Watson Has Tough Words for Combs, Tax Subsidy Programs

State Sen. Kirk Watson, D-Austin, criticized Republican Comptroller Susan Combs on Wednesday, saying she had a “cavalier” approach to doling out millions of dollars in tax incentives, including the award eventually granted to the promoters of F1 auto racing.

Watson emphasized that the F1 race and the Austin track where it was recently held will create positive economic development for years to come — and deserved to have the state as a partner. He helped draft the legislation that made it happen.

But Watson said Combs mishandled the tax subsidy program and is calling for changes in the way “events trust fund” awards are allocated in the future.

Watson's criticism focused on Combs telling Formula One auto racing promoters that the state would provide $25 million a year in incentives over 10 years to support the group’s efforts to build a track in Austin.

“I think we will look at whether or not you want to have just the comptroller, just one person, looking at something that’s this important to economic development in the state,” said Watson, speaking to The Texas Tribune after he grilled a top Combs aide at a Senate Economic Development Committee hearing Wednesday morning.

Combs spokeswoman Lauren Willis said the comptroller's office had followed all laws and procedures.

"We strictly follow what is outlined in the statute, as passed by the Legislature, when administering the event trust fund programs," she said.

During the hearing, Watson also questioned whether some of the recent high-dollar awards from the programs — such as the millions given to the promoters of the Cotton Bowl and Valero Alamo Bowl college football games in recent years — met the criteria lawmakers had in mind when they created the programs.

The trust funds are set up to lure events that would not otherwise be held in Texas. The Cotton Bowl and Valero Bowl have been held in Texas since 1937 and 1993, respectively.

Robert Wood, who oversees economic development programs in the comptroller’s office, told Watson during the hearing that the bowls meet the guidelines in the law. He said the “communities that are applying” for the money have told the comptroller’s office that the bowls could be moved to other states.

As an example of what can happen, Wood then asserted that the Sun Bowl had been moved out of El Paso. However, the Sun Bowl, held in El Paso since the 1930s, has not announced any moves out of the state. It is considered to be the border city’s top national annual sports event. 

After the hearing, Watson said that the guidelines for determining how to award incentive money to lure events might need tightening to ensure that money isn’t given away to attract economic development that would happen regardless.

One of the most interesting moments during the hearing came when Watson was grilling Wood about what happened with the F1 incentive money. Watson brought up Combs' May 2010 letter to F1 chief executive Bernie Ecclestone, in which she said “I hereby certify” that if F1 auto racing were brought to Texas as promised the state would provide $25 million a year for 10 years to the promoters.

Wood said that was not meant as a promise or guarantee, but Watson kept pressing him.

“Did she have the authority to extend a guarantee or promise or a commitment or a certification that there would be $25 million?” Watson asked.

“No sir,” Wood answered.

“That’s the first time I’ve heard that out loud,” Watson said after the exchange. 

Combs approved an expenditure from state funds of $25.3 million, almost exactly what she had offered in 2010, for the F1 promoters in December. The inaugural race was held in November. If it is held for at least 10 years, as planned, the state could be on the hook for $250 million or more.

The hearing was aimed at finding out how incentive programs are working, from the governor's deal-closing Texas Enterprise Fund to various programs overseen by Combs. Sen. Robert Deuell, R-Greenville, said senators from both parties have concerns about spending tax dollars on private-sector economic development programs, but he’s still waiting for legislation to materialize.

“There’s been criticism from some of the Tea Party folks that they don’t think government should be doing the various programs, and some people on the left are also saying we’re wasting our money with that,” Deuell said. “It doesn’t seem to be a Democrat-Republican thing.”