Gov. Greg Abbott Shutting Down Perry's Troubled Startup Fund
AUSTIN — Republican Gov. Greg Abbott began dismantling a flagship initiative of his predecessor Thursday, saying he will abolish Rick Perry’s pet program that gave $200 million in taxpayer dollars to Texas startups and was beset by bankruptcies and questionable claims of success.
The decision was not surprising. Abbott signaled throughout his campaign that the Texas Emerging Technology Fund troubled him ideologically, but problems with the decade-old program ran deeper than new Republican distaste for governments “picking winners and losers” in the private sector.
Texas lost tens of millions of dollars investing in failed high-risk startups and the fund’s inner workings were largely kept from public view. An Associated Press investigation last year revealed undisclosed troubles with state-funded companies that had stagnated, didn't file tax reports and made questionable job-creation claims.
Perry hitched his 2012 presidential campaign to a booming Texas economy and bragged about how the tech fund and his other economic policies kept the state prosperous while the rest of the U.S. lurched from a recession.
Now, as Perry gears up for a possible 2016 run, his conservative successor has scrapped the tech fund within his first 10 days in office. Abbott wants the money set aside for startups to be spent instead on recruiting top faculty talent to Texas universities.
“Texas will continue to make meaningful and effective investments in job creation,” Abbott said in a statement. “Now we must also harness our resources to elevate Texas’ higher education institutions as integral participants in our economic advancement.” Lawmakers must still OK abolishing the tech fund but Abbott is unlikely to face opposition.
A spokesman for Perry did not immediately return a message seeking comment.
Perry likely won’t see his legacy on economic development undone entirely. A similar but separate program, the Texas Enterprise Fund, appears headed for survival but not without reforms. That was Perry’s signature “deal-closing” fund used to lure companies to Texas, such as when Toyota received $40 million last year to relocate its California headquarters to suburban Dallas.
Part of Abbott's announcement calls for taking half the unused money in the tech fund — which aides say is more than $100 million — and spending it on enterprise fund applicants instead.
During his final months in office, Perry defended the economic impact of having given taxpayer dollars to more than 140 startups. But he also seemed to give lawmakers his blessing to do away with his signature programs, saying it was “their call.”
The tech fund worked by giving startups taxpayer dollars in exchange for giving the state an equity position. If the companies were successful, the state recouped its investment or even made a profit. If they went bankrupt or shut down — and at least 16 have so far — the dollars are lost.
The timing of Abbott's announcement is likely not random: A required annual report on the financial health of tech fund is due to be made public Saturday. (AP)