Reform of Emerging Technology Fund Clears House Hurdle

The state's top elected leaders would no longer decide which tech start-up companies receive commercialization grants under a bill that won preliminary approval in the Texas House on Monday.

The legislation is aimed at alleviating concerns that friends and financial supporters of Gov. Rick Perry have been getting preferential treatment from the Emerging Technology Fund, said the bill's sponsor, Rep. John Davis, R-Houston.

"The perception is it's the governor's deals he's doing for his friends," Davis said. "It just takes that perception away." Davis said that while he didn't agree with the notion that politics were driving the grant process, he believes reforms are appropriate.

Under House Bill 3162, the governor, speaker and lieutenant governor would no longer make the final decision for commercialization grants. They would retain decision-making authority for grants made to institutions of higher education. The legislation would change the name of the fund to the Texas Research Technology Fund.

Created in 2005, the Emerging Technology Fund was touted as a crucial tool to foster technological innovation and attract economic development. It has awarded nearly $200 million to more than 100 companies. But the fund has sparked complaints about cronyism and pay-to-play politics. In 2010 The Dallas Morning News reported that $16 million had been awarded to companies whose officers or investors had given campaign money to Perry.

Then in 2011, the state auditor conducted a critical audit that found a variety of transparency and oversight failures at the fund.

The bill faces a final hurdle in the House before moving to the Senate, where Davis said he expects Sen. Bob Deuell, R-Greenville, to carry the legislation. Less clear is how much money the Legislature will provide for the fund. Perry has asked for about $140 million for the next two years. So far, lawmakers have only agreed to appropriate $7 million — the amount left over in the fund right now — though that number could grow.