AUSTIN, Texas (AP) — Republican and Democratic senators grilled the governor's director of economic development on Wednesday, questioning how many jobs have actually been created by two incentive funds and whether they are adequately monitored.
Gov. Rick Perry's office administers the Texas Enterprise Fund, designed to attract businesses to Texas, and the Emerging Technology Fund, which invests in innovative companies. Aaron Demerson, the director who oversees the funds, said they help create jobs in Texas and spur technological development.
But Sen. Bob Deuell, the Republican chairman of the Senate Economic Committee, started a hearing at the Capitol by acknowledging that the funds have many critics that call them corporate welfare or a slush fund for Perry to reward campaign donors.
"There are people from the far right that don't like this kind of thing, there are people from the far left that don't like it and people in between," the Greenville lawmaker said. "The criticism you get is that these are phantom job reports ... and that these jobs are not really created."
Deuell noted that another incentive program to fight cancer had been badly mismanaged and is now the subject of a criminal investigation.
Sen. Wendy Davis, D-Fort Worth expressed concern that after 10 years, the Texas Enterprise Fund has never undergone an independent audit. Davis said she supported government efforts to encourage economic development, but said such program require close scrutiny.
While the enterprise fund is forecast to create 66,000 jobs, when Davis pressed Demerson on how many new jobs actually exist because of the program, he could not answer. Davis also questioned whether $2 million in returns on $184 million in taxpayer funds in the Emerging Technology Fund was sufficient.
At several points in the hearing when asked probing questions, Demerson said he did not have the answers and promised to reply later in writing.
Under questioning from Deuell, Demerson acknowledged that as many as 12 companies funded by the Emerging Technology Fund were under review or subject to litigation. He said many of the companies receiving enterprise fund money have not created the number of jobs originally promised and as a result his office has revised those contracts to set lower targets.
"Our goal is to really work with the companies. We want a win-win situation, but there are state dollars and an obligation there," he said. "We're not drawing a line in the sand and saying one or the other, we want to work through that and if there is a win situation that protects the taxpayer dollars, we're going to do it that way."
He said his office has never canceled an enterprise fund contract, though some recipients have chosen to repay $22 million rather than continue in the program.
Sen. Brian Birdwell, R-Granbury, expressed skepticism about the funds because they use taxpayer dollars to finance private companies. He asked for more rigorous study to see if the funds are accomplishing their goals.