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's office revealed Tuesday that it changed 11 Texas Enterprise Fund contracts with companies receiving taxpayer-funded grants for creating jobs, making the deals more favorable for the firms.
Two other contracts were ended, including a $20 million agreement with mortgage giant Countywide Financial, which sank into financial turmoil and laid off thousands of workers nationally. Bank of America, which now owns Countrywide, will return $8.45 million after creating only 3,800 of 7,500 promised jobs, Perry's office said.
Perry's office announced the amended and terminated enterprise fund agreements late Tuesday after learning that the nonprofit Texans for Public Justice was releasing a report today detailing enterprise fund contracts that weren't fulfilled or were in trouble. The report also lists companies, such as Austin's HelioVolt Corp., that had contracts with the state changed to reduce job creation requirements or allow more time to fulfill job promises.
"The global recession that hit Texas in 2008 is playing havoc with Governor Perry's signature business-incentive program: the Texas Enterprise Fund," the report states, adding that Perry's office "has quietly redefined success."
Yeah, he's big on *redefining* stuff, especially when he's been caught.I
The Governor’s Office has not come clean about the extent to which its job promises have receded during the recession. More often than not, it continues to tout the larger job numbers found in the original TEF contracts rather than the smaller, amended job targets that it has since negotiated. The last two columns in the accompanying table show five cases where amendments slashed a TEF contract’s total job targets. Although the last of these amendments were signed in late 2009, a June 2010 TEF report on the governor’s website continued to report the larger, outdated job numbers for four of the five projects. While political capital might be squeezed from phantom jobs, the charade breaks down for Texas families that can’t cash a phantom paycheck.
Governor Perry likes to boast about Texas’ economic performance, which he attributes to TEF and to state policies limiting regulations, torts and taxes. As the accompanying graph illustrates, however, Texas’ employment growth rate turned negative starting in February of 2009, according to Texas Workforce Commission data, and did not swing to positive growth until May 2010. Texas’ unemployment rate shot well beyond its peak during the dot.com-bomb,5 hitting 8.2 percent in July 2010 (below the U.S. unemployment rate of 9.5 percent). Whether measured by unemployment, job losses or Texas’ gross domestic product, it is Texas’ worst performance in 22 years, surpassing slumps in 1982, 1985 and 2001, according to a 2010 report by the Federal Reserve Bank of Dallas.7 Although it outperformed the national economy, Texas’ pain was tangible—with 350,000 jobs destroyed in 12 months. Many TEF-subsidized enterprises reported that they, too, have been hammered.
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