(Orange, Texas)

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January 4, 2013

State's investment funds await new Lege scrutiny

AUSTIN, Texas — Bankruptcies and a criminal investigation marred Texas' signature programs that use taxpayer funds to boost private startups in 2012, and lawmakers this year must decide how much of an appetite they have to keep the money flowing.

The state budget picture will be brighter when Legislature reconvenes Tuesday, but leaders of both Gov. Rick Perry's Emerging Technology Fund and the embattled Cancer Prevention and Research Institute of Texas, or CPRIT, will find it a much tougher sell getting lawmakers to buy in to their programs and fork over a combined $739 million over the next two years.

Terry Chase Hazell, chairwoman of the Emerging Technology Fund's advisory committee, on Friday acknowledged various challenges in making a case for funding, but said she was confident that lawmakers would be thorough.

"The broader lens that the Legislature looks at the funds through is not something we should, or try, to control," Hazell said.

On the flip side, another prominent state economic development program isn't asking for a dime. The Texas Enterprise Fund is touted as Perry's deal-closer to bring companies such as Apple to Texas, and carried an unused balanced of about $145 million at the end of last year, said Perry spokeswoman Lucy Nashed.

"I think we just looked at what we already have in the bank and felt that was an appropriate amount to move forward with," Nashed said.

CPRIT accounts for the bulk of the high-tech money being sought — $600 million requested over 2014-15 — and is the most battered. The state's $3 billion cancer-fighting agency unraveled last year amid internal accusations of politics trumping science, widespread resignations and now a criminal investigation into an $11 million grant that was given to a private company and that completely bypassed the review process.

Dallas-based Peloton Therapeutics received that grant, and the startup is similar to those infused with cash by Perry's tech fund, which has doled out more than $194 million since 2005. Two bankruptcies in the fund's portfolio last year added to previous busts and raised questions about whether the fund is now worth less than what taxpayers have put into it.

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