. A deal has now apparently been reached on the Top Ten law, though whether it really achieves what Perry wanted it to or not I couldn’t say. So as before, tune in tomorrow, or maybe a few days from now, to see how much of a victory Perry gets to declare.

Perry’s staff also had to spend part of the week distancing him from his chief campaign consultant, who told the Dallas newspaper that expanding the GOP philosophical base is like opening a “whorehouse.” Several prominent Republican women denounced the statement in a letter to Perry as “in keeping with how you’ve governed — through division and an appeal to fear.”‘


“The governor is clearly distracted by an upcoming battle in the Republican primary and is probably is somewhat less focused on the range of issues that he might have been focused on,” [Sen. John] Carona said.

Many believe that Perry, by attacking the federal government and the Obama administration, is trying to shore up hard right support for his expected GOP primary re-election challenge from U.S. Sen. Kay Bailey Hutchison.

“A lot of decisions, from my vantage point, appear to tempered by what appeals to the far right element in a Republican primary, and that can wreak havoc on the system,” said state Sen. Rodney Ellis, D-Houston.

Yeah, some of us have been saying that Perry’s agenda for this entire session should be viewed through the 2010 GOP primary prism for awhile now. Say whatever else you want about our Governor, he’s not subtle, and while his motives may be unintelligible, they’re seldom a mystery.

Budget yes, UI not yet

The conference committee on the budget finished its work yesterday.

While final details are still emerging, the 10 conferees worked out a last minute plan for spending $700 million of federal stimulus money for state fiscal stabilization. They hope that it will avert a special session, even if Perry vetoes some or all of the money. It appeared to go to school textbooks in part. And there were other things funded that are near and dear to the Perry family, such as preservation of a couple more county courthouses ($7 million) and restoring the fire-gutted Governor’s Mansion.

Burkablog and Floor Pass, which notes that the committee will vote out the budget on Tuesday, fill in a few more details. The first obstacle is making sure Governor Perry will sign it, but so far there’s no evidence that he wants to force a do-over. Not dipping into the Rainy Day Fund, for which we can all thank President Obama and the stimulus package, likely helps out there.

Unclear at this time is the fate of the Davis/Walle amendment, which would drain money from the Texas Enterprise Fund in the event that SB1569 gets vetoed. And speaking of SB1569, it took a few steps forward in the House, but ultimately was not brought to a vote. The best writeup I’ve seen about what went on during this comes from Ed Sills’ TxAFLCIOENews; I’ve reproduced it beneath the fold.

According to Brandi Grissom on Twitter, the House has recessed for the night due to its computers being down, without having passed any bills today. They’re scheduled to work Saturday and Sunday, and according to Gardner Selby, voter ID is supposedly atop the calendar for Saturday. That’s assuming they actually get to it – as we’ve seen multiple times this session, being on the calendar is no guarantee of anything. The Democrats will surely do what they can to run out the clock if they feel they must. We’ll see how far down the agenda the House gets tomorrow.


Ogden stem cell rider removed from budget


Sen. Steve Ogden just announced that his rider banning use of state funds for embryonic stem cell research will not appear in the new state budget.

“We really couldn’t come to a consensus” so the bill will be silent on the stem cell issue, Ogden announced in this morning’s conference committee meeting on the budget bill. “I continue to be concerned about us continuing to be silent” on what he called “a profound issue.”

While the federal government has guidelines and regulations concerning use of federal money in such research, “in Texas there are none. I hope even though we adopt this rider (the House version, which was silent on stem cell research), it is not the last word on this subject,” Ogden said.

That’s fine by me. I strongly disagree with Sen. Ogden’s position on this issue, but I’d be happy to have the fight in the House and in the Senate, through the committee process and on the floor, out in the open for all to see. What we got instead was a sneak attack, which gave no one the chance to argue against it. Given that the House did not concur, it was only right to not force the issue via the conference committee, so kudos to Sen. Ogden for not going to the mat over this. Bring it up in 2011 and we can try to settle it then.

Now, if the Davis/Walle amendment on unemployment insurance and the Texas Enterprise Fund survives, then I’ll be even happier. The House is supposed to take up SB1569 tomorrow, which likely doesn’t leave enough time to pass it and override a veto, so the best bet to make sure Texas gets the unemployment funds it needs is to make it painful for Rick Perry to reject them. Let’s hope it happens. The CPPP has more.

Whatever Ricky wants

It’s too early to say how much of Rick Perry’s self-proclaimed agenda will get enacted this session, as much of it hinges on the budget reconciliation process as well as on legislation that hasn’t been taken up by one chamber or the other.

Some of his top goals were resupplying the Texas Enterprise Fund and the Emerging Technology Fund, which he uses to create jobs in Texas reward his cronies while making grandiose and unverifiable claims about job creation; changing the state business tax to exempt small companies with less than $1 million in revenue; and approving a voter identification law.

Lawmakers writing the two-year spending plan seemed willing to put money into Perry’s job creation funds, but whether he gets the approximately $500 million combined he wanted for the accounts is far from certain. Lawmakers want more oversight of how the funds’ money is spent. The House, in its version of the state budget, put restrictions on the enterprise fund money to try to force Perry to accept $555 million in federal stimulus money for unemployment benefits.

A House-Senate conference committee is working out a compromise budget plan, so several money items on Perry’s wish list won’t be known until that deal is finally struck.

An increase in the business tax exemption for companies from the current $300,000 to $1 million in revenue won approval in the House but has not made it through the Senate.

The Republican-backed voter identification bill, a highly charged political proposal that would require Texans to show additional ID at the ballot box beyond a voter registration card, won passage in the GOP-dominated Senate after grueling testimony and debate. Odds for the bill are slimmer in the House, where the partisan makeup is almost even.

I made a slight edit to that first paragraph to more accurately reflect the truth of the situation. I have no idea how any of this is going to play out. Recent history has shown that while the House in particular has been willing to take a slap at Perry here and there, in the end the Governor has won a lot more of these staredowns than he’s lost. On the other hand, he doesn’t have Tom Craddick twisting arms for him this time around, and with the miniscule Republican margin, he may just suffer a few setbacks. Bear in mind that as long as Speaker Straus continues the tradition of not voting on legislation, if Rep. Ed Kuempel remains on the sidelines any straight partisan vote will be a tie, on which legislation fails to pass. Voter ID in particular may not be passable now, if Dems stick together. Just whipping Republicans won’t be enough.

There’s another wild card in this, which the article doesn’t discuss, and that’s the possibility of a special session, which some people I’ve spoken to think is inevitable. Rep. Kuempel’s health could be a factor in that as well – if he’s at full strength, that bodes better for the chances of any legislation Perry would push in a special session. The advantage to calling a special session for Perry is that it gives him another 30 days to pander to his base, as well as the chance to pick up any agenda items that fall victim to the calendar. On the other hand, he can’t raise money during a special session, and there’s always the chance he’ll still fail to get stuff passed, thus providing ammunition to KBH. Again, it’s hard to say how this might play out, but the possibility is definitely there, and I’m a bit surprised the story didn’t bring it up.

Get ready for the next school funding lawsuit

The handwriting is on the wall.

Property tax cuts and a stingy state budget have left many Texas school districts saying they are short-changing children and warning of another lawsuit attempt to force reforms.

Texas lawmakers plan to increase school spending, but a skeptical education community isn’t sure it will be enough to cover costs or close growing funding gaps between school districts.

Lawmakers cut property taxes three years ago in school finance changes ordered by the Texas Supreme Court, largely freezing school revenue at 2006 levels. Today, school funding has grown dramatically less equitable and an estimated 40 percent of the state’s 1,040 school districts are running deficits, requiring them to dip into reserve funds.

A recent report by the non-partisan Legislative Budget Board indicates school funding is more inequitable today than it was when lawmakers reformed the system.


“We have people in desperate straits,” said Wayne Pierce, head of the Equity Center, which represents about 900 low- and mid-property-wealth districts.

“There’s a good chance, if they don’t do this right, people who have held off in filing a lawsuit will start thinking seriously about it,” Pierce said.

I forget where I came across it, but I recently saw an observation that the state of Texas has never embarked on school finance reform without being forced to do so by a lawsuit first. I don’t know about you, but I think that’s a lousy way to do business.

As state law has forced local tax rates down to a maximum of $1.04 per $100 property valuation for maintenance and operations, poorer districts are getting less total revenue unless they persuade voters to raise taxes.

Committees in both the Senate and House are considering school finance bills, including a plan by Sen. Leticia Van de Putte, D-San Antonio, that has been embraced by school districts.

It has a larger price tag than the one Rep. Scott Hochberg, D-Houston, is pushing in the House, or than another one by Senate Public Education Chair Florence Shapiro, R-Plano.

“I don’t think school districts in Texas will ever get all the money they need,” said Hochberg.

“I’m particularly concerned that we are still under-funding what it takes for a school district to be successful with the most challenging kids,” he said.

So as we ponder the billions of dollars we’ve spent on property tax cuts and not spent on fixing and improving our schools, here’s a report from McKinsey about the economic impact of the education gap, via Matt Yglesias:

If the United States had in recent years closed the gap between its educational achievement levels and those of better-performing nations such as Finland and Korea, GDP in 2008 could have been $1.3 trillion to $2.3 trillion higher. This represents 9 to 16 percent of GDP.

If the gap between black and Latino student performance and white student performance had been similarly narrowed, GDP in 2008 would have been between $310 billion and $525 billion higher, or 2 to 4 percent of GDP. The magnitude of this impact will rise in the years ahead as demographic shifts result in blacks and Latinos becoming a larger proportion of the population and workforce.

If the gap between low-income students and the rest had been similarly narrowed, GDP in 2008 would have been $400 billion to $670 billion higher, or 3 to 5 percent of GDP.

If the gap between America’s low-performing states and the rest had been similarly narrowed, GDP in 2008 would have been $425 billion to $700 billion higher, or 3 to 5 percent of GDP.

Emphasis in original. All these achievements could have been realized with a far smaller investment than the payoff. How much better shape would we be in today if we truly recognized the value of high quality schooling for everyone? This is a far, far better job creation engine than the Texas Enterprise Fund, and yet our Governor, who claims to be all about economic growth and job creation, would never consider making the kind of investment in public schools that would yield these results. And so we get what we don’t pay for, and we wonder why school finance reform is always on the agenda.

Perry’s ongoing war on the unemployed

You have to say this about Governor Perry: He never goes off message, no matter how ridiculous that message may be.

Gov. Rick Perry on Wednesday re-stated his opposition to legislation that would allow the state to accept federal stimulus dollars for expanded unemployment programs. A key part of Perry’s argument is that once Texas expands the pool of people who are eligible for unemployment benefits, there will be no changing the program back to its current guidelines. (While the federal stimulus law says that states cannot insert a sunset provision that would automatically end the expanded benefits at a certain point, state legislatures can choose to revert back to the previous parameters of their programs).

“I’ve never seen anything generally done away with once it becomes law so I wouldn’t think this one would be any different,” Perry told a gaggle of reporters after a speech Wednesday.

I asked Perry about 2003, when lawmakers famously cut a number of programs in order to cope with a $10 billion budget shortfall.

“Ronald Reagan said that there’s nothing more permanent than a temporary government program,” Perry responded. “I think that is a very wise statement and I will stand by that. Cutting government programs that are put in place that are entitlements are almost impossible to change.”

I just want to point out that Perry’s legislative director, Ken Armbrister, said those exact words about “temporary government programs” two months ago in testimony about the unemployment insurance funds. Like I said, always on message.

Is it almost impossible to cut a government program?

In 2001, the Legislature created a $1,000 stipend for teachers to pay for health insurance. In 2003, the Legislature cut it back to $500. And in 2006, it was rolled into teachers’ salaries to help lawmakers and Perry inflate the size of a teacher pay raise.

Between 2003 and 2007, the Legislature cut the utility assistance program for low-income Texans from $150 million to $15 million.

The Legislature created the Children’s Health Insurance Program in Texas in 1997. In 2003, the Legislature cut vision, dental and mental health benefits, while increasing the frequency with which families had to enroll.

Lawmakers cut payments to doctors seeing Medicaid and CHIP patients in 2003.

You get the idea. And Perry said when announcing that he would not accept the stimulus dollars, “Texas overcame a $10 billion deficit in 2003 because we decided to reduce government spending,” Perry said in March.

Said House Democratic Leader Jim Dunnam, “The governor didn’t have any difficulty repealing CHIP eligibility and throwing 250,000 children off of health insurance. Maybe he has amnesia.”

It’s not amnesia, it’s good old-fashioned dishonesty. Maybe the key is to make the UI changes permanent, since we don’t seem to have any problems discontinuing permanent government programs when the mood strikes us.

In addition to being dishonest about unemployment insurance and the stimulus money, Perry is also a hypocrite as the Statesman points out. Yes, I know, I’m as shocked as you are.

Perry uses taxpayer money — he asked for $260 million for the next two-year budget cycle — from the [Texas Enterprise Fund] to attract businesses to Texas. A principal measure of success is how many jobs a new employer creates.

What’s interesting here is that, as The Associated Press reported last week, companies that have received money from the fund are now allowed to count part-time workers in toting up the number of people they have hired.

But one of Perry’s objections to accepting the federal stimulus money for unemployment compensation is that it would allow part-time workers who lose their jobs through no fault of their own to receive prorated unemployment insurance benefits. A typical example is a spouse who works part-time because of children, loses her job and needs unemployment benefits until she can find another job.

So, it’s fine by Perry to count part-time workers if it means helping an employer get public money, but if the employer lays off those part-timers in a recession, too bad for them. There are few better examples of the governor’s high regard for business interests and lack of interest in ordinary people.

Here’s a link to that AP story, which I missed when it came out. I really don’t think there’s anything that needs to be added to this.

Another chance to slap the Governor

The Lege has had a few opportunities to express its opinion about Governor Perry and his “leadership” this session. Passing the unemployment insurance bill, inserting the budget amendment that would strip funding from the Texas Enterprise Fund in the event of a veto of the UI bill, the Office of State-Federal Relations bill, that sort of thing. The Senate will get another chance today when the dentist in charge of the SBOE, Don McLeroy, comes up for a confirmation hearing as the chair of that agency. TFN Insider has the details.

Don McLeroy’s appointment as chairman of the Texas State Board of Education finally gets a hearing in the Senate Nominations Committee on Wednesday (April 22). Gov. Rick Perry appointed McLeroy chairman in July 2007, after the last legislative session. So the Senate still has to confirm his appointment.

It’s unusual for the Senate to reject a governor’s appointment. Even so, state lawmakers aren’t happy with a state board that has become increasingly dysfunctional (and embarrassing) since the Bryan dentist’s elevation to chairman. The board has disregarded established procedures, ignored state law, defied the Legislature and lurched from one “culture war” battle to the next. Most recently, of course, Chairman McLeroy led the board in opening the state’s science curriculum to creationist attacks on evolution, wildly declaring: “I disagree with all these experts! Somebody has to stand up to these experts!”

The Nominations Committee will meet 30 minutes after the Senate adjourns for the day on Wednesday. The hearing, which will include testimony on other nominations as well, will be in the Senate chamber at the Capitol. Those who want to testify can register at the hearing.

Unless you’re already at the Capitol it’s probably too late to take any action to influence the committee. You can tune in to the Senate’s live video feed to watch the hearings, though, which ought to be more interesting than the usual Senate business – looks like McLeroy is just now getting into the hot seat. I can’t wait to see what comes out of this one.

Senate passes SB1569, but may not be able to override a veto

The Senate passed SB1569, the bill that accepts stimulus funding for unemployment insurance, by a 19-11 vote today. As Elise noted on Twitter, two Senators flipped to No for final passage; one other Senator was either absent or did not vote. We don’t know who exactly the changed and missing voters were yet. For the record, the second reading vote went as follows:

Yeas: Averitt, Carona, Davis, Deuell, Duncan, Ellis, Eltife, Estes, Gallegos, Harris, Hinojosa, Lucio, Ogden, Shapiro, Shapleigh, Uresti, Van de Putte, Watson, Wentworth, West, Whitmire, Zaffirini.

Nays: Fraser, Hegar, Huffman, Jackson, Nelson, Nichols, Patrick, Seliger, Williams.

The same group voted to suspend the rules so the bill could be brought to the floor. As predicted, the entire Harris GOP contingent voted against. The final margin of 19-11 means the Senate would not vote to override a Governor Perry veto if it comes to that and no one flips back; even if the absentee voted Yes it would be insufficient. So if there’s the be any stick to induce Perry to sign this thing, it’ll have to be the Yvonne Davis amendment.

Speaking of the House, HB2623 by Rep. Joe Deshotel, which is listed as “similar” to SB1569, had its committee report sent to Calendars on Friday. Given that the “identical” HB3153 by Rep. Tan Parker is still in committee, I’d say that’s the bill to watch in the lower chamber. There’s still time to allow for a veto override attempt, if they don’t get bogged down. Patricia Kilday Hart has more, and a statement by Sen. Leticia Van de Putte is beneath the fold.

UPDATE: Via Postcards, the answer is that Sens. Shapiro and Estes switched their votes between second and third readings, and Harris was absent.

UPDATE: The Statesman has more on the prospects in the House.

Although there are six weeks left in the session, lawmakers need to finish a bill within the next month to attempt a veto override. During that period, the governor must veto a bill within 10 days of its final passage or it becomes law.

Business and Industry Committee Chairman Joe Deshotel, D-Beaumont, said the House is “up against a wall” to get the bill to the governor.

“Every day now counts,” said Deshotel, who will sponsor Eltife’s bill in the House. “We can make it through if it doesn’t stall somewhere.”

It was unclear Monday which House committee will take up Eltife’s bill and how long it will take to clear that committee and get to the floor for a vote. Then, assuming the governor vetoes the legislation, the hard work would begin in getting the support in both houses necessary to override a veto.

Given Perry’s clear opposition and the jam-packed legislative schedule, Rep. Wayne Christian, R-Center, said it would be “irresponsible of us to waste the citizens’ valuable time (taking up the measure) if the governor already says it is vetoed.”

“Why should we kill other bills that might be able to help the citizens of Texas if we know that this is a nonproductive exercise of yelling at each other on the House floor?” said Christian, a leader of conservatives in the House.

Deshotel said the possibility of a veto should not deter the House because the policy issue is a critical one.

He also said the governor might not veto the bill if he sees that it has broad-based support from both Democrats and Republicans, including House Appropriations Chairman Jim Pitts, R-Waxahachie.

“The governor can always change his mind. I want to get the bill to the governor,” Deshotel said.

Especially if the budget provision that moves money from the Texas Enterprise Fund to the unemployment insurance trust survives the budget conference committee. I’m sure the Governor has a fallback position prepared just in case. Speaking of that provision, a statement from Rep. Armando Walle, who was the initial author of that amendment, has been added beneath the fold.


House passes budget, slaps Perry

State Rep. Chris Turner, on Twitter:

At 3:56 am, the House unanimously passed the budget.

Believe it or not, that was earlier than was originally anticipated. The pregame chatter was that the House would have to reconvene today to finish the job, given the vast number of amendments that needed to be slogged through. It helped that the debate was largely civil, with many contentious amendments, the kind that get inserted to force record votes for future campaign fodder, got withdrawn.

“The real story tonight is that we all worked together, arm in arm, to pass a budget that we can all be proud of. We have shown that working together, we can do what is right for Texas and for Texans,” said Appropriations Committee Chairman Jim Pitts, R-Waxahachie.

The mostly sedate debate – there was a random “bring it on!” when one lawmaker questioned another’s amendment – ran the gamut of sometimes hot-button subjects while intentionally steering clear of a couple of sensitive issues.

House members voted to ban public funding for private school vouchers, bar the Texas Department of Transportation from hiring lobbyists, pay for rail relocation to pave the way for a high-speed passenger train from San Antonio to Dallas under an amendment by Rep. Ruth Jones McClendon, D-San Antonio, and change teacher incentive funding to give local school districts more control under an amendment by Rep. Mike Villarreal, D-San Antonio.

The Republican governor would see losses on two fronts under the proposal approved at 4 a.m.

The measure would drain most of the operating funds for Perry’s office, instead using it to pay for community mental health crisis services and veterans’ services under amendments by Rep. Jessica Farrar, D-Houston, and John Davis, R-Houston.

In addition, if Gov. Rick Perry carries through on his vow to block some $555 million in stimulus funds for unemployment benefits, he would lose the $136 million in the Enterprise Fund.

That budget amendment by Reps. Armando Walle, D-Houston, and Yvonne Davis, D-Dallas, would transfer the money to the unemployment trust fund that pays benefits to workers.

“He (Perry) is having a bad day,” said Rep. Jim Dunnam, D-Waco. “He might have to secede.”

But an effort to slash funding for Planned Parenthood was dropped, and lawmakers also decided to forgo consideration of a ban on embryonic stem cell research.

I’ll expand on some of these points in a minute, but first let me say that this, finally, was the kind of thing I had envisioned when Joe Straus was gaining momentum to knock off Tom Craddick as Speaker. The budget debate was substantive, it focused on real issues and not ideological talking points, and in the end it was passed unanimously. Does anyone think that would have happened if Craddick were still running the show? I sure don’t. Straus hasn’t been the end of the rainbow by any means, but he gets a ton of credit for this.

Now then. As fun as it is to contemplate a penniless Governor’s office – perhaps its functions can be privatized; I hear Accenture is looking for a new gig – that was just a bit of a shell game that will ultimately be rectified. Of much greater importance, and much more likely to have a real effect, was the amendment to zero out the Enterprise Fund.

Rep. Trey Martinez-Fischer proposed an amendment that would keep Texas companies from receiving money from the Enterprise Fund and the Emerging Technology Fund if they’d already been bailed out by the feds. (Withdrawn.) Rep. Marisa Marquez tried to keep Perry’s funds from bailing out corporations that laid people off while paying bonuses to executives. (Also withdrawn) And Rep. Joe Moody wanted to prohibit cash flow from Perry’s funds to companies that contributed to his, Dewhurst’s or Straus’ campaigns. Debbie Riddle killed that bit of fun with a point of order. (She’s good at that.)

Then, Rep. Armando Walle wanted to nix the $136 million appropriation for the Enterprise Fund in the 2010-11 biennium if none of the unemployment insurance bills pass. The idea here is that if the unemployment insurance bills don’t pass, then Texas won’t get the $555 million for the unemployment trust fund, which Perry rejected last month. And the Enterprise Fund siphons money from the trust fund. So what Walle wanted to do with his amendment is say to Perry, “Veto the unemployment insurance bills, and we’ll zero out your slush fund.” But that amendment didn’t fly, either. Died on a point of order.

So far, Mark Strama has been the only one of the bunch to have any success. His amendment, which passed, says that the Emerging Tech Fund should prioritize funding for energy-related R & D projects.

But stay tuned. Yvonne Davis’ amendment, which would completely eliminate funding for Perry’s Enterprise Fund, was temporarily withdrawn, but seems like it might have some success.

And in the end, Rep. Davis’ amendment was accepted. I’m not exactly sure how it differed from Rep. Walle’s amendment, but the bottom line is that as things stand now, if Perry vetoes SB1569, whose prospects for passing the House look better to me now, then he nixes his own slush fund. You gotta love that.

Other matters of interest: School vouchers go down again. Teacher incentive pay gets an overhaul. Various petty amendments bite the dust amid general good will and the liberal use of points of order.

The floor fights have been few and far between. We hear that House members on the left and right have struck a truce and agreed to pull down their most controversial budget amendments.

That includes Panhandle Republican Warren Chisum’s proposal to de-fund Planned Parenthood. Chisum’s amendment had family family planning providers worried. But the amendment never came up.

Leo Berman, the Tyler Republican, did bring forth two amendments aimed at illegal immigrants. One would have instructed state health officials not to issue birth certificates to children of illegal immigrants (who, under current law, are U.S. citizens). Berman also tried to tax money transfers sent from Texas back to Mexico, and Central and South America. Both of Berman’s amendments were shot down on points of order because they changed state law, which isn’t allowed during the budget debated.

All in all, it was a pretty good day. There were some more goodies and the requisite amount of silliness, as one would expect for an 18-hour marathon. I recommend you read Vince’s exhaustive liveblogging to get a feel for that. In the meantime, the budget now goes to the conference committee so that the differences between the House and Senate versions can be ironed out. Burka things the Senate has the advantage in that, so who knows how much of what the House did will ultimately survive. All I know is that having seen the budget process under Tom Craddick three times, this was a vast improvement.

UPDATE: From Texas Impact:

Among the most important improvements the House made on the floor were:

They call the House budget “a significant improvement over the Senate budget”. Let’s hope we can say the same after the conference committee. Link via EoW.

Stem cells and the budget battle

Other than voter ID, we really haven’t had a big fight in the Lege this session. Burka thinks Sen. Steve Ogden’s scurrilous stem cell rider could be the next big brawl.

The Ogden rider is not in the House bill, but it is likely that the conservatives will offer the identical language as a floor amendment to the House committee substitute. [House Appropriations Chair Jim] Pitts will oppose it. If the amendment passes, it will be in both bills and will become part of the conference committee report. I believe that if it comes to a vote, it will fail.

It’s all about 2010 GOP primary politics, of course. Never mind what would be good for Texas. There will be a rally in support of removing this rider from the budget this morning at the Capitol by Texans for Advancement of Medical Research. Click on to read their press release.

That won’t be the only thing to fight about, of course – Burka has three other posts highlighting various amendments to the budget, many of which seek to divert or restrict money in the Texas Enterprise Fund, a/k/a the Governor’s slush fund. That has the potential for more entertainment value, mostly for the gratuitous Perry-bashing that it will allow. No shortage of things to keep an eye on, that’s for sure.

Oh, and the House yesterday approved $3.3 billion in supplemental spending, which included $700 million for hurricane relief. It passed by a margin of 141 to five on second reading. As far as I know, no teabags were harmed in the passage of that bill.

UPDATE: Here for your perusal is the Legislative Study Group analysis of the budget, also known as CSSB1. It gives a detailed overview of all appropriations in each article of the budget, including a breakdown of federal stimulus funds, plus a description and rating of each amendment, of which there are well over 100. Only a handful of amendments are rated as “Unfavorable”, with most of them being aimed at the Public Integrity Unit of the Travis County District Attorney’s office (it’s long been a GOP desire to move prosecution of political crimes out of Travis County) or at undocumented immigrants; the former amendments come from Rep. Wayne Christian, the latter from (who else?) Rep. Leo Berman. Check it out.


Senate panel approves budget

As you know, the Lege has one task they absolutely must do every biennium, and that’s pass a budget. The Senate Finance Committee has taken its first step towards doing that.

A two-year state budget that accepts federal stimulus money and increases spending by 7.3 percent, but hoards cash reserves, was approved by Senate budget writers today.

Counting federal funds, the Senate Finance Committee’s budget would spend $182.2 billion, up $12.5 billion over the current two year cycle.

“It’s a fairly significant increase in the overall budget,” said Finance Committee Chairman Steve Ogden, R-Bryan. “The committee worked hard to try and address many, many legitimate needs in state government, and we wouldn’t have been able to do it without the federal stimulus money.”

The panel approved the budget, 14-0. The full Senate is expected to act on it later this week.

A key goal of Senate budget writers was to protect the state’s “rainy day fund,” so that 2 1/2 -year old school property tax cuts won’t vanish after 2011. The committee left untouched some $9.1 billion expected in the rainy day fund by September 2011.

The reserve is expected to be used next session, when lawmakers will confront a yawning gap between the 2006 property tax cuts and offsetting new revenues from a revamped business tax and higher taxes on cigarettes and private transfers of used cars.

A 24-percent increase in federal funds helped the Senate panel balance the budget for 2010-2011.

So, thanks to stimulus funding, we can keep those irresponsible property tax cuts and not only not dip into the Rainy Day Fund, but also put aside enough money to pay for a further continuation of those cuts in the next session, when the piper was fixing to hand us a sizable bill for his services. My head is spinning.

In a brief discussion by the Finance Committee, Sens. Judith Zaffirini, D-Laredo, and Eddie Lucio, D-Brownsville, said they were voting for the budget with reservations.

Zaffirini said the panel should have heard testimony from experts before adopting a last-minute provision that would bar using any funds in the budget for embryonic stem cell research.

There’s a longer story on that here. Most of the arguments are familiar to people, since it’s basically the abortion issue one step removed, so I’ll just note this bit and move on:

Proponents of using embryos, who say they are obtained from fertility clinics and would be discarded anyway, said Texas stands to lose billions from a burgeoning biotech industry if it continues to create a hostile legal and regulatory climate.

A recent study by University of North Texas economists Bernard Weinstein and Terry Clower said the state could lose out on as many as 100,000 new jobs in the next five years if the state restricts embryonic research.

Yeah, no one’s ever really explained to me what’s supposed to happen to all those unused embryos at fertility clinics. Stay in the freezer forever, I guess. The Chron has a story on this as well, noting that researchers from Baylor College of Medicine, three University of Texas Health System academic health institutions and Rice University, including Norbel laureates Robert Curl and Ferid Murad, signed a letter to the Senate asking them to remove the Ogden rider. Anyway, moving on as noted to the House, where the Appropriations Committee was dealing with a different kind of kerfuffle.

House budget writers, spurred by a chairman angered by how Gov. Rick Perry helped steer a $50 million grant to the Texas A&M University System, voted Friday to strip Perry of one of the powers he used to make the grant happen.

The House Appropriations Committee put language in its proposed budget saying any transfers between the Texas Enterprise Fund and the Emerging Technology Fund must be approved by the 10-member Legislative Budget Board. The panel also said the budget board, made up of the lieutenant governor, House speaker and members of the House and Senate, must approve any grants from the two funds.

Perry uses the Enterprise Fund to attract businesses to the state and the Emerging Technology Fund to launch tech projects at universities working with the private sector. Current law says grants from those accounts must be approved by the governor, lieutenant governor and House speaker.

Friday’s move was a response to Perry’s announcement this week that he had transferred $50 million from the Enterprise Fund to the Emerging Technology Fund to pay for a grant to the Texas A&M University System for a new pharmaceutical manufacturing center.

But House Appropriations Committee Chairman Jim Pitts, R-Waxahachie , says that’s not how the state usually pays for buildings at universities.

Several members of the Appropriations Committee, including Pitts, praised the Texas A&M center, saying they were more concerned with the process than the result.

“We have a legitimate concern that funds (that) were dedicated for one purpose were moved to a fund with a completely different purpose with little or no input from the Legislature,” Pitts said.

There’s a reason a lot of us have called this a slush fund for the Governor. I suppose I should thank him for making that a little more obvious to some folks. This may well be a fine use of that money, but it sure would be nice to have something other than just Rick Perry’s say so.

One more thing:

The Appropriations panel also proposed putting $136 million into the Enterprise Fund and $77 million into the Emerging Technology Fund over the next two years — combined, more than $200 million less than Perry requested.

“Now is not the time to cut back on job creation programs,” Perry spokeswoman Allison Castle said.

Because Rick Perry’s priorities are sacrosanct. Other priorities can go hang, but what Rick Perry wants is untouchable. Got it.

So about all those stimulus funds

Remember how Governor Perry had argued against states receiving federal stimulus dollars? Well, he still doesn’t want them, though he’s giving himself some waffle room.

Gov. Rick Perry said Tuesday he’s not sure the state should accept all of its projected share of federal stimulus money — $16.9 billion and counting by preliminary estimates — because of the “mile-long” strings that might be attached.

“In Texas, we actually know it is a good idea to look a gift horse in the mouth. If we don’t, we may end up with an old nag,” said Perry, who has been critical of such federal spending and voiced concern over whether the state could afford federal strings.

“One thing that concerns me is that dollars are going to come into Texas that require us to match those dollars, and then two years from now, those federal dollars won’t be there, but we will be on the hook to pay for those programs going forward,” Perry said.

Funny, I don’t recall that being a condition for property tax cuts. But that’s Totally Different, because, well, it just is.

According to a preliminary legislative analysis, economic stimulus provisions that affect the Texas budget could total about $16.9 billion.

Perry didn’t say which programs he was referring to, and spokeswoman Katherine Cesinger said his staff still is looking over potential allocations to Texas.

One program that raised concern early on was funding for unemployment insurance that would be contingent on state changes allowing more jobless people to become eligible, Cesinger said.

That would be the unemployment insurance fund that we stopped fully funding awhile ago.

Rep. Jim Dunnam, D-Waco, who heads the state House’s Select Committee on Federal Economic Stabilization Funding, said it’s hard to understand the GOP governor being reluctant to take stimulus funding.

“The governor every year comes in and wants half a billion dollars for the (state) enterprise fund to create jobs and stimulate economic growth and he’s going to say we don’t want $20 billion?” Dunnam said. “I find it difficult to understand.”

Perry said he welcomes federal dollars for one-time infrastructure improvements, such as transportation.

“You’ve got plenty of roads and re-doing some things down in Galveston County and that part of the state hurt by the hurricane. We’ll gladly accept those dollars. But we need to say, ‘No, thanks,’ if they’re trying to stick a bill on the state of Texas to expand government,” Perry said.

And what, road and reconstruction projects always come in under budget? Anything we undertake now might wind up costing more later. That doesn’t mean they’re not worth doing. Heck, some things turn out to be sufficiently worthwhile that we decide to spend more on them later. What are we afraid of?

I accept that sometimes federal monies come with unpalatable requirements. I don’t mind having a debate over those things, as long as the Lege gets to express an opinion as well. These decisions need to be made on a larger basis than Rick Perry’s primary campaign. We can always include a sunset provision on anything we’re not sure we want to keep funding two years from now. BOR has more.

UPDATE: In the end, Governor Perry has decided to take the cash. Since that’s what I wanted him to do, I’ll spare the snark about being against it before he was for it. But that doesn’t mean you have to! Here would be a fine place to express your sarcasm. Just be careful about what email address you use.