Don’t restore economic development slush fund

This article by Jay Wall first appeared May 19, 2017 in The Houston Chronicle.

The Texas House wisely stripped $43 billion in funding from the Texas Enterprise Fund and redirected that money to improve the state’s foster care system. The governor and others want to restore and even increase the funding. With the state Legislature relying on constitutionally questionable accounting gimmicks to balance the budget and urgent needs in other areas of the budget, does a state with a top-rated environment for business need to spend money on an economic development slush fund?

The $43 million Texas Enterprise Fund allows the governor, lieutenant governor and speaker of the House to pick winners and losers. It spends the tax revenue of existing Texas businesses to lure new competitors from outside the state and to pay off businesses that blackmail the state by threatening to leave. Meanwhile, the state has urgent needs in other areas including the failing foster care system. The state would do better to preserve its status as a business-friendly state rather than grow a reputation as a state where the real business is done in Austin.

Technology companies are moving to Texas for its quality workforce and lower cost of living compared to other tech centers. Texas has been the top exporter in the nation for 14 consecutive years. Forbes ranked Texas No. 1 for talent attraction. Thumbtack rated Texas No. 1 for “Small Business Friendliness.” CNBC ranked Texas the No. 2 “Best State for Business” – losing to Utah over the cost of doing business, business friendliness, quality of life and education.

Moving to No. 1 would be better-served by lowering the cost of doing business, improving the regulatory and legal environment, upgrading education and enhancing the quality of life in Texas. None of those involve politically motivated payments to bribe businesses to do something they would be doing anyway for purely economic reasons.

One specific area where we can start to enhance the quality of life in Texas is by protecting the most vulnerable members of the community. The Texas foster care system is in disarray. Just how bad is it? In April, a 15-year-old girl in Child Protective Services custody was killed when she left the CPS office where she was being housed because of a lack of foster care facilities and was struck by a car. A second girl had run away from two different CPS offices where she was being housed for lack of available foster homes. In cases where CPS takes custody from one divorced parent, they lack the resources to do the obvious – find the other parent and return the children to him or her. Even at the basic level of technology, CPS caseworkers are overburdened, carrying file folders crammed with papers while electronic tablets would improve efficiency and accountability.

The drastic problems in CPS are just one of the areas where the state’s limited resources could be better spent than the Enterprise Development Fund. Rather than spend money on political handouts to favored businesses, the Legislature could improve the business climate for Texas by: improving the workforce through education reform; improving quality of life by reforming and fully funding law enforcement; and simply lowering the cost of doing business for existing as well as new businesses.

Texas businesses should not be funding their own new competitors. Texas taxpayers shouldn’t be facing a false choice between improving the business climate and improving quality of life; they are two sides of the same coin. Not every day or even every session does the Legislature make a decision that is such a slam dunk. Let’s keep this one.

Wall is a commercial real estate broker, specializing in tenant representation.