The policy group Good Jobs First, which is critical of such incentives,Infant True Religion, found that the net gain of jobs from relocations to Texas amounted to about 0.03% each year. A similar 2005 study by the Public Policy Institute of California found that, even when California was losing the most jobs to other states, those losses amounted to less than one-tenth of 1% of total jobs. It's a little rock in a very big pond, said Thomas Cafcas, a research analyst with Good Jobs First. Any state that actually thinks the poaching strategy is the best strategy is putting their policy efforts in the wrong basket. Texas-sized payments to firmsTexas' efforts to attract businesses date to 2003, when the state nearly lost a bid for Toyota to build a manufacturing plant in San Antonio. Perry convinced legislators that the state needed extra sweeteners to compete. Lawmakers that year allocated nearly $300 million from the state's rainy day fund to create the Texas Enterprise Fund. At the time, Texas was facing a budget shortfall for Medicaid and the Children's Health Insurance Program, and critics charged that starving those programs would have a greater economic effect on the state.As the money flowed, Perry's office had ample fodder for speeches and news releases. A major early grant of $40 million went to Sematech, an Austin computer chip research company that agreed not to shift jobs to Albany,True Religion Mens Jeans, N.Y.Perry credited the Enterprise Fund for other major corporate expansions by Texas Instruments, Citgo and Dow Chemical.But as the years went by and some companies missed deadlines for promised job creation legislators and advocacy groups raised questions.A 2010 report from a government watchdog group,True Religion Mens Swimwear, Texans for Public Justice, analyzed 50 Enterprise Fund projects that had job creation targets in 2008 and 2009. The group found that two-thirds of the projects either had failed to meet job goals, had employment targets reduced or had contracts canceled by the state.One of those cancellations was Calabasas-based Countrywide Financial, which received $20 million in 2004 from the Enterprise Fund an award that Perry called the crowning jewel of the program. When the high-risk mortgage lender collapsed in mid-2008 and was acquired by Bank of America, it had failed to meet job-creation goals and ended up paying back only a fraction of Texas taxpayers' money.The same 2010 report found that the so-called clawback penalties amounted to only about 1% of the total disbursements for firms that failed to meet job-creation goals.Over the last two years, as Perry's tenure nears an end, legislators have called the fund a prime example of skewed marketplace incentives. Lawmakers last year chose not to approve additional money.Greg Abbott Texas' attorney general and the GOP nominee for this year's gubernatorial race said the state should get out of the business of picking winners and losers. Conservative groups have called it a departure from the state's small-government, free-market values. Economic development programs are really a net loss, no matter how many jobs you attract, said Peacock of the Texas Public Policy Foundation. The jobs that these kinds of programs produce are dwarfed by the overall job growth in Texas. A spokeswoman for Perry, Lucy Nashed, said in a statement that the fund has created nearly 76,000 jobs over the last decade and led to more than $24 billion in capital investment. For years, the Texas Enterprise Fund has been an effective tool to help our state close the deal with businesses seeking to take advantage of Texas' low taxes, fair courts, smart regulations and world-class workforce, she said.Economists also point out that state payments can't make up for a company's workforce needs.Sematech the Austin microchip firm Texas wooed with $40 million in 2003 pulled up stakes in 2011, moving its employees toAlbany, where it had developed a growing partnership with local universities. We're not talking about leveling the playing field and letting the market work, said Mike Davis, a professor of economics at Southern Methodist University in Dallas. This is very much government supporting the businesses they believe they should support. Are theyall that good at picking out who the real winners should be? California takes a stab at reformCalifornia's new slate of business tax incentives comes after a lengthy and troubled experiment with community development programs. Related