Texas budget proposals freeze business programs

AUSTIN, Texas (AP) -- Gov. Rick Perry likes bragging that Texas is open for business, but the state budget on the table suggests the trough of taxpayer dollars for private companies may be drying up.

Budget proposals lawmakers laid out this week include no new money for Perry's signature business incentive programs, the Emerging Technology Fund and the Texas Enterprise Fund. Nor is there money earmarked for the beleaguered Cancer Prevention and Research Institute of Texas, which has given about $96 million since 2010 to private startups, in addition to hundreds of millions more for research.

Lawmakers also froze out the tech and enterprise funds in the 2011 session, but did let the programs carry over unused money.

Lt. Gov. David Dewhurst on Tuesday downplayed the significance of both the House and Senate beginning budget talks this time with no new dollars in the pipeline again.

"I think there's an appetite among our Texas lawmakers to continue to provide the adequate business incentives so that companies continue to locate here and that new technology is delivered," Dewhurst said. "I understand there has been criticism of different programs — some of which I think is unwarranted, and some of which I think could use some more transparency."

CPRIT is taking the brunt of that criticism. The state's once-celebrated $3 billion cancer-fighting agency is at a standstill while prosecutors continue a criminal investigation stemming from an $11 million grant to a biotech startup in 2010. An internal audit last year revealed the award to Dallas-based Peloton Therapeutics was approved in spite of the company's application bypassing an independent review.

Democratic state Rep. Garnet Coleman, who plans to introduce a bill making changes to CPRIT, said the state has not been getting the bang for its buck when it comes to taxpayer funds given to private companies. The state typically takes an equity position in exchange for its investment.

"If the state is going to act as a venture capitalist, then the people of the state of Texas should get as much back as appropriate," Coleman said.

Perry's tech fund also has come under new scrutiny. It has given more than $194 million since 2005 to private startups with the promise of creating jobs and bringing groundbreaking technologies to the market, but bankruptcies in the fund's portfolio last year raised questions about whether the state was getting a return on its investments.

Perry's office last put a value on the portfolio a year ago. A new fund report is due later this month.

Perry asked lawmakers to restock the tech fund with $139 million in 2014-15. But budget writers in both the House and Senate left that request on the sideline while crafting their first drafts. They simply let the fund carry over about $7.2 million that has yet to be spent.

"Budgets as introduced are always a starting point, and our office expects to have to make our case for important programs, just as other agencies have to make theirs," Perry spokesman Josh Havens said Tuesday. "Ultimately, the governor believes this incentive fund is important to our state's economic strength and job-creation prospects and we'll work with lawmakers to see it move forward."

The governor's office did not request any new money for the enterprise fund, which Perry touts as a deal-closer to sway such companies as Apple to expand their presence in Texas and create more jobs. His office has said there was still enough unused money in the fund — about $145 million near the end of last year — to avert the need for more.

Dewhurst, who appoints members of CPRIT's governing board, has left the door open for the agency to win back funding this session if confidence in the troubled institute is restored.

A spokesman for Jimmy Mansour, chairman of CPRIT's governing board and one of Dewhurst's appointees, said lawmakers are acting within their rights.

"(Mansour) understands the Legislature creating this starting point, which tells one and all that its confidence must be earned back by right actions and truthful, full explanations for what's previously occurred," said Bill Miller, an Austin lobbyist. "He is fully on-board with that plan."

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