Study finds more Texas Enterprise Fund projects fail to meet job-creation goals

By Kelley Shannon, AP
Wednesday, September 8, 2010

Study: Texas Enterprise fund companies struggling

AUSTIN, Texas — Two-thirds of the Texas Enterprise Fund companies that had to meet job-creation goals in 2009 in exchange for millions of dollars in taxpayer money failed to bring in the jobs they promised, according to a report released Wednesday.

That percentage is up from the previous year, when Texans for Public Justice also issued a study on enterprise fund companies and found that 42 percent of those it reviewed were failing to meet their job-creation targets.

Gov. Rick Perry, a Republican seeking re-election against Democrat Bill White, points to the fund as an effective tool to help lure companies to the state. The fund is a deal-closing account created by the Legislature at Perry’s urging. The governor frequently credits the fund for helping to create some 53,000 new jobs in Texas and generating billions of dollars in capital investment.

Perry spokeswoman Katherine Cesinger said in response to the report Wednesday that the Texas Enterprise Fund was “a national model for attracting businesses.”

“Texas cannot control national economic trends or individual business pressures, but TEF contracts demand job creation in return for funding,” Cesinger said. “If companies don’t meet contracted job creation numbers, they are required to return TEF money to the state, which can then use that money for new job-creating deals.”

White’s campaign called again for an audit of the enterprise fund and said Perry is diverting tax dollars paid by small businesses to “give handouts to companies he chose.”

“When will Perry stop stonewalling and be accountable to taxpayers by welcoming an independent audit of all the money he’s spent?” said White spokeswoman Katy Bacon.

The new study looked at compliance reports filed by 50 enterprise fund companies and the job creation targets they agreed to.

Thirty-three of those projects failed to deliver on their job promises for 2009, the study found. Six contracts were canceled. Some companies had their contracts with the state amended to lower their job-creation goals or to postpone deadlines, changes reported on earlier this year by The Associated Press.

“These amendments had a crippling impact on the number of new jobs that the affected companies were required to produce during the recession,” the study states.

Perry’s office awarded $368 million to the 50 fund recipients to create or maintain 49,581 jobs, according to the report. In their 2009 compliance reports, these companies said they had delivered 30,381 jobs.

As of June, 17 enterprise fund recipient companies were fined $2.8 million by Perry’s office for failing to meet goals. That amounted to 2 percent of the $116 million in state money they had received from the fund so far, the report states.

Cesinger noted that every legislative session since the enterprise fund was formed in 2003, Texas lawmakers have reauthorized it.

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