Gov. Greg Abbott’s office proposes growing its Texas incentives funds by almost $200 million, far above the totals contained in the Senate’s initial budget.

The state budget started in the hands of the Senate this year, and it eventually will be reconciled with the House budget. Abbott’s staff, led by Jordan Hale, on Thursday morning requested significant bumps to incentive funding: $107.9 million for the Texas Enterprise Fund, which provides incentives for companies that relocate to the Lone Star State; $40 million for the Governor’s University Research Initiative, which is used to recruit university faculty; and $56 million for film and video game marketing.
Those numbers might sound surprising, given that Abbott announced a hiring freeze for state jobs between now and the end of the fiscal year. Hale, however, said the Texas Enterprise Funding had brought 15 companies to Texas since the last session. Those companies committed to bring 5,600 jobs to Texas with an average salary of $77,000. The governor’s budget document noted TEF continues to diversity the Texas economy.

“Among these are some of the nation’s most prominent businesses, including McKesson, the largest American pharmaceutical distributor and the fifth largest company in the Fortune 500. McKesson alone will add almost 1,000 jobs to Texas,” according to the document. “Another 1,000 jobs will come from the new campus built by fellow Fortune 500 company, Charles Schwab. Along with headquarters relocations for Jacobs Engineering Group, Kubota Tractor, Jamba Juice and cloud computing company LiveOps, as well as other grants, TEF has brought economic diversification across the state from Amarillo to the Rio Grande Valley.”

Sen. Kelly Hancock, R-North Richland Hills, is expected to head up Natural Resources & Economic Development Committee this session. Hancock said many talk about successful relocations with the incentive funds. Hancock, however, wanted a broader picture.

“To me, one of the pieces that we are missing is, what is the competitive environment?,” Hancock said. “What are other states offering? What is the competitive environment? Why do we need these funds, from the perspective of, here is what is going to happen if we don’t.”

The budget this session is considered to be very tight. Sen. Jane Nelson, chairwoman of the Finance Committee, has gone out of her way to zero-out new funds beyond essential services, including the incentive funds. Many of the Flower Mound Republican’s comments Thursday centered on finding alternative sources of funding — such as federal grants — to deal with high-cost issues such as disaster funding and support for communities with military bases that are trying to avoid closure.

Presented by the Dallas Business Journal

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