GlobeSt.com UPDATE: Economist Says Texas Should Get More Aggressive

The report says Texas must ante up money to play the incentive game; do a better job of marketing itself; improve job training; and recommends the governor be more directly involved in economic development efforts.

Perryman, whose firm is the Waco-based Perryman Group, compiled the report at no charge at the request of Texas Economic Development, the agency in charge of attracting businesses to Texas and helping Texas companies grow. For previous story, click here

Joe Newman, president and CEO of the Bastrop Economic Development Corp., says the recommendations strike a chord, especially in regard to job training. "We really need a good work-force training program," he says. "One of the first things companies look at is, 'Where are my workers going to be and how are we going to train them.'"

Incentives, such as fee waivers and tax exemptions, aren't competitive with those offered by other states. The report said that Texas funds many basic economic development functions at a fraction of the money spent by other industrial states. Other inducements are missing entirely in Texas.

Perryman also said Texas must take steps to beef up incentives, despite budget restraints, to compete with other states. The report, however, said incentives should be offered only when justified by an effective return on investment.

Perryman warns that Texas can't rely on its past pro-business reputation and lack of state income tax to attract businesses. The state has fallen behind in number and size of business developments. The state needs to market itself more effectively, particularly internationally. He suggested a $5-million effort to raise the state's profile and trumpet its benefits to business.

While several state agencies are involved with economic development, the governor's office should be able to act a "strike force" in closing deals with companies. The report also recommends putting Texas Economic Development in the Office of the Governor.

"If the governor's office puts its weight behind it, it's going to be great," Newman says. He cited former Gov. Ann Richards' efforts in keeping the General Motors plant in Arlington open as effective participation by the governor's office.