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Watchdog group: Texas job creation program missed goals; Perry's office calls analysis flawed
AUSTIN, Texas (AP) ' A government watchdog group in Texas said Wednesday that a job creation program touted often by Gov. Rick Perry as he seeks the Republican presidential nomination has delivered on barely a third of the jobs it promised to bring to the state by the end of last year.
But Perry's office fired back immediately at Texans for Public Justice, arguing the end of 2010 is a false deadline and the report an unfair judgment on the success of the Texas Enterprise Fund. The figures cited by the group, a left-leaning organization that's often critical of Perry, are future job-creation targets that were never meant to be reached by last year, a Perry spokeswoman said.
The fund, Perry spokeswoman Lucy Nashed added, "continues to be one of the state's most competitive deal-closing tools."
The Texas Enterprise Fund has handed out $440 million in public money in the form of economic development grants to private companies since its creation in 2003 in an effort to bring jobs to Texas. The grants are approved by Perry, the lieutenant governor and state House speaker, with Perry's office responsible for negotiating the grants and distributing the money.
The report issued by Texans for Public Justice found that companies getting money from the fund created 22,349 jobs by end of last year, or roughly 37 percent of the 59,100 jobs that the governor's office says the participating firms had promised to create as of this summer. The group's numbers are based on a review of the state's contract with each company that received a grant, said Andrew Wheat, the group's research director.
"Our report is assessing how these projects performed on the basis of their original contract," Wheat said. "The governor's office is getting different results because, when the going gets tough as it has in this recession, they tend to amend the contracts and move the goalposts."
As an example, Wheat cited the job creation target for 2010. The original contracts called on those receiving grants to create 11,876 jobs in that year, a figure he said dropped to 6,959 once the deals were amended by Perry's office.
Nashed said she couldn't confirm the renegotiated targets for 2010, because the governor's office only measures the fund's cumulative results ' not year by year or contract by contract. She said the enterprise fund's amended agreements called for grant recipients to create 23,410 jobs by the end of last year and they had exceeded expectations by delivering 33,400.
She said the fund allows "for these amendments and re-negotiations because you can't predict what a business cycle is going to be like." Firms that renegotiate with the state to enter into new, less stringent contracts are required to pay penalties, and through August, the fund has received more than $25.7 million in such repayments.
Texans for Public Justice also criticized how Perry's office counts the number of jobs created. Wheat said the fund has given money to five projects his groups considers fraudulent, because the firms are claiming to have created more jobs than they actually have. Perry's figures also include jobs created by Samsung Electronics Co., which the report excluded since the governor's office is currently completing a "jobs audit" of that agreement to see how many new positions were actually created.
In September, Perry's presidential rival Michele Bachmann likened one of the deals subsidized by the Texas Enterprise Fund to Solyndra Inc., the California energy company that went bust after receiving a $528 million loan from a federal stimulus program.
She said Perry's state fund "gave $35 million and a grant to a private company and there were donors in that private company," referring to Perry campaign contributors. Though the company promised to create jobs, "they didn't create any," she said.
The firm Bachmann was referring to, Lexicon Genetics, received $35 million in 2005 and pledged to create 1,662 jobs by the end of this year, but its workforce of more than 600 has fallen to 290 today ' with 70 of them based in New Jersey, not Texas.
But the firm renegotiated in 2008 to push back the job deadline to at least 2016 and paid $16,000 in penalties.
Lexicon's top investors in 2005 ' Bob McNair, William McMinn and Gordon Cain ' were all large donors to Perry's gubernatorial campaign that year.