As Texas woos business, where's the transparency?

Photo by Muliadi Soenaryo

Texas may be “wide open for business,” but we’re far from providing taxpayers with the open government they need to evaluate the success of some of the nation’s costliest and most controversial economic development programs.

Gov. Rick Perry often touts the success of the Texas Enterprise Fund and the Texas Emerging Technology Fund, two taxpayer-financed tools used to promote job creation and investment in Texas. But can policymakers, watchdogs and taxpayers access the information needed to evaluate the effectiveness and efficiency of these two mega funds, in which Texans have invested nearly a billion dollars?

Transparency of the public purse matters because it promotes fiscal responsibility, bolsters public confidence in government and deters corruption. And these days, Americans are more likely to seek that kind of information online. Thanks to Comptroller Susan Combs and numerous transparency advocates, Texas has been a leader in online transparency, but the state must do more, especially to protect and promote taxpayers’ ability to monitor public handouts to private entities.

In Texas, Perry has taken an aggressive approach to economic development spending. For instance, the Emerging Technology Fund, which is used to promote technological innovation in Texas, has cost the state about $425 million since its inception. Outlays like these are controversial because they often come alongside major cuts to services like education and health care.

Just the possibility that taxpayer handouts could be used as political favors requires an even greater level of transparency to ensure that cash grants, tax credits and other forms of economic development subsidies are truly justified.

Unfortunately, this transparency does not exist. According to the governor’s own fiscal year 2013 legislative report on the Emerging Technology Fund, 17 private entities that received funding through the portion of the fund designed to encourage the development of new technologies have ceased operation. Neither the governor’s website nor the reports to the Legislature provide any indication of whether the state has successfully recouped this money. It’s not possible for taxpayers to evaluate whether the $22.6 million that went to these entities was a prudent use of taxpayer money. What we do know is that Texans will pick up the tab in the form of additional program cuts or higher taxes.

Any investment carries a risk of loss, but when companies fail to deliver on agreed-upon public goals — in this case, for companies to profit — the public should be able gauge the appropriateness and effectiveness of these investments.

My organization is filing 17 open records requests with the governor’s office to assert taxpayers’ right to access this information. It’s a confusing and time-consuming task, even for a group that serves as a watchdog on tax and budget issues. The obstacles make it extraordinarily hard for average taxpayers to hold their elected officials accountable on spending decisions.

Attorney General Greg Abbott, a candidate for governor, has said government should get "out of the business of picking winners and losers.” Whether you agree with that or not, one thing is clear: As long as taxpayer dollars are going to private companies, heightened transparency is crucial. To decide which of these subsidy programs deserve state support, we need to make clear which companies receive how much, what they are expected to deliver in return, whether they make good on those promises and whether they are held accountable when they don’t deliver. Without that transparency, we can’t be sure that these subsidies aren’t being wasted or used as political favors. 

Sara E. Smith

Staff attorney for Environment Texas