Texas Economy in Focus

Economic Development and Business Development Expenditures January 2009

Background

Texas is entering its eighth biennium under the Strategic Planning and Budgeting System (SPBS). The SPBS links agencies’ strategic plans to the state budgeting process, using each agency’s strategic goals, objectives and strategies as the basis for constructing the state budget. Performance measures developed under each appropriation provide legislators with a basis for evaluating an agency’s ability to meet its objectives.

The 1995 Legislature adopted some refinements to the planning and budgeting system. In 1996, the Governor’s Office issued Vision Texas: The Statewide Strategic Planning Elements for Texas State Government, containing goals for major service areas in state government and benchmarks that measure progress toward the statewide goals. Since then, although the statewide goals have been essentially the same each biennium, the benchmarks have been revised slightly over time. The most recent list of statewide goals and benchmarks contains eight functional area goals and 155 state-level benchmarks.

Since the 1998-99 biennium, Texas state agencies have been required to link each budget strategy in their appropriation requests to at least one of the statewide goals, state-level benchmarks and 38 service categories. A service category is a group of similar strategies cutting across agency lines, such as “Higher Education Instruction” and “Mental Health.”

SB275 requires the Comptroller’s office to provide expenditure data for the statewide goal of economic development and for the statewide service category of business development for the 2004 through 2008 fiscal years.

The tables provided by the links below contain data for fiscal 2007 and fiscal 2008. Information for expenditures for prior years can be located in the January 2007 version of this report.

Economic Development

Exhibit 1
Statewide Goal: Economic Development


Benchmarks
  1. Undetermined
  2. Number of new jobs announced as a result of the Texas Enterprise Fund
  3. Amount of capital investment made in Texas as a results of grants provided through the Texas Enterprise Fund
  4. Number of employees in targeted industry sectors
  5. Number of new small businesses created
  6. Number of new nongovernment, nonfarm jobs created
  7. Number of emerging technology research commercialization grants awarded
  8. Number of nationally and internationally recognized researchers recruited to Texas public institutions of higher education as a result of emerging technology research superiority grants
  9. Per capita gross state product
  10. State and local taxes as a percent of personal income
  11. Texas unemployment rate
  12. Median household income
  13. Percent of state highway system rated good or better based on the Pavement Management Information System Condition Score
  14. Percent reduction in traffic congestion using the Texas Transportation Institute's Travel Time Index
  15. Number of Texans receiving job training services

One of the eight statewide goals is promoting economic development. Fourteen individual indicators benchmark economic development, ranging from per capita gross state product to the number of new small businesses created. (See Exhibit 1) However, only eight of the benchmarks were linked to agency budget strategies. (See Table 1) State agencies and institutions of higher education linked 100 of their budget strategies with the benchmarks under the economic development goal. Many of the budget strategies do not fit neatly into any of the 14 benchmarks listed and are classified as “undetermined.” Expenditures for promoting economic development totaled $9.2 billion in fiscal 2008, up from $7.1 billion in fiscal 2004. (See Appendix 1 for expenditure detail by budget strategy.)

The state funds these economic development strategies from general revenue funds, federal funds and other funds in the State Treasury. Federal funds and other Treasury funds provide most of the money for several of the largest programs under the economic development goal. Nearly 87 percent of economic development spending is for TXDOT and spending for this agency comes almost exclusively from federal funds and from state revenues dedicated to this purpose. Other significant spending includes Texas Workforce Commission employment support programs, the bulk of which are federally-funded; Lottery Commission programs, whose revenues are deposited in dedicated funds; and other programs funded primarily with dedicated state money and federal funds. (See Appendix 2 for the method of finance detail for each program strategy.)

The statewide service category of business development most closely corresponds to economic development. Business development was linked to 29 budget strategies for state agencies and institutions of higher education. (See Table 2.) Agencies spent $369.9 million in fiscal 2008, up from $236.7 million in fiscal 2004, on business development. (See Appendix 3 for expenditure detail by budget strategy.) Most of the increase is due to expenditures from the newly created Texas Emerging Technology Fund. (See Appendix 4 for the method of finance detail for each program strategy.)

Eleven budget strategies link to both the Economic Development statewide goal and the Business Development statewide service category, leading to duplication in the combined amounts. These overlapping strategies account for $321.1 million in fiscal 2008.

After eliminating the duplicated spending of strategies appearing in both, the state spent $9.3 billion on economic development and business development in fiscal 2008, up from $7.1 billion in fiscal 2004. (See Table 3.)

Performance measures designed to track progress toward the state’s goals are also built into the states’ budgeting system. “Outcome measures” are used to assess the effectiveness of an agency’s performance at the budget goal and objective levels, but not all individual budget strategies are linked to a specific outcome measure. “Output measures” quantify the services or goods produced by an agency. They are designed to gauge workload at the budget strategy level. Most, but not all, budget strategies have one or more output measures. “Efficiency measures” typically provide an indication of administrative cost-effectiveness for a program. Appendix 5 contains outcome measures, output measures and efficiency measures associated with the budget strategies linked to the economic development statewide goal and the business development service category. Since outcome measure data could not be linked directly to budget strategies in the LBB’s automated budget database, this information had to be gathered from agency LAR submissions for the years shown. Appendix 5 contains all key outcome measure and output measure data available from LAR submissions.

This analysis includes all budget strategies linked by agencies to the statewide goal of Economic Development and to the statewide service category of Business Development in their Legislative Appropriations Requests for the FY2010-2011 biennium. Agency designations of budget strategies to statewide goals or service categories can change between biennia. In order to allow for a consistent historical comparison of economic development expenditures, this analysis uses only those budget strategies currently designated as such. Budget strategies which may have been linked to the Economic Development goal or the Business Development service category in earlier LARs but not in the current submissions, have not been included. Similarly, this analysis includes only performance measures for budget strategies included in this analysis. Therefore, expenditure information included in this report can be expected to vary from amounts reported in prior versions of this report for the same years to the extent that agency budget strategy designations change.