Rick Perry Wasted $40 Million on Toyota

by Published on
Rick Perry
Patrick Michels
Gov. Rick Perry attends the National Day of Prayer breakfast in Austin, Tex.

If there was any lingering doubt that Gov. Rick Perry’s Texas Enterprise Fund functions more as a corporate cookie jar than a “deal-closing” job machine, it should surely be put to rest with today’s news. Earlier this week, Perry announced that Toyota would receive $40 million to move its North American headquarters from California to Plano and bring with it 4,000 jobs. In a press release, Perry crowed, “Toyota understands that Texas’ employer-friendly combination of low taxes, fair courts, smart regulations and world-class workforce can help businesses of any size succeed and thrive.”

The press release went on to claim that Toyota had “cited a number of factors in choosing” Plano, including the Texas Enterprise Fund investment.

But today, the Los Angeles Times reports that that’s so much horse hockey.

“Taxes, regulations and business climate appear to have had nothing to do with Toyota’s move,” the paper reported. And that’s coming from a top executive.

“It may seem like a juicy story to have this confrontation between California and Texas, but that was not the case,” said Jim Lentz, Toyota’s North American chief executive.

Toyota left California to move its company’s brainpower, now divided among offices in three states, into one headquarters close to the company’s manufacturing base, primarily in the South.

“It doesn’t make sense to have oversight of manufacturing 2,000 miles away from where the cars were made,” Lentz said. “Geography is the reason not to have our headquarters in California.”

Oops.

So what did Texas taxpayers get for their $40 million? If you take Lentz at his word, basically nothing. Toyota was coming to Texas with or without the Enterprise Fund money. An incentives program like the Enterprise Fund is premised on the idea of being a “deal-closer.” You have to ask the “but-for” question: But for this incentive, would X company move to Texas? If the answer is, “Yes, the company would move anyway,” then there is no reason to offer the incentive.

What’s remarkable in the Toyota case is that an executive is admitting as much. You can’t blame Toyota—a for-profit company responsible to its shareholders—for taking the $40 million, but you have to wonder if the state of Texas shouldn’t now ask for its money back.

And what did Perry get? Bragging rights, the ability to lay claim to the “job creator” mantle, another notch in his belt for the silly zero-sum California vs. Texas pissing match and associating himself with a popular brand of Texas-made trucks. (Full disclosure: I own a Toyota Tacoma.)

Of course, this isn’t the first time that the true nature of the Enterprise Fund, which has paid out $558 million since its inception in 2003, has been made apparent. Last year, the governor offered Chevron $12 million for an office tower it was already planning to build in downtown Houston and the company’s own application made scant reference to other sites it was considering. Chevron also noted that it planned to use the money to lavish employees with moving benefits and perks.

If there is a “Texas miracle,” Perry’s Enterprise Fund doesn’t seem to have much to do with it.

Forrest Wilder, a native of Wimberley, Texas, is associate editor of the Observer. Forrest specializes in environmental reporting and runs the “Forrest for the Trees” blog. Forrest has appeared on Democracy Now!, The Rachel Maddow Show and numerous NPR stations. His work has been mentioned by The New York Times, the Washington Post, the New Yorker, Time magazine and many other state and national publications. Other than filing voluminous open records requests, Forrest enjoys fishing, kayaking, gardening and beer-league softball. He holds a bachelor's degree in anthropology from the University of Texas at Austin.

  • GOP Julie

    Typical contortions from the Texas Observer. In an attempt to downplay the impact of 5,000 California jobs moving to Texas, you liberal hacks rely on the reporting of the LA Times? Here’s some news you didn’t report: Other states were competing against Texas for those prized jobs. So, it wasn’t a waste of $40 million, now was it?

    • Forrest Wilder

      So, what, you think the LA Times just made up the quotes from the Toyota exec?

      • GOP Julie

        I’d like to see the complete context of the conversation. After all, other states were competing for those same jobs. But you chose not to report that fact. If you ask me, that’s a glaring omission. Or to use your term, a big “oops!”

        • Forrest Wilder

          Yes, other states were competing for the jobs and the $40 million incentive had nothing to do with locating in Texas according to Toyota’s executive. Both things can be true: It’s true that Toyota was considering other states near their manufacturing base and that the $40 million was not the deal-closer. If you think that’s incorrect, then you disagree with Toyota, not me.

          • 1bimbo

            good job toyota exec. your statements save face in california for expanding to texas, and shrug off competing states by pushing the ‘proximity’ narrative..didn’t take much to persuade a lefty opinion site that texas cash didn’t sweeten the pot.. there’s a reason why wilder works for a outdated liberal dot-com and toyota execs makes 7 figures operating a multi-billion dollar international corporation..

          • Jed

            i bet there are several reasons, in fact.

      • https://www.youtube.com/watch?v=94rcOVJBMYQ Winston Blake

        The LA Times is cat litter box liner… I’ll explain the difference between a California cowboy and a Texas cowboy for you…

        When they both see a cow with its head stuck in the fence, the Texas cowboy runs over, rapes the cow and asks the California cowboy if he wants some.

        The California cowboy runs to the fence, sticks his head in, drops his drawers, and says “o.k.”

    • tonydude4you

      Julie, defending Perry or ANY Republican just tags you as a whacko.. OPEN YOUR EARS, there is NOTHING Republicans are doing these days that have any worth. They are completely outside reality ! PERIOD, TRUTH, UNDENIABLE. !! REPENT AND REBOOT !! those are the only ‘R’s that will save you !

      • GOP Julie

        I would put Rick Perry up against any liberal Democrat in the country, including your sainted Barack Obama. Tell him to explain to the American people how he plans to create jobs again. After nearly six years, the only success you liberal windbags can point to is .01 percent GDP growth in the 1st quarter of 2014. Is that what you call progress? Is that how you move America forward? I’ve got news for you, chum. Saying “Yes We Can” doesn’t make it so. Go back to school and open an economics book. Better yet, look in the mirror before you call someone else a whacko.

      • caseygiles

        i think it’s ironic that your username is “voiceofreason”…..you’re just a guy yelling at people who don’t agree with you. very unintelligent and ineffective approach.

  • 1bimbo

    perry knows this money will pay off in the 100s of millions of dollars in jobs per corporation and millions more in more jobs which pop up around the corporations. i’d call it a win-win

  • Vinny Minchillo

    There are plenty of other “southern” places Toyota could have picked, but they picked Texas because the whole package was in place, including the $40 million in table stakes that are part of major company relo packages these days. If you don’t have any money to put in, you can’t even be part of a serious discussion. This is exactly why the Enterprise Fund was created and it sounds to me like it’s working.

    • tonydude4you

      oh Vinny, so Lentz called you and told you something completely different from Los Angeles Times ? so you must have Lentz on your speed dial !!!

  • caseygiles

    i doubt toyota told Perry that at the time. pretty sure they pretended otherwise, so i find this guys comments pretty underhanded. had they not come, there would be a scathing article about how Perry lost us thousands of jobs. easy to monday morning quarterback this stuff after the fact, when you have all the information, hindsight, etc. But a good, UNBIASED author would have considered such things.

  • R1o2b3

    More corporate welfare, again? Perry doles out 19 billion a year. The 4000 jobs are going to out of staters, not Texans. If you want to import a middle class piecemeal from another state, fine, but the company should pay its fair share in taxes. Stop giving them our tax dollars. The only job creation from Perry primarily consists of the poverty wage service economy that will support the Toyota campus which we will have to subsidize through medicaid and food stamps. Fine, Perry leads the nation with poverty wage job creation which is why we are ranked 9th highest in poverty. Keep our public schools ranked at the bottom nationally in per pupil funding. Give that money to corporate treasuries because they need to buy back more of their stock and our kids won’t need an education to work at poverty wages.