Other Voices

August 13, 2014

Texas Enterprise Fund is the right competitive tool

Business-friendly state still needs financial incentives to attract jobs.

The cornerstone of capitalism rests on the principle that the pursuit of one’s own self-interest maximizes not only personal wealth but also the prosperity of the community.

Corporations, partnerships and proprietorships, like the individual, act mostly in their own interests. They seek to minimize the costs of doing business in order to maximize profits that can be distributed to the owners of the business.

The Texas Enterprise Fund, created by the Legislature in 2003, was established with this precept in mind.

By providing economic incentives to out-of-state companies, lawmakers sought to attract new businesses to the state by lowering the costs of doing business in Texas. Now, a select House committee has been formed to make recommendations on these incentives.

As of June of this year, the Enterprise Fund has disbursed nearly $560 million in awards to companies as incentives to bring them to Texas, resulting in more than 100 companies moving to or expanding in Texas and approximately 80,000 new Texas jobs.

The bigger impact on our economy, however, has been the capital investments these companies have made in Texas. That number is approaching $24 billion.

This means that the state made a $560 million investment and received nearly $24 billion in return. That’s a more than 4,000 percent rate of return.

It may be argued that Texas spent nearly $7,000 per job created under the Enterprise Fund, but such simplistic analysis wholly disregards the multiplier effects and ancillary benefits that are created when an out-of-state company moves to Texas.

Skeptics have questioned the wisdom of the Enterprise Fund and have even challenged the economic principles upon which it’s based.

Economic theoreticians often see the world solely in black and white. But from lawmakers’ viewpoint, at the kitchen tables, factories, office parks and retail centers of the districts that we represent, I can assure you that our constituents see the many shades of gray in everyday life.

The primary argument is that because of Texas’ economic strength and business-friendly climate, no additional economic incentives are necessary to attract out-of-state companies to Texas.

This ignores the fact that other less economically attractive states will provide competitive economic incentives to bridge the gap and, in some instances, surpass Texas’ value proposition altogether.

Likewise, for those states that can provide a business-friendly economy, the mere addition of economic incentives would likely tip the scales against Texas.

Companies are moving here not only because Texas has a welcoming business climate but also because Texas provides the necessary economic incentives to enable our state to compete with like-minded states that seek these jobs as determinedly as we do.

I will support the Texas Enterprise Fund because it supports ordinary Texans.

Jason Villalba, R-Dallas, is on the Business & Industry Committee in the Texas House.

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