Saturday, March 31, 2001

Texas is trying hard to land Boeing

AUSTIN - Boeing's decision to move its headquarters from Seattle - possibly to the Dallas/Fort Worth area - could be a boon for Texas. Luring Boeing's home office to Texas would bring only a few hundred jobs, but it could provide an enormous marketing tool to attract other companies to the state.
   This is good news for economic developers who have seen a disturbing trend of companies shunning Texas for other states in recent years. Worse yet, Oklahoma is whipping Texas in the competition for major manufacturers.
   Texas lost six major projects to Oklahoma over the past few years. In the last few months, two major manufacturers took their $1.3 billion in capital investment and 3,000 new jobs north of the Red River. That's not the worst of it.
   Texas overall lost 12 new manufacturing projects valued at $5 billion and an estimated 7,500 new jobs to other states since 1997. Other states have been beating Texas by boosting their economic development efforts and restructuring their tax laws. As a result, Texas has plummeted from its No.1 national ranking for recruiting new manufacturing projects to 37th - the worst in the state's history.
   Texas economic development officials say high property and franchise taxes for manufacturing have hampered their efforts. This has prompted Texas lawmakers to examine solutions to reverse the trend. The proposed Texas Economic Development Act authorizes tax incentives for economic development, including allowing school districts to provide tax relief for certain corporations that make large investments that create or maintain jobs.
   Supporters claim that the bill would benefit school districts because it requires manufacturers to pay certain school property taxes before being eligible for the property appraisal tax cap.
   And manufacturers would pay full school district property taxes when the eight-year appraisal cap expires. The two versions of the bill are pending in the House Ways and Means and the Senate Finance committees.
   While these efforts may attract manufacturers, there's another important element that's needed - an aggressive chief executive willing to negotiate with corporate officials and sign letters encouraging them to locate in Texas.
   Ann Richards, governor from 1991 to 1995, was aggressive and her efforts paid off. From 1990-96, Texas attracted on average two projects every year with initial investments of more than $500 million, according to economist Ray Perryman. "Ann is a very strong personality and she was very persuasive,'' Perryman said. "What Ann could do is make her presence known.''
   But since 1996, Texas has attracted only two projects with initial investments of more than $500 million. This was mostly under George W. Bush, governor from 1995 to 2000.
   Perryman said other states have become more aggressive since 1996 in attracting companies.
   "I don't think this is anything you can lay at Bush's feet,'' Perryman said, noting that a governor's powers are limited in negotiations. "What the governor can do is say we want you to be in Texas and we'll do everything to make it work for you.'' Nevertheless, Perryman said, "It's safe to say she (Richards) was more aggressive than Bush was.''
   Gov. Rick Perry has shown a commitment to attracting companies to the state. Perry immediately issued a statement after Boeing announced that it was leaving Seattle. "Texas stands ready to help Boeing as the company embarks on its site selection process," he said.
   The governor's remarks sent a strong message to Boeing officials that the state's chief executive is committed to their project. Tweaking tax laws and a strong commitment from the governor can go a long way toward bringing Texas back to No. 1 in attracting major manufacturers.
  

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Ty Meighan is chief of the Scripps Howard Austin Bureau. You can reach him by phone at (512) 334-6640 or by email at meighant@scripps.com.

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