Perry changes enterprise fund contracts


Associated Press

Posted on January 27, 2010 at 4:00 PM

Updated Wednesday, Jan 27 at 4:00 PM

AUSTIN, Texas (AP) — Gov. Rick Perry's office revealed Tuesday that it changed 11 Texas Enterprise Fund contracts with companies receiving taxpayer-funded grants for creating jobs to make them more favorable for the firms, and that two other pacts had ended.

One of the companies ending its enterprise fund contract was Bank of America, which now owns the mortgage giant Countrywide. Countrywide sunk into financial turmoil and laid off thousands of workers nationally even as it remained in a job creation agreement in Texas. Bank of America ended the company's $20 million agreement with the state and will return $8.45 million, Perry's office said.

His office announced the amended and terminated enterprise fund agreements shortly after learning that the nonprofit Texans for Public Justice was releasing a report Wednesday detailing enterprise fund contracts that weren't fulfilled or were in trouble. The TPJ report also lists companies, such as Lockheed Martin Corp., that had their contracts with the state changed to reduce job creation requirements or allow more time to fulfill job promises.

"The global recession that hit Texas in 2008 is playing havoc with Governor Perry's signature business-incentive program: the Texas Enterprise Fund," the TPJ report states, adding that Perry's office "has quietly redefined success."

Perry's prepared statement said: "Contracts may be amended as necessary to adjust for changes in terms, including job targets and deadlines, and companies must be in compliance to amend their contract. TEF contracts are working as intended, rewarding job creation in Texas and protecting taxpayer dollars in the few cases where employers do not live up to contract job commitments."

Perry frequently talks up his record on job creation in his bid for re-election. He faces U.S. Sen. Kay Bailey Hutchison and Republican activist Debra Medina in the March 2 GOP primary.

Since it was formed by the Legislature in 2003 at Perry's urging, the Texas Enterprise Fund has invested more than $385 million in deals that resulted in 54,600 new jobs and more than $14.3 billion in capital investment, according to Perry's office.

Forty-five enterprise fund companies receiving $363 million in public money were reviewed in the TPJ study, which was based in large part on state compliance reports the firms filed for 2008 — a year in which the global recession greatly slowed down the nation's economy. Companies are only now beginning to file their Texas compliance reports for 2009.

Enterprise fund contracts contain "clawback" provisions that allow the state to financially penalize a company if it fails to meet a job target, and Perry's office has cited those rules as protections for taxpayer money.

Texans for Public Justice, which says it tracks money in politics and advocates for corporate accountability, said it made numerous requests under the Texas Public Information Act in compiling the analysis. Only 13 of the 45 projects examined were performing well, the report found.

The other company that ended its contract with the state was Gulfstream. It halted its $375,000 agreement and will return that amount plus interest to the state, the governor's office said.

"While Texas continues to weather the economic storm better than the rest of the country, Texas families and companies have felt the effects of the national recession, including some TEF recipients," Perry's office said in the statement.

In addition to Lockheed Martin, the companies whose contracts were amended are Rockwell Collins; Rackspace; Texas Energy; Allied Production Solutions; Fidelity; Martifer; Motiva; Vought; Authentix; and Heliovolt.

Perry's office said Texas Instruments and Baylor successfully completed the terms of their enterprise fund agreements.

Texas' unemployment rate was 8.3 percent in December, compared with the national average of 10 percent. Some 300,000 jobs were lost in the state last year.