Gov. Rick Perry's Business-Friendly Texas Thriving

May 16th, 2011
Human Events
By: Kenneth Hanner

The same week in April that a delegation of government officials from beleaguered California came to Texas to examine the state’s sound economy, Republican Gov. Rick Perry announced deals with three major corporations, creating new jobs in the Lone Star State.

It’s no big secret why Texas has been attracting businesses, while corporations are fleeing California. As Perry told the Golden State visitors, Texas’ low taxes and regulatory sanity offer a friendly business climate for companies looking to set up shop.

“Here in Texas, our economic approach has made our state a major destination for companies looking to relocate or expand,” Perry told the delegation.

California Assemblyman Dan Logue, who led the group, noted the stark difference between how the two states’ economies performed during the recession.

“From 2008 to 2010, Texas added more than 165,000 jobs. During that same time period, California lost 1.2 million jobs. In terms of creating jobs, Texas is clearly doing something right and California is doing something wrong,” said Logue.

“There were certain principles we stuck with,” Lucy Nashed, a spokesman for Gov. Perry, told HUMAN EVENTS in an interview. She said those principles included low taxes, a “reasonable” regulatory environment, and a fair legal system “with no over-suing.”

The business-friendly approach seems to be working. In its April report, the Federal Reserve Bank of Dallas said that the Texas economy continues to thrive compared with the rest of the nation, with employment expanding at a 3.1% annual rate in February. The state’s unemployment rate was 8.2% in April, compared with the 8.9% April national rate.

Laffer in Action

With his solid economic record and a wide-open Republican presidential field, Perry would be an A-list candidate if he decided to jump into the race. He is currently the nation’s longest-serving governor and is chairman of the Republican Governors Association.

Elevated from lieutenant governor in 2000, when then-Gov. George W. Bush won the presidency, Perry, 61, regularly cruises to reelection, winning his third four-year term last year when he handily defeated former Houston Mayor Bill White, 55% to 42%.

As an outspoken advocate for limited government and states’ rights, Perry would be naturally positioned to compete for Tea Party support, and, after 10 years as governor, has the connections needed for fund-raising success. But Perry has repeatedly disavowed a possible 2012 presidential bid.

The deals that Perry announced during the week of the Californians’ visit were possible due to a program called the Texas Enterprise Fund (TEF), which allots money to help companies relocate or expand in the state in order to generate new jobs. According to the governor’s office, the fund has become “one of the state’s most competitive tools to recruit and bolster business.”

The largest of the three deals was the announcement by eBay that it would invest $5.1 million to expand its Austin office, creating more than 1,000 jobs, after the TEF program allocated $2.8 million for the project. The other deals were announcements by 3M and TD Ameritrade that they were expanding their existing facilities in Angleton and Fort Worth.

The TEF program is credited for generating more than 58,000 jobs and $14.7 billion in capital investments in the state since 2003, when Perry pushed for its inception, while the state has spent $433 million to attract and bolster the private investments.

“The TEF program is essentially a deal-closing fund," Nashed said. “It helps local officials who have already been negotiating with a company by giving “a little extra push at the end,” she said.

Another arrow in Perry’s economic quiver is a program called the Texas Emerging Technology Fund (TETF). That program has doled out more than $193.7 million to high-tech companies and universities for research and development.

Nashed said the fund helps biotech and telecommunication companies partner with Texas universities to work on “groundbreaking, life-changing technology,” bringing research jobs into the state.

Critics say that the Texas economy is not as strong as it looks, and point to the $27 billion budget shortfall that needed to be confronted as the state legislature reconvened in January.

But Perry’s approach to the budget deficit largely follows his limited-government philosophy: Keep government small and cut spending.

With the mid-term Republican tsunami that swamped Texas Democrats, Perry’s conservative troops in the state legislature grew, and there was never any doubt that spending cuts, not tax increases, would be the way to get the budget shortfall under control.

The state senate passed a bill calling for $23 billion in spending cuts, mostly in education and Medicaid programs, while the statehouse countered with $11 billion in spending cuts.

As the process continues, with a late May deadline, the state senate has already backed down from trying to tap into the state’s “rainy-day” fund to lessen the severity of the cuts after opposition from Perry and conservatives in the statehouse.

An analysis by the Texas Public Policy Foundation (TPPF), a free-market think tank in Austin, said that “controlling the size and cost of government is the No. 1 reason Texas’ economy has remained strong.”

“If we don’t spend as much, we can have lower taxes,” Bill Peacock, director of the foundation’s Center for Economic Freedom, said in an interview with HUMAN EVENTS.

In addition to low state spending and a relaxed regulatory climate, Peacock said the Texas economy has been aided by being a right-to-work state. “We don’t have a lot of problems with union pressure,” said Peacock. He also cites tort reform measures signed into law by Perry earlier in the decade, which have lowered the number of frivolous lawsuits.

Perry strongly indicated his support for the limited-government approach when he spoke about the state’s economic success while attending the recent launch of the TPPF’s new Laffer Center for Supply-Side Economics.

Arthur Laffer, of course, was the Reagan economic aide who famously drew a curved line on a napkin, illustrating how decreases in tax rates can increase tax revenue.

Perry said Laffer’s supply-side philosophy is consistent with his approach in governing the Texas economy.

“By sticking to the principles Dr. Laffer has advocated, like low taxes, predictable regulations and a fair court system, Texas has become a beacon for employers fleeing the job-crushing atmosphere that has taken hold in other states,” said Perry.

When asked how the governor would philosophically reconcile his limited-government views with a state program such as TEF, which uses taxpayer money to steer funds to private companies, Nashed said, “While Gov. Perry believes in limited government, he also believes in competition between the states."

Raconteur Media Company in Austin, TX designed, develops and maintains RickPerry.org for Texans for Rick Perry.