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Texas Senate Moves to Abolish Scandal-Plagued Emerging Technology Fund

The measure was approved on a 30-1 vote and now goes to the House.

(TNS) -- AUSTIN — The Senate voted Wednesday to dismantle a signature initiative of former Gov. Rick Perry, abolishing the scandal-plagued Emerging Technology Fund and transferring its remaining assets to the state’s incentive program for new businesses and a new university research effort.

The measure, requested by Gov. Greg Abbott, was approved on a 30-1 vote and now goes to the House. Sen. Konni Burton, R-Colleyville, cast the only no vote.

Under the proposal, about $45 million will be used to create the Governor’s University Research Initiative, aimed at recruiting top science and engineering researchers to join the faculties at various Texas universities.

The other $45 million will go to the Texas Enterprise Fund, which offers subsidies to attract new businesses and expansion in the state. The enterprise fund was another of Perry’s original initiatives.

“Texas will be home of the research centers and great minds that will transform the next generation,” Abbott said in proposing his university research initiative earlier this year. The goal is to attract Nobel laureates and members of the National Academy to state universities, which will be a catalyst for economic development, the governor said.

Action to abolish the Emerging Technology Fund follows criticism of that program and the Texas Enterprise Fund for approving awards to some of Perry’s key political donors. For example, more than $16 million from the tech fund was awarded to companies with investors or officers who were large campaign donors to Perry.

Texas lost tens of millions of dollars investing in failed startups, losses that were initially concealed because the tech fund’s operations were kept from public scrutiny even as some of the companies receiving awards touted questionable job-creation claims.

The tech fund operated by giving tax dollars to the startups in exchange for the state holding an equity position in any products that were successfully developed.

Perry rejected the criticism, saying the programs were properly managed by the governor’s office and provided long-term benefits to the Texas economy.

But Abbott made clear that he wanted the program discontinued. The Republican said in his campaign last year that he opposed “picking winners and losers” in the economy, though he did not specify how he wanted to handle the two funds. Awards from the technology fund went primarily to high-tech startups in the state.

Earlier this year, Abbott called on lawmakers to increase the “transparency, accountability, efficiency and effectiveness” of the enterprise fund. The House and Senate are now considering bills that would overhaul the policies and practices of the program.

Regarding his University Research Initiative, the governor said participating universities should recruit new faculty only from institutions outside of Texas. He also said they could seek a dollar-for-dollar matching grant under the new initiative.

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