The legislative session was certainly one for the books. Dramatic changes in political dynamics, a massive budget shortfall, and the seemingly perpetual cycle of death and resurrection for several high-profile bills made for more than a few headlines. There were some difficult choices, and some decisions that will bring hardships and challenges to a lot of Texans. I’m sure I will have many occasions in multiple forums in the coming months to wax philosophically about the things I liked and disliked about the process and the outcomes. For now, however, I want to focus on what I believe history will ultimately remember as the most significant outcome of this always entertaining process (and it has absolutely nothing to do with stimulating tourism spending in Ardmore).
The 78th Texas Legislature marked a truly historic renaissance in our economic development programs. We have very quickly awakened the 800-pound gorilla that dominated site selections in the early 1990s and unleashed it on the world with a vengeance. New enactments: (1) combined a number of the existing, little-known, under-utilized support programs into an “Economic Development Bank,” that is more flexible and can be effectively marketed, (2) simplified our Enterprise Zone program to improve accessibility of tax incentives to communities and companies alike seeking to stimulate activity in economically disadvantaged areas, and (3) reformed the local economic development sales tax (without screwing it up) to make sure that the funds are used more efficiently for area job creation programs. We also kept intact the provisions of the Texas Economic Development Act (approved in the previous session) which allow us to overcome much of our current disadvantage in taxing capital intensive firms.
While these measures in and of themselves are important, the real action occurs in the two most critical areas for success in attracting and retaining major facilities—money and flexibility. The key economic development functions have been moved to the Governor’s office, following a pattern that has been established by virtually all of the states that have been big winners in recent years. This shift allows for real time negotiations and decision making, a critical component in contemporary site selection. The State now has, for the first time, the ability to cut a deal that is in our best interest without having anticipated every last detail of the structure in a prior statute (a practical impossibility in today’s dynamic environment).
The legislature also created an “Enterprise Fund” of $295 million to provide the resources necessary to market Texas for economic development and provide needed incentives for key initiatives. While other states certainly have more, we now have enough to be competitive. We have to be prudent, but that is as it should be. We can now leverage our considerable assets in other areas in a way that can be effective and keeps us from getting knocked out of the running before the race begins.
There are several large locations in play at the moment, and the benefits of the new framework will likely be felt very soon. Over an extended time horizon, these provisions will foster notably higher economic growth and fiscal soundness. Given the incredibly difficult circumstances surrounding this session, this change is a remarkable accomplishment indeed.
Like any session, this one brought much to criticize and much to praise. I am always grateful for and impressed with the very hard work of a group of dedicated and capable citizen-legislators. Whatever else may be said, it will long be remembered as one in which Texas emerged as a leader in economic development in a manner that will pay dividends for generations to come.