Thursday, March 31, 2011

Gov. Perry to "Fully Fund Business Capital"

Governor Rick Perry and the Texas Legislature plan to fully fund business capital via the Texas Enterprise Fund and Emerging Technology Fund.

Gov. Perry's multimillion-dollar economic development funds are not cut in the budget
Perry won't lead by example.  Public education and health care face budget cuts of 25 to 33%.  Apparently education and health expenditures aren't investments in Texas' future.  The Governor's website states:

To date, the TEF has invested more than $430 million and closed the deal on projects generating 57,305 new jobs and more than $14.7 billion in capital investment in the state.
Almost 10% of the $430 million went to one company, Vought Aricraft Industries in April 2004.  It promised to provide 6,300 jobs by 2010 for $35 million in TEF funding.  Instead of providing the promised 3,000 new positions, it cut 35.  Governor Perry gave Vought $1 million per job eliminated.

Vought committed to invest $558 million in its Dallas-Fort Worth, where it planned to consolidate operations and build portions of the fuselage for the Boeing 787 Dreamliner. Vought's 2004 SEC filing shows:

On February 26, 2004, we announced plans to consolidate much of our manufacturing operations in Dallas, Texas. To help us accomplish this major restructuring, we will receive a $35 million grant from the Texas Enterprise Fund and will work with the Texas General Land Office and several other state and local agencies. Although plans are not fully finalized, we intend to renovate and modernize the Dallas facilities, close the Nashville and Stuart sites, and reduce the size of the Hawthorne site over the next 18 to 36 months.
No consolidation occurred.  Dreamliner production went to South Carolina, partially financed by Texas taxpayers..  The 3,000 "new jobs" Perry claims came from Vought were already in place in 2004.  The $558 million in capital on Perry's report never happened.  It's complete fiction, something the AP missed.

As Vought walked up to its 2010 Texas commitment, the firm sought bidders.  Carlyle courted Triumph in late 2009 and early 2010.  Were any calls made to the Governor's office?  Dealmakers like clarity.  The Carlyle Group announced it would sell Vought to Triumph Group in March 2010.
For the privilege of holding $35 million for six years, Vought returned $900,000 to Texas taxpayers, under a Perry renegotiated deal.  That's TexExecutive privilege.  Make no mistake, Carlyle Group principals have the chops to refund Texans the full $35 million plus interest.  The Legislature is fully funding the Governor's corporate slush pile, while not conducting oversight.

Yet, draconian cuts must be made elsewhere, due to a structural tax deficit Perry wishes to to make permanent:

The governor is committed to keeping taxes low in order to help small businesses continue to succeed and create jobs, and reiterated the need to make permanent the small business tax cut that was passed last session. This measure cut taxes for 40,000 small businesses, and allowed them to focus on job creation and growing their businesses.
Governor Perry is a man ahead of his time.  It took the City of San Angelo until 2011 to give millions in tax breaks for job retention.  While Perry's TEF Fund stays full throttle, citizens struggle mightily. TEF is anything but "wide open," transparency wise.  It's a black hole.

Update 4-4-11:  While children in wheelchairs testified on the harm of proposed cuts, Perry's personal Texas Enterprise Fund handed out  $2.45 million to a Cisco-EMC joint venture and $2.1 million to GGNSC Holdings.  Both grants are to fund corporate headquarters.

Update 5-2-11:  The Senate budget does not fund the Texas Enterprise Fund or the Emerging Technology Fund.  Watch for reconciliation.

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