Texas Enterprise Fund

Lieutenant governor candidates Dan Patrick and Leticia Van de Putte answer questions at a Q-and-A session after a debate Monday evening.

Photo Credit: Ethan Oblak | Daily Texan Staff

Leading candidates for lieutenant governor, state Sens. Dan Patrick, R-Houston, and Leticia Van de Putte, D-San Antonio, faced off at their first and only scheduled debate at the KLRU studio on campus Monday night. The candidates discussed several issues, including border security and public education.

Citing the recently released state audit of the Texas Enterprise Fund, Van de Putte chastised Gov. Rick Perry’s office for the way it handled the fund.

“I was appalled to learn that the governor had instilled a process for our Texas Enterprise Fund that had no accountability,” Van de Putte said. “When it comes to government programs, it shouldn’t be about who you know; it should be what you know.” 

Patrick said he supported ending the Texas Enterprise Fund’s business incentive program.

“I‘ll leave that to the next governor, but I took that position with the latest audit report,” Patrick said. “The best thing we can do is eliminate the business tax and lower property taxes. The real attraction of Texas is our economic opportunities, which are second to none.” 

Van de Putte also said she was proud to sponsor the Texas Dream Act, which gave in-state tuition to undocumented students. 

“This is about what you pay at the registrar’s office,” Van de Putte said. “Hardworking students who have the chance to pay the same should be given that chance. The jobs of the future are going to require a post-high school something. A one-time investment could change a generation.”

Patrick said he took issue with the in-state tuition bill because it raised questions of “fairness.”

“If they live in Oklahoma, and they want to go to any of our schools, why should they have to pay dramatically more than a non-citizen?” Patrick said. “I empathize with those students who have done good jobs and were brought here not on their own, but it’s a question of fairness, and it goes to the heart of why we need was to pass legal
immigration reform.”

Van de Putte agreed with Patrick that the border should be secured, but she said that local law enforcement needed to be more involved.

“We need to make sure our citizens are protected, and we need to listen and respect those local leaders,” Van de Putte said. “I would make sure our local law enforcement officers have the tools and personnel they need to get the job done.”

Van de Putte also accused Patrick of hiding his tax records. 

“I don’t know why my opponent has refused to disclose his taxes,” Van de Putte said. “So, I ask you tonight, Dan, will you disclose your taxes as everyone else has? And, if not, Texans can ask the question, Dan, what are you hiding?”

Patrick said he has been open about his financial situation.

“We filed a financial disclosure form every year,” Patrick said. “My form last year was 168 pages, which lists every stock I own, everything about me you would like to know.”

Patrick also discussed his plan to lower the state’s property tax and instead increase the state’s sales tax. Van de Putte criticized the plan, saying it would hurt city and county governments.

The candidates are not scheduled to debate again before election day. While Van de Putte originally proposed five debates, Patrick only agreed to Monday’s debate in Austin. Speaking with reporters after the debate, Patrick said he did not think that having only one debate was a problem for the voters because additional debates would not give more answers.

A state audit of the Texas Enterprise Fund concluded that the Office of the Governor needs to monitor and control the Texas Enterprise Fund administration in order to substantiate the program’s claims of job creation.

The extensive audit was released Tuesday near the end of Gov. Rick Perry’s term. Perry leaves office in January.

The audit also found that some companies that received award money from the program never submitted an application to the Texas Enterprise Fund. Since the program started in 2004, about $172 million went to companies that did not apply.

The Texas Enterprise Fund was established by the Texas Legislature in 2003 with the purpose of attracting new business to Texas. The audit, which was the first comprehensive audit on the program since it was adopted, revealed inconsistencies in the awarding process to businesses as well as the claims that the program created jobs and fostered competition with other states.

According to the audit, poor monitoring by Perry’s office made it difficult for state auditors to corroborate the office’s claim that the Texas Enterprise Fund created more than 48,000 jobs.

The audit called for better record-keeping and more specific definitions — one of the state auditors’ recommendations was to define “key terms” in the award agreements. Other recommendations were just as basic: The audit recommended the Office of the Governor ensure all applications are complete and accurate, as well as check to make sure that applicants are eligible for awards from the Texas Enterprise Fund.

Texas Gov. Rick Perry addresses the media at Thomas Jefferson High School in Dallas.

Photo Credit: The Associated Press

As evidenced by the unofficial city slogan, “Keep Austin Weird,” Austin prides itself on its independent businesses. But since that phrase was trademarked in 2003, eight of Austin’s 10 tallest buildings have been built, a construction statistic indicative of the increasing corporate presence in our capital city. As companies began setting up headquarters in Travis County, the pace of suburban sprawl accelerated around the metropolitan area. Soon some Austinites began adopting a new mantra: “Don’t Dallas my Austin.”

Austin’s population boom over the past decade and a half coincided with Texas’ adoption of some of the most business-friendly regulations in the country. Many factors make Texas an attractive place to move or start a business, including favorable laws, increasing urbanization, and proximity to oil and gas industry hubs. 

But one business incentive, the Texas Enterprise Fund, has proven itself more contentious than others.  

Set up in 2003 by the Texas Legislature, the enterprise fund is the largest “deal-closing” fund in the nation. Using this fund, Gov. Rick Perry’s office can offer substantial sums of money to companies to set up offices in the Lone Star State when deciding between a Texas site and out-of-state options. The money comes with a catch: Each company that receives a grant must promise to generate a certain number of jobs.

The promise of the enterprise fund to create jobs holds a particular importance for graduating seniors. But what does the fund mean for students as a whole, many of whom will be entering the workforce in the next few years?

While its existence is a testament to the high esteem in which state legislators hold free enterprise, the enterprise fund has had a controversial existence. In April, the Legislature voted almost unanimously for the state to perform an external audit of the fund, a move that the Fort Worth Star-Telegram mused might have been a dig at the fund’s leading proponent, Perry.

The left-leaning Texans for Public Justice has also condemned Perry’s office for changing after-the-fact the target number of jobs created for several companies that received enterprise fund grants, ensuring that these companies would keep the grant money despite not achieving their goals.

Even Texas Attorney General Greg Abbott, Perry’s likely successor to the governorship, hints that he would eliminate the fund if elected.

“We can [elevate the Texas economy] by leveling the playing field and getting government out of the business of picking winners and losers,” Abbott said in a September speech, in a notable departure from Perry’s aggressively pro-business take on governance.

Not one to be cowed by controversy, Perry touted the enterprise fund on the presidential campaign trail in 2011 as part of his job-creating credentials.

The Wall Street Journal examined the job-creation numbers issued by Perry’s office during his presidential campaign and found that they had been inflated. It also noted charges from Perry’s opponents that the fund could be used to trade political favors with campaign donors.

From the perspective of a student graduating to the worst job market in decades, the fund seems to have serious upsides. A chart released by the governor’s office this summer details all the companies that have received funds, and the list is studded with firms that have prized internships and jobs open to UT students. JP MorganChase, Apple and Hewlett-Packard all hire UT students and all were awarded millions of dollars in funds in the past five years.

It’s hard to know if these businesses would have opened Texas offices without the incentive funds, as critics contend, but risking the robust job market for college grads will be a tough sell.  We as students benefit from the jobs it brings into the state, but as citizens we should be aware of the transparency issues that come with it.

Matula is a finance junior from Austin.

Early last week, Texans for a Conservative Budget, a coalition composed of powerful small-government proponents, released a proposal containing solutions for the current state budget deficit. But the proposed “solutions” are misleading. The proposal calls for working out an admittedly flawed budget but addresses the problem with spending cuts to programs that already endured austerity-inspired slashing this past legislative session — including ones to higher education.

The plan aims to “revamp” higher education, simultaneously implying that the budget deficit results from allegedly wasteful universities and then dismissing any argument that the higher education funding structure itself is a problem. Conspicuously, the proposal says that higher education funding should be shifted toward “student-centered” funding, though it is hard to imagine how further limiting that budget could benefit students. Presumably, the approach that insists on “streamlining” and “efficiency,” by some convoluted logic, would assist students by forcing their universities to spend smarter. Unfortunately that has not been the case.

While Texans for a Conservative Budget blithely proposes a simple 3-percent budget reduction, UT students will be facing a budget reduction of their own in the form of a 3-percent tuition hike. The coalition’s student-centered funding model was indeed centered on students — but only in the sense that students ended up absorbing most of the cost.

Going beyond direct effects on higher education’s budget, the proposition calls for an elimination of Gov. Rick Perry’s Texas Enterprise Fund, a program used to attract employers to the state. The elimination of the successful program, in part responsible for maintaining the state’s low unemployment rate, would be a mistake. Most recently, the Texas Enterprise Fund and its city-level equivalent came under fire for providing subsidies to Apple, which was deciding whether to locate a new facility in Austin that will provide 3,600 high-wage jobs. Thanks to the incentives, UT students will be able to work at one of the country’s most innovative high-tech companies. The development would continue an interesting trend: 2 percent of all Apple employees are UT graduates, according to Business Insider.

The coalition’s member groups — most notably, the Texas Public Policy Foundation and Americans for Prosperity — are an amalgamation of budget-cutting muscle that have proven their ability to strong-arm the state Legislature into getting controversial cuts passed. Last year, the alliance fought to restrain the Legislature from using the state’s Rainy Day Fund, though Texas faced an unprecedented budget crisis. In all likelihood, the coalition’s members will be able to successfully lobby legislators on at least some of the plan’s provisions during the next session.

And at the root of that lobbying, coalition member Julie Drenner told The Texas Tribune, is one basic choice for each state program: “Do [we] reform it, or do [we] eliminate it?” By outlining the budget discussion in such limited terms, the proposal sets universities up to fail by making them an enemy. But by fostering an educated workforce, higher education can be one of the state’s greatest advocates for economic development and, in tandem, fiscal responsibility — but only if it is allowed to do so. Texans for a Conservative Budget proposes fiscal responsibility, but defunding higher education is exactly the kind of irresponsibility it vilifies.