Texas

TEXAS

See Robinson S&L Perspective p42ff

Texas boasts a long tradition of decentralized, municipal level economic development. Necessarily Texas state-level ED has not been the prime driver of what goes on in Texas economic development land. The first apparent ED-related state-level entity was the Texas Department of Agriculture founded in 1907. It continues to the present, promoting Texas agriculture, export promotion, Texas Agricultural Finance Authority (1987), the state’s agricultural district program, and rural CDBG program which through the Texas Capital Fund finances infrastructure, business development, and rural area downtown/Main Street development. Due to the continued importance of agriculture and related sectors in the Texas economy, its Department of Agriculture has evolved into an agency with significant economic development functions—alongside other state departments that served the urban areas.

 

Texas state-level mainstream ED stretches back to the Texas Industrial Commission formed in 1920. Appointed by the governor, its five member board consisted of one employer, one employee and three drawn from the general public all of which served two-year terms. It original function was labor-management arbitration. In 1959 that function was removed and in its place the Commission was tasked with the responsibility to promote industrial development and its board expanded to nine members drawn from the different regions of the state. Funding, however, was not provided to the Commission until 1962 when a full-time executive director was hired. At the annual 1961 Southern Industrial Development Conference in Little Rock fifteen Texas economic developers began the process to incorporate the present-day Texas Economic Development Council. Formally incorporated in September 1961, it quickly grew to 130+ members, with full-time staff by 1964—and affiliated with Texas A&M https://www.texasedc.org/history.

 

Texas was early reorganizing the importance of global competition and in 1965 the Commission hired a specialist in export to promote foreign sales of made-in-Texas products. In 1973, the board was expanded to include three new members from rural areas. By the Seventies the Commission had expanded its scope to include divisions of Industrial Development (attraction and promotion and custom training targeted to manufacturing; an International Development, Community Development, and Minority Business Development. The Commission during this period did not take the lead but rather provided information and technical assistance to leads and to local governments. That began to change when, in 1983, the Commission was renamed to the Texas Economic Development Commission and its board was again enlarged to fifteen.

 

A major reorganization followed in 1987, when the Commission was again renamed, becoming the Texas Department of Commerce and merged with eight state agencies, boards, commissions—of particular importance was the transfer of JTPA and CDBG responsibilities from the Texas Department of Community Affairs (not to be confused with present-day Department of Housing and Community Affairs). (Texas had authorized municipalities to establish housing authorities in 1937). The original goals included were focused primarily on the attraction and promotion of new business to Texas, to encourage existing business investment, and to improve rural economic development. At that time, governance was a six member advisory board appointed by the governor with Senate consent—and three ex officio members from the JTPA Coordinating Council, the Texas International Trade Commission, and the Trans-Mexico Authority. The executive director is appointed by the governor for a two-year term. The obvious linkage of the department to the Governor marked a fundamental change and clearly high priority that mainstream ED enjoyed at the Texas state-level.  From its beginning in 1989, the department included funded foreign offices, a rural ED fund, a product commercialization fund, and an exporters loan guaranty program. The 1991 inclusion of the Trans-Mexico development fund and the development of Trans-Mexican database cemented the department’s prime targeting of Mexico as an economic opportunity. By 1992 the department had six divisions: business development, tourism, workforce development, research and planning and intergovernmental relations and communications. It employed over 300 workers and enjoyed a state appropriation that exceeded $254 mm dollars. https://tshaonline.org/handbook/online/articles/mctdx

 

The 1987 and 1989 legislation also provided for the formation of the Texas Economic Development Corporation (TxEDC) which was formally incorporated as a tax-exempt 501©3 nonprofit in 1991. In 1997, the Department of Commerce was renamed the Department of Economic Development and formally housed in the Governor’s Office in 2003 (Rick Perry) as the Economic Development and Tourism division. In the same year (2003), TxEDC launched TEXASONE to aggressively market and promote Texas as a business location. In 2013 the TxEDC Board separated from the Governor’s Office and funded completely by its private membership aggressively promote Texan economic development—an example of privatization that followed the 2007-9 Great Recession. TxEDC and the Governor’s Office continue to work closely to achieve the goals of the TEXASONE program—which attracts and recruits targeted industry sectors (not clusters).

 

Texan community development was in 1987 temporarily unified with mainstream ED from 1987 to 1991 when it was split off into its own department. The present-day Department of Housing and Community Affairs was established in 1991 when the legislature merged two agencies, the Texas Housing Agency and the Department of Community Affairs (the latter had been established in 1971 when it was taken from the governor’s office (1969) to handle local coordination with the Great Society programs. At that time the Dept. of Community Affairs was organized into six divisions: Model Cities, a community development division, a comprehensive planning assistance division that administered HUD  programs to early childhood, public employment, drug abuse, a housing division that developed state housing programs, worked with local governments and residential construction industry, and the Texas Office of Economic Opportunity which focused on alleviating poverty and included the Governor’s Youth Opportunity Program and housed the self-supporting Texas Housing Agency (established in 1979) to foster private investment in low income housing through revenue and mortgage bond programs and approval of tax credits.

 

The Texas Department of Housing and Community Affairs is presently a seven member board appointed by the governor, with consent of the Senate. The CDBG programs were transferred from the Dept. of Commerce, as well as Low Income Energy, Home Energy, Emergency Nutrition and emergency relief from the former Dept. of Human Services. Its primary focus is affordable housing and a number of housing-related programs, including a emphasis on manufactured housing and homeownership. It also manages the full range of programs associated with various community development initiatives such as financing, emergencies, low income and poverty, food, shelter, neighborhood stabilization, family problems, and “colonia” initiatives. Of particular interest are its “colonia” initiative which includes administration of the Colonia Fund for severely distress unincorporated areas that meet the current state definition of what constitutes a colonia.

 

Texas created its initial version of its, now famous, jurisdictional “Development Corporation” in 1979. The usually municipal level development corporation was intended to promote “the creation of new and expanded industry and manufacturing activity” (and that “communities in this state are at a critical disadvantage in competing with communities in other states for the location and expansion of such enterprises by virtue of the availability and prevalent use in all other states of financing and other special incentives”[1] The major, almost revolutionary, expansion of the Texan economic development program, however, occurred in the 1989-2001. Throughout the early 1980’s however, Texas tooled up with the 1979 legislation authorizing local and county jurisdictions to issue bonds, make tax abatement agreements, issue grants and make loans.

[1] Economic Development of Texas 2008, Attorney General Office, www.oag.state.tx.us,  P.1), Sec 3(a)(6) 1979 Texas Economic Development Act