Texas grant recipients gave millions to Governor Perry

SAN ANTONIO, Texas (Reuters) - Businesses that won grants from a Texas economic development fund contributed $7 million to Governor Rick Perry and the Republican Governors Association, which supports him, a report by a watchdog group said on Thursday.

Perry has made his job creation record in Texas a central theme of his campaign to secure the Republican Presidential nomination and take on President Barack Obama next year.

Forty-three companies which received $333 million in grants from the Texas Enterprise Fund made contributions to Perry and the Republican group, which has been his biggest financial supporter, the report by Texans for Public Justice found.

It said that $1.7 million was given to Perry's campaigns directly, and $5.3 million to the RGA, which has more flexibility accepting donations.

In a Republican debate on Tuesday, Perry defended the Enterprise Fund, saying its $439 million in total investments is responsible for 54,600 jobs in Texas, and a total of $14 billion in investment.

"The people who have jobs today in the state of Texas are perfectly happy that we have got a program like that," Perry said. The legislature has 'full oversight' of the fund, he said, and his office added that other elected leaders must approve grants.

Grants included $1,125,000 to Plano, Texas based Frito-Lay to create 125 jobs. Frito-Lay's parent company PepsiCo donated $607,000 to the RGA, the report said. The governor's office said Frito-Lay exceeded its job pledge by creating 140 jobs.

Many companies that received Enterprise Fund funding did not meet their job goals, the watchdog group said.

Motiva Enterprises, a joint venture of Royal Dutch Shell's U.S. unit and Saudi Refining Inc., received $2 million from the Enterprise Fund in 2006, promising to create 300 refinery jobs in the Houston area by the end of 2010.

TPJ reported that in 2009, Motiva amended its contract to allow two more years to deliver the 300 jobs. At the end of 2010, Motiva reported it had created 258 jobs. Starting in late 2006, after the Enterprise Fund grant was awarded, Shell began contributing to the RGA, and has since contributed $235,000 to the organization, and another $13,000 to Perry's campaign.

Motiva did not return a call seeking comment.

Enterprise Fund contracts include "clawback" provisions that allow the state to reclaim money if the job targets are not reached, although it is not clear how effective these efforts have been.

Some of the Enterprise Fund grantees have created significant jobs.

In 2007, the Enterprise Fund issued a $22 million grant to Rackspace, a major web hosting company, to rebuild an abandoned shopping mall in San Antonio and make the building its headquarters. It now employs 3,700.

A report issued by the Enterprise Fund to the Texas Legislature reported 57,140 jobs created by the Texas Enterprise Fund, a number several thousand larger than the figure mentioned by Perry during the Tuesday debate.

But overall Texans for Public Justice Director Craig McDonald said the governor was overstating job creation by the fund, which was closer to 30,000.

(Editing by Peter Henderson and Chris Wilson)

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Photo: Flickr user Robert Scoble.