Perry's Travels Yield No Jobs as Texas Governor's Rivals Seethe
Starting with a four-day trip to California in February, Perry has traveled to Connecticut, Illinois, Maryland, Missouri and New York to urge businesses and residents to move to the Lone Star state. Texas added more than 30 percent of the nation’s new jobs over the past decade because it doesn’t tax personal or corporate income and avoids excessive regulation and frivolous lawsuits, Perry tells broadcast audiences.
Attracting free publicity helps Perry keep his name in the news as he considers another bid for the presidency, said California Lieutenant Governor Gavin Newsom, a Democrat who visited Perry in 2011 to learn about Texas’s economic development strategies. Perry plans to leave office in January 2015 after 14 years leading the second-most-populous state.
“I don’t see any hard data that show his trips have had any impact other than getting Governor Perry a lot of attention,” Newsom said. “There’s a little Barnum and Bailey here.”
Perry can’t identify expansions tied to the trips this year because it’s too soon for companies to make such decisions, said Lucy Nashed, a spokeswoman. All six states Perry targeted are led by Democratic governors and have higher taxes and burdensome rules, she said.
“It’s always going to make some people uncomfortable when another governor comes into their state, but he does it civilly,” she said.
Most governors emphasize growth of existing businesses, which leads to more job growth than relocations, said Mac Holladay, an Atlanta consultant who led economic development departments in Georgia, Mississippi and South Carolina.
“Trying to lure businesses by using trips to other states isn’t unique to Rick Perry, but he may be doing it in a more ham-handed way,” said former Pennsylvania Governor Ed Rendell, a Democrat who now runs his own consulting firm.
“He’s done a good job on transportation and economic development,” said Rendell. “Other than that, I think he’s nuts.”
A quieter approach to recruiting worked when Toyota picked Mississippi for a plant in 2007 after the New York Times reported the automaker was choosing Arkansas or Tennessee, former Governor Haley Barbour said. Japanese executives prefer tight lips, he said.
“Politicians want to brag,” said Barbour, a former chairman of the Republican National Committee. “It didn’t serve any interest to show our hand.”
Perry overstates his impact on job creation, said former Houston mayor Bill White, a Democrat who lost to Perry in the 2010 governor’s race. Texas’s economic strength stems from oil and gas production, net migration from the U.S., Mexico and other countries, and a pro-business climate dating back generations, White said in a Sept. 29 interview.
“Those things have very little to do with who is governor,” said White, a partner at the Lazard Ltd. (LAZ) investment bank. “Governors have more influence on longer-term investments such as transportation and education.”
Texas employment is growing by about 2 percent through July this year, slightly faster than the U.S., and comparable to its average growth pace of the past 30 years, according to a Sept. 18 report by the Federal Reserve Bank of Dallas.
In the second quarter, Texas’s economic health gained 2.6 percent, about in the middle of the pack of 50 states plus the District of Columbia, according to the Bloomberg Economic Evaluation of States index. Its employment growth was second-highest after Idaho’s.
Still, the state has the highest percentage of residents without health insurance among U.S. states, while per-pupil public-school spending trails every state except Arizona and Nevada. Texas ranked 25th in per-capita income in 2012, compared with 30th in 2002, according to U.S. Department of Commerce data.
Texas’s growth story reversed during the technology and telecommunications industry downturn in 2001 and 2002, as the state lost a higher percentage of jobs than the U.S. average.
In 2003, Perry intensified industry-hunting after lawmakers merged economic-development efforts under his office. The change led to TexasOne, a nonprofit group that pays for Perry’s trips and ads with money from businesses, chambers of commerce and local, tax-funded economic-development groups.
While TexasOne doesn’t receive state money, it works closely with Perry’s staff. David Cabrales, a Dallas lawyer who led TexasOne’s board in 2011 and 2012, said he couldn’t discuss the group’s work without approval from Perry.
TexasOne initially focused on meeting site-selection consultants who work for companies considering relocations, said Bob Wingo, an El Paso advertising-agency president and a director from 2004 to 2010. In recent years, TexasOne sponsored interstate and overseas recruiting trips, typically led by the secretary of state or, on a few occasions, Perry himself, according to the group’s annual reports.
“It’s an incredibly targeted effort that paid dividends over and over,” Wingo said, citing Toyota Motor Corp.’s plant in San Antonio and Automated Data Processing Inc.’s El Paso operations center as examples of business expansions facilitated by the group.
Perry’s office provided a list of several dozen companies that have expanded in Texas over the past decade, including Google Inc., Samsung Electronics Co. Ltd., Apple Inc. and Fidelity Investments. Many received subsidies through the Texas Enterprise Fund, which has spent $500 million to attract and retain businesses since 2004.
This year Perry revamped TexasOne’s approach, making himself pitchman on the interstate trips and in advertisements promoting Texas. He is listed as the keynote speaker at the Oct. 5 California Republican Party Fall Convention in Anaheim.
“I hear building a business in California is next to impossible,” he said in an ad earlier this year.
Democratic Governor Martin O’Malley “has made Maryland the tax and fee state, where businesses and families are paying some of the highest taxes in America,” Perry told Baltimore-area radio listeners.
Perry spoke to Missouri’s chamber of commerce as ads on St. Louis and Kansas City television stations criticized the state’s tax policy. The chamber didn’t know about the ads when it agreed to host Perry, spokeswoman Karen Bushman said.
Governor Jay Nixon called the chamber of commerce’s meeting a “direct contravention of the purposes of that organization, which is to enhance and support Missouri businesses,” according to a statement.
Perry is expanding his promotion of low taxes and limited regulation through Americans for Economic Freedom, a new tax-exempt group whose directors include former House Speaker Newt Gingrich and August Busch III, ex-chairman of Anheuser-Busch Cos. Inc.
TexasOne has raised the ante to pay for Perry’s barnstorming. While donations topped out at $75,000 annually through 2012, two companies -- Ryan LLC, a Dallas-based tax adviser, and North Cypress Medical Center, a privately owned Houston hospital -- each gave $250,000 this year, according to the TexasOne website.
Ryan Chairman Brint Ryan declined to comment. Telephone calls to North Cypress owner Robert Behar weren’t returned.
Ten other companies or groups donated $100,000 each this year, including AT&T Inc., Landry’s Seafood Restaurants Inc., and Energy Transfer Partners LP. (ETP)
Top members of TexasOne agreed in March “to raise money to fund a more robust effort to market Texas and its economic development advantages,” Chairman J. Bruce Bugg Jr., a San Antonio banker, said in an e-mailed statement. “Governor Perry has served as the face of those ads.”
Perry will keep taking the Lone Star story on the road, said Steve Munisteri, the state Republican Party chairman.
“You’ve got to understand the Texas swagger,” he said.
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