Gov. Perry’s Partisan Piracy Raises Ethics, Transparency Questions

Are Texas Taxpayers Footing the Bill for Perry’s Attacks on Democratic Governors?

The Texas state motto is “friendship,” but a report released today suggests that Republican Gov. Rick Perry may be putting Texans’ money to work in a decidedly unfriendly way – using partisan attacks on some of his fellow governors to poach jobs from their states.

“Gov. Perry needs to level with Texans about how he’s using their money,” said Arn Pearson, Common Cause’s vice president for policy and litigation. “Perry is mixing politics with economics in a dangerous way that demands full transparency and raises important ethical and legal questions.”

Perry has ratcheted longstanding interstate competition for job development to new partisan heights this year. A non-profit group that operates as an adjunct of Perry’s office has spent $1.8 million on TV and radio ad campaigns in six states, underwriting commercials in which Perry casts the states and/or their Democratic governors as anti-business.

While Perry’s press releases say that “no state tax dollars will be used for his travel and accommodations, or for the ad buys,” a report released today by Good Jobs First raises questions about the money behind the Perry offensive and suggests that Texas taxpayers are likely picking up at least part of the tab.

The confrontational trips and ads are paid for by TexasOne, a public-private partnership that gets a substantial portion of its revenues from 80 municipalities and publicly funded economic development corporations, according to the report. Good Jobs First said public funds comprised about one-fourth of TexasOne’s 2012 revenue; one press report put the public’s share of its funding at 45 percent over three years.

TexasOne is an adjunct of the Texas Economic Development Corporation (TEDC), a tax-exempt, non-profit corporation created by the Texas state government, controlled by Perry’s office, and financed by member dues, some of which come from local economic development corporations that in turn get their money from sales tax revenue.

Because TEDC’s 501 (c)(3) tax status requires that it abstain from political activity, the group’s involvement in Perry’s partisan-tinged campaign may run afoul of federal tax laws, Pearson said.

“Gov. Perry’s commercials declare Texas ‘wide open for business,’ but the cozy relationship between the governor, TexasOne and the big corporations that help fund it leaves Texas wide open for corruption,” Pearson said.

Perry, a Republican who ran for President in 2012 and has refused to rule out a second bid in 2016, is in Maryland today for business recruitment meetings, including a stop at a firearms manufacturer. Ahead of the trip, TexasOne has spent $500,000 on ads that accuse Democratic Gov. Martin O’Malley of making Maryland “the tax and fee state, where businesses and families are paying some of the highest taxes in America.”

“Perry’s campaign seems more about the presidential climate in the two states than their business climate,” said Jennifer Bevan-Dangel, executive director of Common Cause Maryland.

Perry and TexasOne have run similar campaigns in New York, California, Illinois, Missouri and Connecticut, all states with Democratic governors.

“When you grow tired of Maryland taxes squeezing every dime out of your business, think Texas,” Perry tells Maryland business people in a radio ad. In a previous ad, Perry urges New York business people to “get out before you go broke” and move to Texas, and in another he says “I hear building a business in California is next to impossible.”

In at least one interview, Perry was unabashed about the campaign’s partisan edge. “This is a good red state – blue state conversation we’re having,” he told a reporter in Illinois.

“While states prepare to be boarded, Perry’s PR machine fires on his fellow governors with rhetoric normally reserved for election season attack ads,” Pearson said.