- Associated Press - Wednesday, October 1, 2014

Fort Worth Star-Telegram. Oct. 1, 2014.

Troubling audit for Enterprise Fund

In the 11 years since the Legislature created the Texas Enterprise Fund and seeded it with $295 million in taxpayer money, Gov. Rick Perry has often touted its usefulness in bringing businesses and jobs to the state.

Now a report from the State Auditor’s Office says the “absence of an adequate control structure” within the governor’s office has meant that Texas has been unable to properly administer the fund, establish the right award agreements or account for how many jobs it has helped create.

That’s a colossal failure not just for Perry but for all Texans and their elected legislators, who should have demanded long before now that the Enterprise Fund be regularly audited and any deficiencies corrected.

Instead, the Legislature repeatedly added money to replenish the fund.

The auditor’s report, released last week, says that $222 million - 44 percent of the $506.8 million spent from the fund on 115 projects through August, 2013 - went to entities that never completed formal applications or were not required to create jobs.

Perry asked the Legislature in 2003 to create the “deal-closing” fund, and state Sen. Kim Brimer, R-Fort Worth, introduced the bill that eventually made it happen.

There were warnings that it could go wrong. State Sen. Steve Ogden, R-Bryan, argued that the fund would cater to special interests who would “go hire a bunch of lobbyists” to obtain tax breaks as tradeoffs for doing business in Texas.

But it wasn’t until last year, under a bill sponsored by state Sen. Wendy Davis, D-Fort Worth, that lawmakers demanded an audit. Davis, who defeated Brimer in a high-profile 2008 election, is now the Democratic nominee for governor.

Since the release of the audit, she has said her Republican opponent, Attorney General Greg Abbott, played a role in allowing the Enterprise Fund to operate with lax standards. Abbott’s office has said that is “political posturing” on her part.

Perry’s office has said all of the fund’s awards were “allocated in accordance with state law” and monitoring standards have improved during the fund’s lifetime.

Perry will leave office in January, having decided not to run for re-election this year. It is widely believed that he is gearing up for a second run for the Republican presidential nomination.

While Perry has had sole authority to negotiate and issue awards from the Enterprise Fund, the lieutenant governor and House speaker are required to sign off on all agreements.

Lt. Gov. David Dewhurst, R-Houston, said he would not approve any more grants until the auditor’s corrective recommendations are implemented. Dewhurst this year lost his bid for re-election.

House Speaker Joe Straus has appointed a special committee to examine all of the state’s business incentive funds and ensure they are “effective, efficient and transparent,” his office said.

It does little good to point fingers of blame. The audit report’s bottom line is disappointing all around.

While there can be no doubt that the Enterprise Fund has had a great many successes, there is no room for sloppiness in spending state money.

A job-creating fund that is inefficient because it lacks proper controls is not only wasteful but embarrassing.

How could our state leaders, who were properly warned during that 2003 debate, have allowed this to happen?

The audit report says some of the awards lacked documentation. More than half of those reviewed had errors that led to inaccurate estimates of how much benefit the state could expect to receive for its money.

Miscalculations of the potential tax revenue from companies recruited though use of the fund means some grantees may have received more than the state could recoup.

Grant recipients fell 18,000 jobs short of the 66,000 they were expected to create last year under their agreements.

Of the 115 awards between 2003 and last year, 23 have been terminated or are inactive. The state recovered $19.2 million from those awards, but the audit report said Texas should have been repaid an additional $3.8 million.

There’s no doubt that financial incentives are useful in today’s business recruiting environment.

But there’s also no doubt that strict financial controls are absolutely necessary.

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San Antonio Express-News. Oct. 1, 2014.

Abolish the Enterprise Fund

The Texas Enterprise Fund has long been criticized as nothing more than a slush fund for Gov. Rick Perry. Now, that status is official.

With the Texas State Auditor’s Office issuing a scathing review of the fund’s handling, the most appropriate response from state lawmakers next biennium would be to abolish it.

The fund, which is under the control of the governor’s office, invites quid pro quo. The governor should not be in the business of picking winners and losers in a quest for photo ops.

The report outlines breathtaking sloppiness by the governor’s office as it dished out hundreds of millions of taxpayer dollars to companies.

It doled out $222 million over 10 years to organizations and companies that never submitted formal applications and were not required to create jobs.

This includes $40 million to Sematech, a nonprofit focused on semiconductor manufacturing, and $50 million for the University of Texas at Dallas.

Equally troubling, the governor’s office failed to provide House Speaker Joe Straus and Lt. Gov. David Dewhurst “with complete and accurate information” about potential funding awards, the report states.

While the governor’s office controls negotiations and the granting of funds, the House speaker and lieutenant governor must sign off on final deals.

In its 2013 biennial report, the governor’s office claimed 66,094 jobs created. In fact, this is the number of jobs that grant recipients are required to create, the audit notes. In reality, over the past decade the fund has provided grants of $505 million, generating 48,317 jobs.

Consider the case of Triumph Aerostructures, which received $35 million from the state via a company it acquired.

“Auditors could not determine the actual number of new jobs the recipient created because of weaknesses in the provisions of the award agreement,” the audit says.

Or consider the case of Scott & White Memorial Hospital in Bell County, which received $7.5 million in 2007.

The hospital met its job-creation requirements for the end of 2012, but there were errors that inflated its job numbers. And one requirement was that the hospital had to build a cancer research center. It had already built one in 2005.

At minimum, all of the state auditor’s recommendations need to be adopted for this fund to continue to exist.

A better option would be to simply abolish this slush fund.

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Corpus Christi Caller-Times. Sept. 26, 2014.

Vote yes for Proposition 1

The unmet need for road upkeep and improvements is evident to Texans whenever they drive around. They should welcome the opportunity to approve Proposition 1 on the statewide ballot.

Proposition 1 would dedicate a portion of state oil and gas tax revenue to transportation funding, which only makes sense. Who better to help with the funding than the industry that fuels the unmet need by finding the fuel that runs the vehicles that use the roads? And who better than the industry that is wearing out those roads at an accelerated rate with the big trucks they drive to the drilling sites during this boom time?

We’re not suggesting that the industry isn’t paying its fair share. It’s just a matter of where the tax paid by the industry is directed. It will pay the same with or without passage of Proposition 1 because the proposition isn’t a tax hike. The state uses 25 percent of oil and gas revenue for education and puts the rest in the Economic Stabilization Fund, better known as the Rainy Day Fund. Proposition 1 would redirect half of the Rainy Day Fund-bound money to the State Highway Fund.

The amount is estimated at $1.7 billion in 2015. The amount would vary annually with the ups and downs of oil and gas revenue. Economics and geology indicate more ups than downs for the next several years.

A vote in favor of Proposition 1 is a vote in favor of what the state should have been doing already. But unfortunately Proposition 1 is only a partial solution to the state’s transportation funding needs. The Fort Worth Star-Telegram reported recently that the state has run up a $23 billion transportation debt. The amount that the state estimates it will need to keep up with traffic is $4 billion to $5 billion. Approving the proposition would get us only about a third of the way there. Then we all can watch the Legislature grapple with what to do about the other two-thirds. Our expectation is that the Legislature will demonstrate how the $23 billion hole got excavated.

Apologies to English teachers for our repeat usage of “unmet needs,” a phrase being used a lot in advocacy of the proposition. We know “unmet needs” is redundant. But it’s also emphatic, as is the need to pass the proposition.

We published a letter Sept. 14 from Mayor Nelda Martinez and County Judge Loyd Neal urging passage of Proposition 1. They weren’t telling voters/drivers what they don’t already know. It was only last year that some of Texas’ roads ruined by oilfield traffic - including some as near as Live Oak County - were in danger of being ground to gravel because repaving was deemed too expensive. Luckily that embarrassing proposal was reconsidered. But it called attention - national attention - to the biting irony that a state reaping the benefits of a huge oil boom couldn’t afford to fix the roads ruined by the oil boom.

Look on the ballot for these words and please vote yes: “The constitutional amendment providing for the use and dedication of certain money transferred to the state highway fund to assist in the completion of transportation construction, maintenance, and rehabilitation projects, not to include toll roads.”

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Houston Chronicle. Sept. 30, 2014.

Bullet train sorely needed in Texas

A bullet train in Texas is sorely needed.

The “great train race,” as we’ll call it, isn’t on anybody’s ballot and won’t be decided for years, but it’s one of the most fascinating contests in the country. The race features two oft-competing states, Texas and California, and two contrasting public policy views - and Houston’s right in the middle of it.

For nearly 20 years, the Golden State has been developing plans for a north-south California high-speed rail system between Los Angeles and San Francisco, with extensions to San Diego and Sacramento as part of a second phase.

Californians predict that its HSR, as it’s called, will be the first high-speed rail system in the nation. It’s a public-private partnership, with as much as $42 billion of the $68.4 billion project coming from the federal government. California voters also approved a multi-billion-dollar bond measure in 2008.

Its Texas counterpart, a 240-mile line between Dallas-Fort Worth and Houston, is privately financed. Robert Eckels, the former Harris County judge who’s now president of Texas Central High-Speed Railway, told an audience at this year’s Texas Tribune Festival in Austin recently that it’s too early to say how much the Texas project will cost, but he did say it would be multiple billions.

Texas Central is affiliated with U.S.-Japan High-Speed Rail, a Washington, D.C.-based company associated with the Japanese high-speed rail operator Central Japan Railway Co., which runs bullet trains between Tokyo and Osaka.

Eckels told the Austin gathering that the project is in the early stages of a federal environmental review, with public meetings led by the Texas Department of Transportation scheduled next month for Dallas, Houston and towns in between. He predicted that if things go according to plan trains would be running between Dallas and Houston by 2021, whisking travelers between the two cities in 90 minutes or less.

As Texans are well aware, bullet train projects, no matter how they’re funded, can derail. In the 1990s, the Lone Star State had a high-speed rail authority and plans for a French company to construct a line. That project fizzled for a variety of reasons, including opposition from Southwest Airlines.

These days, Eckels says, Southwest isn’t standing athwart the track. Still, he and his Japanese cohorts face major challenges before trains began to run, as do their California counterparts. Most everyone can agree on one thing: Both traffic-choked states need transportation alternatives, the sooner the better. We’ll be watching with interest to see which project, and which approach, gets to the station on time.

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Abilene Reporter-News. Oct. 1, 2014.

Craziness gone wild in our world

As if it couldn’t get any worse in Moore, Oklahoma, where a tornado in May 2013 cut a destructive swath and killed 24 people - many of them schoolchildren - the city south of Oklahoma City and north of Norman is back in the news.

An employee fired from a business last week returned to attack two co-workers, both women. He killed one, beheading her.

The unusual style of killing in America is more disturbing because of the recent beheadings of two Americans, a Brit and a Frenchman by those representing the Islamic State (ISIS, ISIL … your pick) in the Middle East. Did the accused Oklahoma killer, a Muslim who is said to have been trying to convert co-workers, imitate what he has said to have viewed?

The suspect’s family apologized for his actions and said his violent ways were out of character.

It’s craziness, folks. It’s barbaric. It has impact. Although death and punishment by the sword is not new in that part of the world, it has shock value in the West.

Violence - extreme violence - seems to be everywhere. Even on the sports channels, showing a football player whaling away on his fiancee.

But there is a breath of hope. Late Monday evening, simmering tensions heated to the point of boiling over in Ferguson, Missouri, where an unarmed 18-year-old man was shot to death by a police officer Aug. 9. Protesters and police were lined up against each other near police headquarters. The sound of gunshots could be heard in the distance, and police were poised to enforce the city’s 11 p.m. noise ordinance.

The captain of the Missouri Highway Patrol, however, allowed the protest to continue without abating the spirit, if done so peacefully.

Whatever the level of these awful “us against them” times, we can only hope that resolution takes the place of retaliation. Perhaps then the craziness will stop,

Copyright © 2018 The Washington Times, LLC.

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