[Vision2020] Perry's Jobs Deception: Part 2

[nickgier at roadrunner.com]

Perry cites Texas jobs, but his figures include future jobs

By Laylan Copelin

AMERICAN-STATESMAN STAFF

Published: 10:27 p.m. Thursday, Oct. 13, 2011

Gov. Rick Perry's record of creating jobs with taxpayer money is coming under greater scrutiny because of his presidential campaign.

Perry is trying to deflect criticism of inflated job numbers and cronyism from the right and the left, from The Wall Street Journal to The New Republic and, of course, from his presidential rivals.

This is hardly news in Texas, where the Legislature this year ordered greater oversight of Perry's management of economic development funds in the wake of a critical audit and outside evaluations of his jobs record. But past criticisms are amplified by presidential politics, particularly when some conservative voters are questioning the wisdom of spending taxpayer dollars to choose winners and losers in the business and technology arena.

Perry's use of tax dollars for job creation is even being compared with the Obama administration's $535 million loan guarantee to the failed solar company Solyndra.

During this week's GOP presidential debate, Perry said it was OK for him to do it, but not President Barack Obama.

"I don't think the federal government should be involved in that type of investment, period," he said. "If the states want to do that, that's fine for states to do that."

The governor defended the cornerstone of his economic development efforts: the Enterprise Fund, the nation's largest deal-closing fund for recruiting companies to Texas, and the Emerging Technology Fund, which gives money to tech startup companies.

"I can promise you, the 54,600 jobs that have been created and the $14 billion-plus worth of investment that has come out of the Enterprise Fund in the State of Texas, those people that have jobs today in the State of Texas, they are absolutely happy that we have got a program like that," he said during the debate.

Not all those 54,600 jobs have been created yet. And some of those promised jobs might not be created for years — if ever — given Perry's track record of amending job targets when a company falls behind.

"They are counting their chickens before they hatch," said Andrew Wheat with Texans for Public Justice, a government watchdog group and frequent Perry critic. "They haven't created 56,000 jobs; they've given money to create 56,000 jobs."

Perry's numbers come from his annual report to the Legislature.

Allison Castle, a Perry spokeswoman, said Thursday that Perry was using a figure from the jobs "committed" through the life of the contracts with the grant recipients.

She said more than 30,700 jobs had been created by the end of 2010. The Enterprise Fund, created in 2003, disbursed almost $363 million through the end of 2010.

Last fall, Texans for Public Justice issued its take on Perry's record in its report, "Phantom Jobs: The Texas Enterprise Fund's Broken Promises."

It concluded that about two-thirds of the Enterprise Fund projects that faced job-creation targets by 2009 failed to deliver the jobs that they originally promised. Perry changed the agreement terms, giving the grant recipients more time to create the jobs, by amending the contracts for about one-fourth of the projects.

At the time, Perry blamed the recession for changing the job targets, but he continued changing targets as the recovery took hold in Texas.

In response to the controversy over some of Perry's contract amendments, the Legislature changed the law this year, requiring legislative leaders to approve the amendments.

In some instances, however, the original language in the Enterprise Fund contracts allows recipients to count jobs they didn't create.

The Wall Street Journal this week focused on a $50 million grant in 2005 that created the Texas A&M Institute for Genomic Medicine at Perry's alma mater, Texas A&M University, and helped Lexicon Pharmaceuticals, a company backed by three Perry donors.

Although the institute has only 10 employees and Lexicon has reduced its Texas workforce from 290 to 220, Perry's 2011 report to the Legislature claims that the two exceeded the 5,000 jobs they promised to create by 2015. The governor's report credits almost 12,000 jobs to that Enterprise grant.

How?

The state is giving the institute credit for any biotechnology job created in Texas.

Lexicon did not respond to a phone call for comment, but Lucy Nashed, a Perry spokeswoman, confirmed the accuracy of The Wall Street Journal's story "with respect to the specifics" about the Enterprise Fund.

Jason Cook, communications chief for the Texas A&M System, said the institute is helping to cure diseases and developing therapies for Alzheimer's disease, attention deficit hyperactivity disorder, strokes, inflammatory bowel disease and wound healing.

He said the university has complied with the contract negotiated with Perry's staff.

"The metric we agreed upon was to reflect the direct and indirect impact on this industry," Cook told the American-Statesman. "It was more about establishing a fundamental research piece to expand the Texas biosciences industry."

Rep. Mark Strama, D-Austin, said that is not how the grant system is supposed to work.

Strama, a former chairman of a House committee on economic development, said he understands trying to create industry clusters, but each grant application should be judged on the number of direct jobs it would create.

"I think we ought to know the indirect jobs counts, but it shouldn't count toward qualifying for the grant," Strama said. "Counting every job in the (biotechnology) field would be a stretch."

State law, cited in Perry's report to the Legislature, says the governor's office shall assess the "direct economic impact" of a project before awarding a grant. But Perry's defense for his contracts is that the lieutenant governor and House speaker, both Republicans, must approve the language.

Perry has not favored his alma mater at the expense of the University of Texas.

In 2005, his office negotiated a $25 million grant to the UT Health Science Center and M.D. Anderson Cancer Center, both in Houston, for the creation of the Center for Advanced Biomedical Imaging Research.

A total of 2,252 direct jobs were to be created by this year. Perry's report to the Legislature credits the center with 4,840 direct and indirect jobs. But there are questions about how those jobs figures were determined.

In a 2009 letter to Texans for Public Justice, Kenneth Shine, executive vice chancellor for health affairs, explained UT's contract negotiations with Perry's office.

He wrote that all parties recognized that it would be "almost impossible to obtain data concerning job creation and salaries from all of the contractors, subcontractors, vendors and related entities that created jobs" because of work at the center.

Shine added that the grant would have a "far-reaching beneficial collaborative effect" on many efforts at the UT Health Science Center and M.D. Anderson.

Officials with the UT System had no immediate comment Thursday.

"If you cut through the academic language," Wheat said of the letter, "they decided it was too difficult to determine the jobs created" by the $25 million grant.

"They decided to count all the jobs created at the M.D. Anderson Cancer Center," Wheat said. "It doesn't pass the laugh test, but that's how they did it."

lcopelin at statesman.com; 445-3617