It was no surprise that the first independent audit of Gov. Rick Perry’s Texas Enterprise Fund found widespread problems with its supervision. The audit reinforced previous reports and critiques by the media, watchdog groups and a handful of state legislators that the fund was sloppily managed.
Accountability for taxpayer money is the Legislature’s job, and it’s baffling that state lawmakers have allowed the Texas Enterprise Fund to operate this long without close scrutiny of the governor’s decisions. Concerns about the fund have existed since its creation in 2003. In 2004, for example, we called on legislators to look hard at the fund’s effectiveness before committing any more money to it.
Similar calls by us and others followed over the next decade. Yet it was only last year, thanks to legislation by state Sen. Wendy Davis of Fort Worth, who is now the Democratic candidate for governor, that lawmakers agreed to submit the Texas Enterprise Fund to a state audit.
As the audit reveals, oversight is overdue.
The Texas Enterprise Fund was created to attract business and jobs to the state. According to a report that State Auditor John Keel released recently, the governor’s office awarded $222 million to 11 companies during the fund’s first two years even though those companies didn’t file applications before receiving taxpayer money.
In all, through 2013, $506.8 million has been awarded to 115 projects. As of June 30, there was $55.1 million left in the fund.
Because of incomplete or nonexistent records, “it was not always possible to determine how the office made awarding decisions,” the audit said of Perry and his staff. And poor record keeping left the state auditor unable to verify Perry’s claim that the fund has created more than 48,000 jobs.
Perry’s staff defended themselves by saying that most of the problems with the fund occurred during its first two years and have been corrected. However, the audit found examples of inaccurate or incomplete information as late as last year.
The state audit of the Texas Enterprise Fund follows reports of problems with other similar funds that have given away tens of millions of taxpayer dollars. In July, The Associated Press reported that another fund run out of Perry’s office, the Texas Emerging Technology Fund, includes recipients that have made questionable job claims. One company that received $1.25 million was actually operating in California, the AP reported.
Last year the Legislature made changes to the Cancer Prevention and Research Institute of Texas after it was found to have given millions in grants without the required scientific and business reviews.
Committees in the Texas House and Senate are re-examining the state incentives process ahead of next year’s session. Many tea party conservatives have said they would like to get rid of the state’s various incentives funds.
Sharp debate remains about how effective and necessary incentives are.
Any Texas official given authority to grant incentives to companies should not be the official monitoring compliance. Oversight should reside elsewhere.
Incentives can be useful, but they should be used sparingly and should come with stringent demands attached. And Texas taxpayers should expect nothing less than transparency and accountability to follow.
— Austin American-Statesman
