Abbott's Office Touts Tax Incentives He Once Questioned

Though Gov. Greg Abbott suggested government should get "out of the business of picking winners and losers” on the 2014 campaign trail, his office on Thursday expressed strong support for the litany of taxpayer-funded incentives Texas uses to lure in out-of-state businesses.

“To unilaterally disarm yourself of incentives will immediately put you at a disadvantage in the marketplace,” Bryan Daniel, head of the governor’s economic development and tourism division, told state lawmakers. “For the state to have the kind of job creation to be No. 1, where we need to be, we have to take the opportunity to help companies who want to move here.”

Daniel was speaking Thursday to members of the House Committee on Small Business and Economic Development. He suggested that such programs were working well — giving taxpayers high returns on their investments — but that Texas could be even more aggressive as other states turn up the competition.

“I can definitely show you a financial benefit to the state for that investment,” he said.

Lawmakers seemed to agree, with some calling Texas’ recent fall from its longtime perch as the nation’s job creator a wake-up call — even if much of the economic slowdown was due to plummeting oil prices, a storm Texas has weathered better than other energy states.  

“We’re Texans. We want to be number one,” said Rep. Angie Chen Button, R-Richardson. “We just have to do something even more creative so we can get back to our position.”

Experts say tax incentives can work well, as long as they are properly evaluated. A key question to ask, for instance, is whether the offers change businesses’ behavior.

In September, a state audit concluded that money from the since-renamed Major Events Trust Fund — used to dangle millions of dollars in incentives to entice events like Formula 1 racing, the Super Bowl and college basketball’s Final Four — was not being closely tracked.

Melissa Maynard, who studies economic development for the think tank Pew Charitable Trusts, said a state law signed last session — House Bill 26 — could bolster the state’s administration of such programs.  

That legislation abolished the state’s Emerging Technology Fund, which was geared toward nurturing start-up firms, and split most of the fund's dollars between a broader economic incentive program, the Texas Enterprise Fund, and a new fund created at Abbott’s urging to draw notable academics to Texas universities.

The legislation also moved the Major Events Trust Fund from the comptroller’s office to the governor’s office, and changed the way Texas calculates returns on its investments.

Daniel said his office has made major strides in implementing that legislation, and that he's seeing nearly as much interest from out-of-state businesses in recent months, despite the energy sector's struggles. 

Since September, Abbott’s office has signed off on at least 20 awards though the Events Trusts Fund, including one that could spend up to $2.7 million to bring WrestleMania to Texas.

Abbott has awarded 10 companies incentives through the Texas Enterprise Fund in 2015, Daniel said.