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Texas Abolishes TDED, Governor's Office Takes Over

June 20, 2003

For Texas, the appropriate role for the state to serve in fostering economic development continues to evolve. With the passage of Senate Bill 275 earlier this month, the third organization in seven years will take the lead to encourage economic growth — this time with a strong focus on clusters and technology-based economic development.

The act abolishes the Texas Department of Economic Development (TDED) and creates an Economic Development and Tourism Office within the Governor's Office. Accompanying the transfer of duties will be just over 100 of the 127 TDED employees.

S.B. 275 requires the new office to identify and work to advance economic growth in key regional and statewide industry clusters. Advanced technology sectors identified for particular business development attention include semiconductors, information and computer technology, microelectromechanical systems, manufactured energy systems, nanotechnology, and biotechnology.

The new office will be responsible for:

  • developing a statewide economic development strategy;
  • engaging in business retention, relocation and expansion efforts;
  • administering business and community development programs, including a new $295 million Texas Enterprise Fund to use for business incentive grants and projects; (A Texas Economic Development Bank, to be established by the new office, will be responsible for administering programs related to financing and tax credits.)
  • serving as a central resource for economic research and information; and,
  • marketing and promoting the state for business development and tourism.

In addition, the act authorizes the creation of several new tools and programs to encourage local technology-based economic development. For example, a Product Development Fund will be created to support the development production and commercialization of new or improved products. The fund is to be capitalized initially by the sale of bonds but then continued through loan repayments, fees, royalties and dividend income.

A Small Business Incubator Fund, to be capitalized and regenerated in a similar manner, will "provide financing to foster and stimulate the development of small businesses" in Texas. Preference in providing financing is to be given to biotech firms, SBIR award recipients, start-ups created to commercialize research funded in part by state funds, and designated SBDC clients.

The responsibilities for the Texas Aerospace Commission are transferred to a new Aerospace and Aviation unit within the Governor's Economic Development and Tourism Office.

The text of S.B. 275 is available at: http://www.capitol.state.tx.us

Texas