Corporate Welfare Alive And Well In Texas

Even when Texas was finishing each biennium with a surplus of dollars, they remained one of the states with the lowest-paid state employees and could not seem to find the money to cover poor and working class children with health care insurance. But they always had the money to hand out huge "welfare" payments to corporations. That's because the state Republican leaders are not just conservative -- they are corporate-owned conservatives.

Now the state is experiencing a cash crunch. They are going to have a $15 to $18 billion shortfall in the coming biennium. They have already asked state agencies to cut another 5% from their budgets on top of budget cuts required in the recent past. Now they are talking about extending the state sales tax (one of the highest in the nation) to products and services that have always been exempt from the tax.

This will be a huge tax increase that will be borne mainly by the poor and working classes (since they will be paying a much larger portion of their income on these new taxes). The Republicans will claim this is not a raising of taxes, since they won't be raising the tax rate but only extending the tax to more products and services. That is a lie. The simple fact is that if you must pay more in taxes than in the past, then your taxes have been raised -- regardless of what kind of word-games the Republicans want to play.

But rest assured that while state agencies are tightening their belts, state employees are being laid off, citizens are receiving less state services and Texans are paying higher taxes, there is one program that won't be touched -- corporate welfare. While ordinary Texans will be hurting, hundreds of millions of dollars of state money will continue to flow into the coffers of corporations.

One of the most egregious of these corporate welfare programs is the Texas Enterprise Fund. This is a special fund containing hundreds of millions of taxpayer dollars that is paid to corporations that are either moving to Texas or creating new jobs in Texas. The problem is that this is just a corporate pay-off and has nothing to do with whether a corporation locates in Texas or not.

The real reasons a corporation might want to locate is Texas are several, and none of them involve getting a pay-off from the Texas Enterprise Fund. Among these are:

- Texas is a low-tax state for corporations. It does not have an income tax. Most of our taxes are raised from the regressive sales tax which is borne by consumers and not corporations.

- Texas is an anti-union state. It has a "right to work" law which says a person doesn't have to join a union even if hired into a union shop (meaning that worker can get union-won benefits without contributing to or joining the union). This has been a very effective union-busting technique.

- Texas has a growing workforce that is willing to work for low wages and few benefits (out of necessity).

- Texas has very good ways to get a corporation's goods to market -- including excellent shipping ports, rail systems and highway systems (although these are beginning to crumble from Republican neglect).

- Texas is an energy-rich state. While consumers pay high energy costs, corporations do not (they get very low "sweetheart" rates from the energy companies).

As one can easily see, there are many reasons why a corporation might want to move to Texas but they don't involve pay-offs from the Texas Enterprise Fund. This fund is little more than a boondoggle that doesn't accomplish what it is supposed to do. Many of the corporations receiving this money do not live up to their contractual obligations (job creation).

Take for example the Countrywide Financial Corporation, which received $20 million from the fund to bring thousands of new jobs to Texas. But when the bottom fell out of the housing industry, they went broke and were bought by Bank of America -- and the contract with the state was revoked.

Another recipient was the Voight Corporation, which received $35 million. They have not created the amount of new jobs that they contracted to create. So what does the Republican leadership of Texas do? They rewrite the contract and give them several more years to comply. And these are not the only ones failing to live up to their obligations after receiving taxpayer money. Governor Perry (pictured) has admitted that at least 11 other corporate contracts have been rewritten in the past year or so.

Frankly, I have to doubt whether the Texas Enterprise Fund is doing Texas any good at all, especially in the midst of this recession and budget deficit. The fund should be included in the cuts being made to Texas agencies and programs. In fact, it is time to end all the corporate welfare.