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Texas Legislature Approves Funding for Emerging Technology Fund

June 13, 2005

The Texas Legislature recently approved $100 million of the original $300 million requested by Gov. Rick Perry for the Emerging Technologies Fund (ETF). Another $100 million is expected to be available from the state's rainy day fund if revenues exceed forecasts.

The ETF aims to foster emerging technologies, enhance university-industry collaboration, and promote technology commercialization (see the Dec. 20, 2004 issue of the Digest). Much of the fund activity will be distributed through regional economic development efforts.

In addition to the $100 million for ETF, the legislature also approved $180 million to replenish the governor's Enterprise Fund, which has been criticized for its lack of accountability and structure. In 2003, the legislature appropriated an initial $295 million for the fund to be used at the governor's discretion in luring jobs to the state. Opponents voiced concern that it was not feasible to project specific numbers of jobs created because grants can be used for employee bonuses and equipment not related directly to job creation, according to the Austin Review.

The nonpartisan Center for Public Policy Priorities states that if deployed correctly, the Enterprise Fund has the potential to enhance job quality and suggests that more stringent accountability and meaningful disclosure would promote public trust and bolster program integrity. Gov. Perry, however, touts the program as a success. In an October 2004 press release, the governor said the fund has attracted employers that have committed to the creation of more than 14,000 new jobs and $6 billion in direct economic investment for the state.

As a component of the Enterprise Fund, the new ETF is under scrutiny. House Democratic Leader Jim Dunnam of Waco criticized the fund, calling it the "governor's slush fund" during a House budget debate, the Associated Press reports. While management of the fund may continue to spark controversy, the following structure is required:

  • 50 percent of the money appropriated is to be used for incentives for private or nonprofit entities to collaborate with public or private institutions of higher education;
  • 25 percent is to match funding from research sponsors; and,
  • 25 percent is to acquire new or enhance existing research superiority at public institutions of higher education.

The governor may reallocate money from one component of the fund to another with approval of the lieutenant governor and speaker of the House. Industries that are eligible for grants under the ETF are those that lead to immediate or long-term creation of high quality new jobs or lead to medical or scientific breakthroughs, according to the governor's office. Gov. Perry is expected to appoint a 17-member committee comprised of industry leaders and nationally recognized researchers by July 1.

More information is available from the governor's website at: http://www.governor.state.tx.us/