TMCnet News
Audit: Perry's fund gave companies millions without formal applications [Austin American-Statesman](Austin American-Statesman (TX) Via Acquire Media NewsEdge) Sept. 25-- Gov. Rick Perry was so eager to give taxpayer money to businesses relocating or expanding in Texas that he didn't require 11 companies to file applications for $222 million over two years, State Auditor John Keel disclosed in a report Thursday. The audit, covering the Texas Enterprise Fund from 2003 through 2013, also criticized instances when Perry's staff released all funds before a company created the required number of jobs. In 40 projects, Perry's staff also failed to require the companies to provide detailed job-creation information and didn't define full-time jobs in most instances. In the case of Sematech, Perry awarded $40 million to keep the semiconductor company in Austin without requiring any new job creation, according to the audit. Texas lost Sematech to New York once the $40 million was spent. In the audit, Perry's staff said that most of the problems occurred during the first two years of the program and said accountability had improved. However, the audit noted that Perry's staff reported inaccurate or incomplete job-creation information to the public as late as 2013. Likewise, companies still sometimes fail to officially apply for state incentives while negotiating deals behind the scenes. For example, Tesla Motors this year never filed an application for state incentives -- although local and state officials, who filled out the paperwork for the company, insisted Texas was in the running for the car company's battery factory and its 6,500 jobs right up to the time that Nevada won the plant this month. In the audit, Perry's staff defended the need for "flexibility" in the process. "This flexibility must include the ability to negotiate with prospective awardees in order to obtain the most advantageous agreement possible for the state," the governor's staff said. The governor's office is supposed to show that the enterprise money is going to companies considering sites in other states or nations, but the audit said those claims couldn't be verified because the information wasn't usually available. On a positive note, the audit said that no money was disbursed without an agreement with the company in place, but it criticized the governor's staff for not always including required standards or maintaining sloppy records. "As a result, it was not always possible to determine how the office made awarding decisions," the audit said. The audit noted that Texas has awarded a total of $506.8 million to 115 projects. Only $55 million remains uncommitted in the Texas Enterprise Fund as of June 30. The critical audit comes as Perry is leaving office, perhaps to run for president, but it casts a shadow over next year's debate in the Legislature whether the state should continue such incentives -- or at least separate oversight from the officials making the awards. State Sen. Kirk Watson, D-Austin, called Thursday for a moratorium on new awards until the Legislature can address the audit's findings. "This is a bad breach of the public trust," Watson said. "For years, we have been asking for better oversight, but those in charge at the Capitol have rebuffed it." Andrew Barlow, spokesman for Lt. Gov. David Dewhurst, said the audit's findings were news to the leader of the Senate although Dewhurst and House Speaker Joe Straus must sign off on any deals proposed by Perry. On Thursday, Dewhurst said he wouldn't vote for any more grants until the auditor's recommendations are adopted. "It's a page turner," Barlow said of the report. "It's pretty disturbing." Last year, Perry, Dewhurst and Straus convened a "blue-ribbon panel" of mostly business executives who gave the state incentive programs their endorsement, although one member complained that the panel's study was superficial. This year, Straus and Dewhurst are trying again, with separate House and Senate panels examining the state incentives process. Straus, who became House speaker halfway through the Enterprise Fund program, said Thursday he is optimistic the committee will come up with recommendations "to ensure these accounts are effective, efficient and transparent." State Rep. Angie Chen Button, R-Richardson, who leads the House study, said Thursday that her committee expects to get answers from Jonathan Taylor, Perry's executive over economic development. She said he is scheduled to testify Oct. 15. Thursday's audit also brings the issue of incentives into the governor's race, as the audit is the result of legislation authored by state Sen. Wendy Davis, a Fort Worth Democrat who is running for governor. "This is exactly why we need to root out the old insider network in Austin," Davis said Thursday. "As governor, I will protect taxpayers by ensuring that the Texas Enterprise Fund is working with proper oversight and transparency to create good paying jobs and to attract new businesses that will ensure Texas continues to lead in the 21st century." Her opponent, state Attorney General Greg Abbott, has hinted he might oppose some incentive funds, but he hasn't been specific. At last count, the state has 67 incentive programs. Abbott, a Perry ally, didn't respond to a request for comment Thursday. But another Republican, Houston's state Sen. Dan Patrick, who is running for lieutenant governor, has been critical of the incentive programs managed by the governor. ___ (c)2014 Austin American-Statesman, Texas Visit Austin American-Statesman, Texas at www.statesman.com Distributed by MCT Information Services |