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Audit Finds Problems In Gov. Perry's Deal-Closing Texas Enterprise Fund

AUSTIN, Texas (AP) - A pet program of Republican Texas Gov. Rick Perry that has given a half-billion dollars in taxpayer funds to companies including Toyota and Facebook failed to support claims about job creation and competition from other states, according to a state audit released Thursday.

The critical report, which also found that some companies never submitted applications before receiving money, is the latest bad news for the possible 2016 presidential candidate's economic development funds. Perry credits them with helping fuel a booming Texas economy - and his office defended them again Thursday - but the programs have become increasingly unpopular among conservatives.

According to the audit, about a third of all the money handed out since Perry launched the Texas Enterprise Fund in 2004 - $172 million dollars - went to companies that never submitted applications. Among them were Citgo Petroleum and outdoors retailer Cabela's.

Perry calls the fund Texas' deal-closer when multiple states are wooing restless companies to move their way. In April, Toyota was awarded $40 million to uproot its U.S. headquarters from California to suburban Dallas.

But auditors said they couldn't always find "sufficient information" about other suitors. Under the fund rules, viable competition is required for Perry's office to tap the money.

Nailing down the number of jobs created thanks to the Texas Enterprise Fund also seemed to challenge state auditors. Claims by Perry's office that the fund has created more than 48,000 direct jobs could not be verified because of "weaknesses" in monitoring by Perry's office, according to the audit.

Perry's office published a report last year indicating more than 66,000 "direct jobs" created, but auditors found that number was actually only what fund recipients had collectively promised.

Responding to the findings, Perry's office said that many problems identified by auditors occurred during the fund's early stages and that better safeguards evolved over time. Spokeswoman Lucy Nashed said Thursday the fund is a "critical" tool to attract businesses.  Procedures are regularly reviewed and updated as necessary to ensure responsible oversight, she said.

In July, a review by The Associated Press of Perry's other signature job-creation program also revealed oversight problems. It found that the Texas Emerging Technology Fund, which gives taxpayer dollars to high-tech startups, includes recipients that have quietly stagnated, not filed tax reports and made questionable job claims. One company that received $1.25 million was actually operating in California.

Even before the audit, the future of both the enterprise and tech funds has been murky as Perry prepares to leave office in January after a record 14 years as governor. The favorite to be elected as his successor, Republican Texas Attorney General Greg Abbott, has expressed unease with giving public dollars to private companies.

Other conservatives have outright called for scrapping the funds.

Perry, who bragged on the funds during his failed 2012 presidential run, has defended of the programs despite growing criticism. But last weekend in Austin, he struck a deferential tone about whether the funds that have awarded a combined $700 million had run its course.

"I think they've served us well," Perry said Sunday. But if the Legislature wants "to unilaterally get out of economic development business, that's their call."

Democrat Wendy Davis, who is running to replace Perry, carried a bill in the state Senate last year that led to this first audit of the enterprise fund. She has called for continuing the program and said Thursday she'll keep it working with proper oversight and transparency.

(© Copyright 2014 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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