Texas’ in­ef­fec­tive En­ter­prise Fund tilted to help the po­lit­i­cally savvy

Austin American-Statesman - - VIEWPOINTS - AMY MASHBERG, AUSTIN REX H. WHITE JR., AUSTIN

In 2013 and 2014, then-gu­ber­na­to­rial can­di­date Greg Ab­bott ex­pressed skep­ti­cism about cor­po­rate wel­fare. His pre­de­ces­sor, Gov. Rick Perry, had no such qualms. Perry had es­tab­lished the Texas En­ter­prise Fund in 2003 to help at­tract out-of-state busi­nesses by dis­pens­ing “eco­nomic de­vel­op­ment” in­cen­tives. It grew to be­come the largest clos­ing fund of its kind in the coun­try.

But can­di­date Ab­bott wasn’t im­pressed. He re­peat­edly wor­ried about cor­po­rate wel­fare crony­ism, say­ing the gov­ern­ment “should get out of the busi­ness of pick­ing win­ners and losers.” How­ever, when asked whether this meant he would dis­con­tinue the fund — a pro­gram that does just that — the can­di­date did not di­rectly an­swer.

Now, it ap­pears we know the an­swer. In his State of the State ad­dress in Jan­uary, Gov. Ab­bott called on the Texas Leg­is­la­ture to ex­pand the fund, urg­ing them to al­lo­cate $108 mil­lion to be used by early 2019.

Though pro­grams like the Texas En­ter­prise Fund make lit­tle eco­nomic sense, they make per­fect po­lit­i­cal sense. They al­low politi­cians to be­stow ben­e­fits on a small-but-or­ga­nized — and thus pow­er­ful — set of in­ter­est groups while spread­ing the costs across a broad-but-un­or­ga­nized set of tax­pay­ers, con­sumers and busi­ness own­ers.

The fund has long been dogged by ac­cu­sa­tions of mis­use. A Septem­ber 2014 au­dit dis­cov­ered a lack of ac­count­abil­ity be­tween 2003 and 2013, as of­fi­cials awarded $172 mil­lion out­side of for­mal chan­nels and failed to ver­ify whether re­cip­i­ents ac­tu­ally cre­ated the jobs they promised.

Even if the fund had a clean record, the pol­icy it­self is coun­ter­pro­duc­tive.

Tex­ans have spent an as­tound­ing $609 mil­lion on busi­ness sub­si­dies since the in­cep­tion of the pro­gram. The same amount of money could have fully funded the K-12 ed­u­ca­tion of 5,000 stu­dents or repaved 500 miles of high­way from Lub­bock to Cor­pus Christi.

What might have hap­pened if $609 mil­lion had not been col­lected from tax­pay­ers at all? Imag­ine how many valu­able lo­cal jobs the in­di­vid­u­als and busi­nesses who footed the bill could have cre­ated over the past 14 years had they faced a lower tax rate. And be­cause all tax­a­tion in­volves what econ­o­mists call “ex­cess bur­den,” those who paid the tax bills ac­tu­ally lost more money than the fund’s ben­e­fi­cia­ries gained.

Ab­bott ar­gues that “hav­ing a deal-clos­ing fund can be an ef­fec­tive tool in keep­ing Texas com­pet­i­tive.” In re­al­ity, the fund is quintessen­tially anti-com­pet­i­tive, tilt­ing the play­ing field to­ward those who know how to work the po­lit­i­cal sys­tem and away from those who don’t.

If yours is a homegrown Texas busi­ness, your tax dol­lars go to your po­ten­tial com­peti­tors. To make mat­ters worse, cor­po­rate sub­si­dies en­cour­age Tex­ans to spe­cial­ize in the wrong in­dus­tries. If a busi­ness would not lo­cate in Texas but for the sub­si­dies, that sug­gests that Texas is not well-suited for it — and that Tex­ans could be more pros­per­ous fo­cus­ing on an­other pur­suit.

More­over, those firms that are en­ticed to re­lo­cate for gov­ern­ment cash are just the sort that are likely to skip town when a bet­ter deal comes along.

The num­bers don’t lie: A re­view of dozens of em­pir­i­cal stud­ies shows that these types of pro­grams sim­ply do not pro­duce the sort of wide­spread pros­per­ity that their pro­po­nents claim. As one re­cent re­port put it, busi­ness in­cen­tives “are ex­ces­sively costly and may not have the promised ef­fects.”

When asked about the fund and how to en­sure longterm pros­per­ity for Tex­ans, then-can­di­date Ab­bott had a wise an­swer: “Good tax struc­ture,” he said, is the best in­cen­tive for busi­ness in Texas. In­deed, a good tax and reg­u­la­tory en­vi­ron­ment — and a gen­eral re­spect for eco­nomic free­dom — are much bet­ter bets than cor­po­rate wel­fare. Hun­dreds of stud­ies have now doc­u­mented the di­rect as­so­ci­a­tion be­tween greater eco­nomic free­dom and higher stan­dards of liv­ing.

There would be no bet­ter way to get the gov­ern­ment “out of the busi­ness of pick­ing win­ners and losers” than to close down the Texas En­ter­prise Fund and in­stead ex­pand Tex­ans’ eco­nomic free­dom.

Re: March 9 com­men­tary, “Two Views, Kolkhorst: Bath­room bill is about women’s rights.”

The trans­gen­der bath­room is­sue has been poorly framed by Democrats — as usual — and will­fully mis­rep­re­sented by Repub­li­cans — again as usual. State Sen. Lois Kolkhorst poi­sonous op-ed is a stel­lar ex­am­ple of the lat­ter.

Through­out her screed, she fo­cuses only on po­ten­tial pre­da­tion. Not once does she con­sider the plight of trans­gen­der teens who al­ready are of­ten mer­ci­lessly bul­lied and now com­pelled to en­ter a hos­tile bath­room in­con­sis­tent with their self-iden­ti­fi­ca­tion and ap­pear­ance. No, in­stead it’s a con­stant, para­noid harp­ing on ne­far­i­ous males and help­less fe­males.

This prej­u­diced, con­dem­na­tory, smirk­ing piece would not be com­plete with­out sanc­ti­mo­nious

Re: March 9 com­men­tary, “Two Views, Kolkhorst: Bath­room bill is about women’s rights.”

It’s in­ter­est­ing that Sen. Kolkhorst would state that ac­tivists from out­side the state are here to de­rail Se­nate Bill 6. I was at the Capi­tol yes­ter­day for 14 hours and heard not “outof-state ac­tivists” but par­ents and their trans­gen­der chil­dren de­scrib­ing con­cerns about be­ing forced to use the bath­room of the op­po­site gen­der.

I sat on a panel with sev­eral of those par­ents. One girl said she was forced to use the boys’ bath­room and de­scribed how a boy climbed over a stall to watch her. Mean­while, the bill’s au­thor was forced to ad­mit that there were no in­stances of a trans­gen­der adult or child at­tack­ing any­one in a public re­stroom.

Call­ing these wit­nesses “out­side ac­tivists” is ex­tremely dis­mis­sive and re­ally amaz­ing, since the com­mit­tee’s in­vited pan­els in­cluded anti-trans­gen­der ac­tivists from Illi­nois and Wash­ing­ton, the lieu­tenant gov­er­nor of North Carolina and Tony Perkins, head of the Fam­ily Re­search Coun­cil.

Re: March 1 ar­ti­cle, “Texas Se­nate sup­ports call for a Con­ven­tion of States.”

As you know, Gov. Greg Ab­bott is ag­gres­sively seek­ing a con­sti­tu­tional Con­ven­tion of States to add cer­tain amend­ments to the U.S. Con­sti­tu­tion. I per­ceive a con­sti­tu­tional Con­ven­tion of States to be a dan­ger­ous event that would threaten to un­ravel our Con­sti­tu­tion that has stood for over 200 years. Fur­ther, such a move would likely re­sult in pro­posed amend­ments writ­ten by thou­sands of lob­by­ists rather than by duly elected mem­bers of Con­gress.

TAMIR KALIFA / AMER­I­CAN-STATESMAN

Jim Web­ster, of Weather­ford, and oth­ers marched to the Texas Capi­tol to express their sup­port for the ad­min­is­tra­tion dur­ing a “March 4 Trump” rally on March 4.

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