Sunday, April 25, 2010

Carlyle's $35 Million Texas Charge Card

Governor Rick Perry granted The Carlyle Group's Vought Aircraft Industries $35 million in 2004 to provide 3,000 new jobs by the end of 2009. Carlyle cut 35 positions, according to Vought's website employment numbers.

However, the 2010 Texas Enterprise Fund report indicates a more opaque situation. Vought's employment did not double, as promised.

2004-- 3,350 workers
2010 promise- 6,350 workers

2010 actual--
3,315 workers (Vought website)
2010 total jobs-- 29,377 (Governor Perry's report)

These measures indicate Vought's employment fell by 35 or grew by 26,000.  Which is right? When politicians are afraid of facts, they obfuscate. Governor Perry's number is credited to "economic impact reports from independent economists analysis." Perry's office used a job multiplier, not the employment measure Carlyle committed to in their 2004 agreement.

The Carlyle Group used Texas' $35 million to capitalize Vought's expansion in South Carolina. When it came time to settle up, Perry used Texecutive privilege. Rather than "one riot, one Ranger," Rick employed "one contract, one Governor." No stinkin' legislature was needed to help the boys at 1001 Pennsylvania Avenue.

What refund might one expect in the first year of a ten year payback, especially for such miserable performance?

Full refund = $3.5 million plus accrued interest

Vought booked a $2.1 million liability relative to the grant

Vought's financial statements say they paid back $900,000, roughly 25% of the principle at zero interest. The Governor's report says he clawed back $944,000.

Had that been a credit card vs. a taxpayer funded gift, the balance would've grown to $46 million at a 5% interest rate. To pay off Carlyle's Texas credit card in ten years, the bill is:

Interest only- $191,000 per month

Monthly payment- $487,000 per month

While politicians talk about transparency, everything about this deal is under wraps, the renegotiated contract, the basis for the $900,000 payment and projected future refunds.

Even the media has shown no interest in the refund to date. (Dallas Morning News, Austin American Statesman & San Angelo Standard Times). Isn't there a Governor's race underway? Maybe a Congressional contest or two?

Texans deserve better, all around.

Update 9-16-10 Vought is a supplier for Boeing NewGen Tanker Team. Thus, there is potential for more jobs in Texas. I imagine those would require new stimulus from the Governor.

Update 6-1-11:  HB 2457 purports to fix the problems with Perry's Texas Enterprise Fund, only Vought's agreement had all the elements required in the new legislation.  The bill is silent on Perry's ability to renegotiate deals, which he did with Vought in Spring 2010.

Update 8-11-11:  Governor Rick Perry will run for President according to Perry spokesman Mark Miner.  Will the media examine Perry's job fabrication numbers?  "Increased scrutiny" is yet to find Perry's Vought shenanigans.