I’ve been in the economic analysis business for decades now. I cut my teeth on the economic boom of the 1970s and the bust of the 1980s. I’ve witnessed (and participated in) the subsequent recovery of the past near-20 years, which has taken the Texas economy far, far beyond the one-dimensional, energy-driven, recession-waiting-to-happen it once was. Tremendous strides have been made in the areas of deregulation, tort reform, economic development incentives, and workforce development. My firm and I have been honored to play parts in many of these efforts to improve the opportunities for Texans.
One initiative I’m particularly excited about right now is the Texas Enterprise Fund. Two years ago when we prepared the “Texas, Our Texas” economic development plan, the absence of a ”deal closing fund” was the major missing link in the Texas economic development arsenal. The Governor and the Legislature created the Texas Enterprise Fund, and the results have been outstanding. It has been instrumental in reversing a trend toward losing out to other states, and it continues to increase the opportunities available to all Texans. The state has reestablished itself as the undisputed national leader in economic development, and the benefits will continue for decades to come.
My firm has analyzed the Texas Enterprise Fund and based on the announcements to date and the likely distribution of the remaining funds, the overall impact (direct, indirect, and induced) on the Texas economy each year once these projects reach maturity includes some $12.4 billion in expenditures and 99,771 jobs. This added production will also generate approximately $377.5 million in yearly state revenues, or an annual return of about 130% on the $295 million initial biennial appropriation. These major new locations also bring additional benefits, including billions of dollars in new investment and a greater capacity to attract and expand major “clusters” in various sectors.
We also examined the potential of the Governor’s recently proposed Texas Emerging Technology Fund. This program provides resources to fully implement the Texas Technology Initiative and enables it to support research and commercialization efforts throughout the state in emerging high-growth sectors (including, among others, nanotechnology, medicine, aerospace, biotechnology, chemical products, and energy).
In a prior analysis, we analyzed the original Texas Technology Initiative and found it to offer enormous opportunities for the state. If the resources provided by the Texas Emerging Technology Fund enable the state to achieve a typical incremental gain in these burgeoning industries equivalent to only 80% of that captured in microelectronics during the 1990s, the overall stimulus to the state economy as of 2015 (in constant dollars) would include $290.4 billion in annual expenditures and almost 1.6 million jobs. The level of gains would also generate $6.2 billion in annual State revenues, a significant payoff from the $300 million biennial investment which has been requested.
It is beyond dispute that the competitive advantage of the US economy lies in our capacity to create and implement new ideas, and the future prosperity of every state depends on its ability to participate in this process. The Texas Emerging Technology Fund is an ideal mechanism to enhance the long-term economic vitality of the state. It will complement the Enterprise Fund and other programs now in place, allowing Texas to leverage its existing industrial base, research capabilities, universities, and entrepreneurial spirit to maximum advantage. It has the potential to secure a leadership role for Texas in multiple sectors with excellent prospects. Through efforts such as these, we can be sure the Lone Star State will continue to prosper. The added diversity helps with stability, better insulating us from future boom-and-bust cycles. Moreover, these initiatives pay for themselves and then some, generating more in tax receipts than they cost the state in addition to improving the quality of life and opportunities for all Texans. Although fiscal resources are always tight, maintaining and funding these programs should be a top priority in the upcoming Legislative Session. It’s a giant step in the right direction.