Gov. Rick Perry touts his Texas Enterprise Fund—which doles out public money to spur job growth—as an economic boon to the state. But nearly half the companies that received the taxpayer grants are also politically connected to Perry, according to a new report by an Austin watchdog group.
The report—released Thursday by the nonprofit Texans for Public Justice—found that of the 90 companies that have received Enterprise Fund grants, 43 have given money either to Perry’s campaigns or to a political organization closely tied to him. Those 43 companies received $333 million in public money through the Enterprise Fund. They donated nearly $7 million to Perry’s campaign account or to the Republican Governors Association. Perry served as chair of the Washington, D.C.-based governors association in both 2008 and 2011 and has helped raise substantial money for the group.
The Enterprise Fund has handed out nearly $440 million in taxpayer money to those 90 companies since its creation in 2003. Perry’s office claims the economic development grants have created more than 59,000 jobs. Critics have often called the program a political slush fund for the governor.
In March 2010, the Observer first reported that nearly 40 percent of Enterprise Fund companies had contributed to Perry’s campaign or to the Republican Governors Association. Our 2010 analysis showed that 20 companies had donated $2.2 million. In the past 18 months, the number of Enterprise Fund grants has increased—as has the political giving.
Andrew Wheat, Texans for Public Justice research director, said the campaign contributions present a conflict of interest for the governor’s office. “Having the government give out public money to private companies is inherently controversial,” he said. “If indeed a government is going to have this kind of program it would seem to be prudent to have it heavily insulated from the political process, which this one definitely is not.” (Full disclosure: Wheat has written columns for the Observer.)
Perry’s office largely decides which companies receive funds, though the lieutenant governor and Texas House speaker also must approve grants. Companies that receive money from the Enterprise Fund file reports with Perry’s office to document that they’re creating the required number of jobs. Companies that fail to create jobs must return money to the state, but only if the governor’s office requires them to.
Wheat said it’s a conflict of interest for Perry—who’s receiving large campaign contributions from these companies—to oversee their compliance. “It seems insane that the politician that is handing out this money and is receiving campaign money from these same sources is also in charge…. There should be independent bean counters enforcing the public’s interest in these contracts.”
Perry’s office didn’t respond to a request for comment late Wednesday afternoon. In Tuesday night’s GOP presidential debate in New Hampshire, Perry was asked about public subsidies for companies that are also his campaign contributors. He defended the grants and noted that the Texas Legislature has oversight of his economic incentive programs. The Legislature meets once every two years.
The top donors in the report include major companies such as Hewlett-Packard and General Electric, which each gave more than $600,000 to the Republican Governors Association since 2008.
Another top donor—the Texas A&M Institute for Genome Medicine—may have exaggerated its job creation numbers, according to a Wall Street Journal report this week. The newspaper found that the Texas A&M Institute for Genome Medicine claimed to have produced 12,000 jobs, when in fact the newspaper could confirm only 220 jobs. “What accounts for the discrepancy? The newspaper asked. “To reach their estimate of 12,000-plus jobs created by the project, officials included every position added in Texas since 2005 in fields related sometimes only tangentially to biotechnology, according to state officials and documents provided by Texas A&M. They include jobs in things like dental equipment, fertilizer manufacturing and medical imaging.”
The Institute for Genome Medicine—at Perry’s alma-matter—received $50 million in taxpayer money from the Enterprise Fund in 2005. The institute has contributed $506,000 to Perry’s campaigns and another $85,000 to the governors association, according to the Texans for Public Justice report, the fifth most generous contributor among Enterprise Fund recipients.
Update (Oct. 14): The Texas governor’s office referred questions about the report to Perry’s campaign. Katherine Cesinger, a campaign spokesperson, responded that TPJ drew “false and unsupportable” conclusions in its report. “In fact, many of the ‘crossover’ companies TPJ cited also contributed nearly equal amounts to the Democratic Governors Association as they did to the RGA during the same time period,” Cesinger wrote in an email. “Each TEF project must receive unanimous approval from the governor, lieutenant governor and speaker of the House to receive funding. Funds are awarded based on the merits of the projects, including job creation, and the TEF is key to Texas’ ability to successfully compete with other states economically. The program also has strong contract provisions and is reviewed every two years by the Texas Legislature.”