More on the Texas Enterprise Fund

The Dallas Morning News has a story (“Audit: Perry’s business fund gave millions to firms, universities that never sent an application“) that suggests that funds from the Texas Enterprise Fund (TEF) was being distributed by the Office of the Governor much less cautiously than the State Auditor considered prudent. The report from the Texas State Auditor identifies a number of way in which the funds were distributed without adequate documentation.

One of the most significant findings (from page 7 of the full report) was that early in the program’s development TEF funds were distributed without an application.

During the 2004- 2005 biennium, the Office [of the Governor] did not require recipients to submit an application and/or did not require recipients to create direct jobs for award agreements associated with 11 projects. The awards associated with those 11 projects totaled $222,281,000, or 44 percent of the $505,838,696 in Texas Enterprise Fund awards the Office made between September 2003 and August 2013.

That’s a lot of money going out the door with very little systematic analysis or documentation. On one hand, many Texas state employees will feel some sympathy with the Office of the Governor because we’ve grappled with the elaborate process behind spending state dollars. On the other hand, you can not help but question why the governor’s office felt it could dish out over $222 million without meticulously detailing and documenting the process. As someone who has been tormented for forgetting to get the sales tax removed from the bill for feeding a job candidate I’m amazed that the people dispensing the TEF were not more systematic in their oversight of much larger sums.

The TEF’s future was already in doubt. Some Texans are questioning the wisdom of getting the government involved in subsidizing some businesses. Others support the idea in theory but question the way in which the funds have been distributed. It’s a good bet that the TEF will be abandoned or transformed when the legislature meets next year. The questions about the fund are closely identified with Rick Perry and the next governor will want a fresh start.

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Who Gets What from the Governor, Part II

Texans for Public Justice has released a report [full report in .pdf format] that looks at how much money companies that received money from the Texas Enterprise Fund (TEF) that is run by the Governor’s office.

This report finds that 43 companies that landed a total of $333 million in TEF awards contributed almost $7 million to Perry’s campaign and the Perry-affiliated Republican Governors Association (RGA). TEF companies sometimes made corporate contributions directly to the RGA, while company PACs, owners or executives gave to both the RGA and to Perry’s campaign (which cannot accept corporate funds). These contributions included $1,652,159 to Perry’s gubernatorial campaigns and $5,331,701 to the RGA. The 43 TEF recipients that contributed to Perry and/or the RGA represent about half of the 90 companies that received TEF awards.

The TPF also found that 3 of the 37 companies in Perry’s investment portfolio received TEF awards totaling $12.2 million. That seemed less troubling since the portfolio was in a blind trust and I suspect a lot of investors hold stock in companies General Electric, Hewlett-Packard, and PepsiCo. Still, the millions of taxpayer dollars that go to these companies reflect why we have blind trusts.

I have written before about the need for institutional reform to create a wall between elected officials who need campaign contributions and government programs that hand out millions of dollars. This latest report provides even more evidence we need to do something. If these companies need capital so badly that they can only get it through government programs they should not have millions of  extra dollars to put into the political system (and remember that the $7 million here is only what they gave to Perry-related political committees).

This does not have to be about Rick Perry. Whether you distrust Rick Perry or will distrust some future governor, the question is if the state needs to separate the politics from the cash or quit giving money to companies. We have conflict of interest rules for other state employees. I have used the example of a law against textbook publishers making contributions to candidates for the State Board of Education as an example of some of us already facing restrictions. Should we tell the companies that cash from the government that they can not contribute to the politicians that control the money?