Texas Governor's Campaign Backers Also Beneficiaries of State Economic Development Programs
When Gov. Rick Perry announced last summer that he wouldn’t run for re-election, he said he was committed to spending his last 18 months in office working to create more jobs and opportunity in Texas. It’s a pledge he has taken seriously, traveling to places like California, New York and Israel in the last year to promote the “Texas Miracle” and recruit companies to bring jobs to the state.
Supporting Perry’s travels is TexasOne, a quasi-governmental agency that has become the governor’s chief marketing tool to tout the state’s “wide open for business” model and that funds his regular promotional trips. (Click here to see an interactive list detailing each of the major contributors to TexasOne and Perry's campaigns.)
TexasOne is controversial in part because of how it’s funded: Many of the same corporations and donors that have contributed millions of dollars combined to the governor’s campaigns also donate to TexasOne, which helps woo corporations to bring jobs to Texas.
The practice is lawful, and it's not unusual for governors to have close relationships — both financial and business — with influential industry leaders. TexasOne officials say that these donor-members, who contribute $1,000 to $250,000 annually to the program, are solely interested in the state’s economic development.
“No one joins because they feel like they’ll get access to Perry,” TexasOne Chairman Bruce Bugg said. “That’s not how it works.”
A Texas Tribune investigation into TexasOne contributors who have also been major donors to the governor found that since 2003, seven of the 12 top givers have also been beneficiaries of millions of dollars in awards from state economic development programs championed by Perry and that some of their executives have obtained gubernatorial appointments to influential state government boards.
TexasOne has collected nearly $12 million from its members — including hundreds of corporations, city governments and local economic development councils — since it was created in 2003.
While several TexasOne members benefited from the state’s economic incentive programs before they became members of the program, most of the companies or their executives have been longstanding supporters of the governor, contributing heavily to his campaigns for more than a decade. Executives, board members and political action committees affiliated with the top 12 contributing TexasOne companies — which all currently give either $100,000 or $250,000 a year to the fund — have poured a combined $6.2 million into Perry’s campaign coffers since 2000.
Critics have accused Perry of promoting “crony capitalism” through the state’s economic development programs and of giving special treatment to “powerhouse players” — the corporations and executives that have supported him politically.
They have called TexasOne a mechanism for the wealthy to curry favor with the state’s longest-serving governor, who oversees some of the state’s most lucrative economic incentive programs and most powerful appointed positions. For Perry, they say, the fund is less about creating jobs for Texans and more about creating opportunities for his own political future using big donor dollars.
“This is Texas Powerball,” said Craig McDonald, executive director of the left-leaning money-in-politics watchdog group Texans for Public Justice.
Perry’s office has long argued that political giving doesn’t influence decisions on which companies receive financial incentives from the state’s economic development funds or who receives gubernatorial appointments. Perry spokeswoman Lucy Nashed said that between 2004 and 2013, TexasOne helped bring more than 44,000 jobs and $16.5 billion in capital investment to Texas.
“TexasOne is an important economic development tool that brings together employers and local communities to market Texas dynamically and competitively across the country and around the world — a successful model that has been duplicated around the country,” Nashed said.
One of the governor’s key job recruitment tools is the taxpayer-funded Texas Enterprise Fund, which lawmakers authorized in 2003 with a $285 million budget. Perry, with the sign-off of the House speaker and the lieutenant governor, has used the fund to “close deals” with companies — including two TexasOne members — interested in relocating to or expanding in Texas by awarding them millions of dollars in financial incentives.
In 2008, Caterpillar Inc., a heavy equipment and engine manufacturer, received a $10 million award from the Enterprise Fund to expand its facilities near San Antonio. Peter Holt, the CEO of HoltCat, the authorized Caterpillar dealer for 118 Texas counties, has contributed more than $612,000 to Perry’s campaigns since 2000. HoltCat became a member of TexasOne in 2013 at the $100,000-per-year level. A Holt Cat spokesman said the company became a member because it is interested in the state’s economic development, and for no other reason. HoltCat and Caterpillar Inc. are separate entities.
Motiva Enterprises, a joint venture between Shell and Saudi Refining Inc., received a $2 million grant through the Texas Enterprise Fund in 2006. Shell, which contributes $50,000 annually to TexasOne, became a member in 2008. Representatives for Shell did not respond to a request for comment.
TexasOne financial documents also show that in April 2006, Sematech Corporation, a semiconductor research coordinator that is not a member of TexasOne, donated $50,000 to the program to “support the Emerging Tech Initiative.” One month after the $50,000 gift, the company received a $5 million award from the Emerging Technology Fund, another economic incentive fund operated out of the governor’s office that is focused on assisting “fledgling technology start-ups, consortia and Texas institutions of higher education.” Sematech contributed an additional $27,000 to TexasOne in March 2007. Sematech representatives did not respond to a request for comment.
Among TexasOne members that contribute $25,000 or more a year to the program, three companies have qualified for a combined $13.75 million in sales tax refunds through the Texas Enterprise Zone Program, an economic development tool operated out of the Texas comptroller’s office that provides tax refunds to companies that create and retain jobs in “economically distressed areas” of the state. Perry has touted the program as being among the state’s top economic development incentive tools, one in which local communities can “partner” with the state by nominating companies to be eligible to apply for tax refunds.
One of the beneficiaries of the Enterprise Zone Program is a top-tier TexasOne donor, Dallas-based accounting firm Ryan LLC, which contributes $250,000 a year for its TexasOne membership. The firm’s success in Texas is rooted in its work helping major corporations obtain large tax rebates from the state’s incentive programs, including the Enterprise Zone Program. CEO Brint Ryan benefited from the program himself in 2008 after his firm qualified for a $1.25 million tax refund.
(The exact amounts paid to companies through the program are confidential under the state’s tax code.)
Ryan is a prominent Perry donor and helped found Make Us Great Again, a Super PAC that supported the governor’s unsuccessful presidential run in 2012. Ryan personally contributed $250,000 to the PAC. Representatives for Ryan declined to comment on whether his company’s involvement in TexasOne or his contributions to Perry presented a conflict with his state benefits.
ExxonMobil qualified for a combined $8.75 million in tax refunds from the Texas Enterprise Zone Program starting in 2004. That same year, ExxonMobil became a member of TexasOne with a $25,000 contribution. ExxonMobil currently contributes $100,000 annually to the program. Representatives for the company could not be reached for comment.
Such examples of the overlap among donors to TexasOne and Perry and state benefits they've received “fit a pattern of pay-to-play politics” in Texas that have been common under Perry’s long tenure as governor, said McDonald of Texans for Public Justice.
But Bugg, the TexasOne chairman, said the program is focused on economic development and does not engage in political activities.
Meanwhile, some top executives at other TexasOne member companies — individuals who have also donated to Perry’s campaigns — have been appointed to some of the state’s most important boards and commissions.
In 2011, Perry appointed Dan Friedkin, a prominent donor and executive at Gulf States Toyota, to the Texas Parks and Wildlife Commission. Gulf States Toyota became a member of TexasOne in 2013 and gives $100,000 annually. Friedkin and his father, Thomas Friedkin, have contributed more than $480,000 to Perry’s campaigns since 2000. The Gulf States Toyota PAC has contributed another $355,000 since then. Officials with Gulf States Toyota could not be reached for comment.
Paul Foster, the chairman of Western Refining, has contributed more than $547,000 to Perry since 2000. He was appointed to the University of Texas System Board of Regents in 2007 and now serves as its chairman. Foster also serves on TexasOne’s governing board. Western Refining, which became a TexasOne member in 2005, currently contributes $25,000 annually to the program. In the last decade, the company has qualified for two different awards through the Enterprise Zone Program for a combined $3.75 million in tax refunds. Western Refining did not respond to a request for comment.
Critics have long taken issue with the governor’s appointments, saying they often go to individuals who have donated heavily to Perry’s campaigns. Perry's office has reiterated that political giving doesn't influence decisions on appointments.
Critics speculate that the governor is using TexasOne and its generous donors to rebuild his national image after his failed 2012 presidential bid — and possibly to bolster his legacy ahead of another run in 2016.
Perry was at the top of his game as governor when he began his presidential campaign in August 2011, raising millions of dollars while almost immediately rocketing to the lead in the polls. But following a series of missteps and gaffes, including his infamous “oops” moment, he eventually dropped out of the race.
Since then, Perry has ramped up his job-recruitment efforts through TexasOne, spending much of his time on the road on economic development trips, particularly to states led by Democratic governors. In the last year alone, Perry has visited New York, California, Maryland and Illinois promoting his “red state” model. He has also increased his presence on the international stage, stopping in London and Davos, Switzerland.
Perry has defended his efforts with job-creation figures: A recent report by the Federal Reserve Bank of Dallas found that Texas experienced more job growth at all pay levels than any other state in the nation from 2000 to 2013. And the state’s unemployment rate — most recently at 5.7 percent — is often more than a point below the national average.
Cal Jillson, a political scientist at Southern Methodist University, said Perry is using TexasOne to burnish his own image on the national stage while beefing up his foreign policy credentials through his international trips. A CNN national poll released earlier this month put Perry in third place among a list of potential Republican presidential nominees whom GOP voters and independents who tend to vote Republican would likely support.
The so-called Texas Miracle, a phrase Perry and other Republicans commonly use to describe the state’s economic success, has been a constant theme of the governor’s branding, said Jim Henson, a Texas Tribune pollster and director of the Texas Politics Project at the University of Texas at Austin.
But bolstering his national standing through his economic development initiatives will be beneficial to Perry as he considers life beyond the Governor’s Mansion, even if he doesn’t run for president, Henson said. That’s because it keeps him on the public radar to be considered for other opportunities.
“It can work for more than 2016,” he said.