FOR IMMEDIATE RELEASE 03/13/2008
Economic Development Hearing Tackles Funding Issues
Deshotel Questions Why Fund Not Used to Promote Small Business
Austin— Speaking to a standing room only crowd, State Representative Joe Deshotel (Beaumont) who chairs the Texas House Committee on Economic Development put the spotlight on one of Texas' most successful job creating funds. The Texas Enterprise Fund was created to promote job recruitment and development throughout the state, but has been used most recently to lure large corporations with grants that include $40 million to Sematech, a hi-tech company, $35 million to Vought, an aviation corporation and $20 million to Countrywide Financial, which was recently bought by Bank of America. The TEF has always operated in the black and has a current balance of over $258 million. Members of the committee wondered why more money isn't being disbursed to create jobs for small business.
Deshotel and other members questioned why the fund isn't being used to support the backbone of the Texas economy. "I’d like to see us at least consider, to give consideration to giving dollars to small businesses to keep them going," he said. Others, including Rep. Mike Villareal (San Antonio), and small business community activists said that money from the fund could also be used to help small businesses or minority- and woman-owned businesses with specific and proven programs that have fallen by the wayside.
According to the Governor's Economic Development and Tourism Office, has disbursed $370 million over the last four years. They maintain that the investment has led to the creation of 52,000 direct jobs and $16 billion in capital investment. Further, they argue that the system isn't broken.
Still, Deshotel pressed the issue by stating that there was a difference between giving a $50,000 loan to a small business that might owe its existence to TEF and giving a cash incentive "to a large employer looking to get the best deal" and asked for more information. Grants and loans in the $50,000 to $1 million range would be a drop in the bucket when compared to the multi-million dollars already being given.
As Chairman, Deshotel and the committee have direct oversight over the funds use and will continue to pursue how to balance the funds existence.
Jim Navarro Phone: 512-463-0662