(The Center Square) – Another multi-billion-dollar company is expanding operations in Texas, this time in Buda in Hays County, one of the fastest-growing counties in the state.
US Foods has pledged $120 million in capital investment, which it claims will create 165 new jobs through expanding its food distribution and warehousing facility in Buda.
A leading food service distributor, US Foods partners with roughly 250,000 restaurants and food service operators and employs roughly 30,000 people in more than 70 locations. It provides customers “with a broad and innovative food offering and a comprehensive suite of e-commerce, technology, and business solutions,” it says.
After the multi-billion-dollar company reported a gross profit of $1.7 billion in the third quarter of fiscal 2024, it received a taxpayer-funded Texas Enterprise Fund grant of $1,072,500 for the expansion.
“This significant investment in Buda brings 165 new, good-paying jobs for hardworking Texans in Central Texas and showcases the strength of our state’s economy,” Gov. Greg Abbott said. “Companies invest and expand in our great state because of our unmatched business-friendly climate, reasonable regulations, and highly skilled workforce. I look forward to seeing continued success for US Foods as we work together to build a bigger, better Texas for all.”
“Central Texas is a critical part of our distribution footprint, and we’ve been proud to do business here since we opened our Buda warehouse in 2011,” US Foods Area President Taylor McIntyre said. “We’d like to express our appreciation to the Office of the Texas Governor for its support and look forward to continuing to grow and enhance our partnership with the many foodservice operators we serve across the region.”
State Sen. Donna Campbell, R-New Braunfels, said the expansion and job creation “isn’t just about business growth, it’s about giving families new opportunities and strengthening Texas’s economy.” She also touted the Texas Enterprise Fund for making the expansion possible, saying, “we’re not just investing in Texas businesses but in the future of Texas and our communities.”
Local officials also touted the first TEF investment in Buda for making the expansion possible.
The TEF was created in 2003 by the state legislature “to help attract new jobs and investment to the state.” It has been re-appropriated every legislative session since.
Proponents argue it’s a vital state program to attract and keep businesses in Texas. Opponents argue taxpayer dollars are being handed to multi-billion-dollar companies that would expand operations anyway, there is little accountability for how the money is used, among other concerns.
When the TEF was created, it was “the largest ‘deal-closing’ performance-based grant of its kind in the nation,” according to a recent legislative report. As more states created similar programs, competition to attract new jobs and business investment also increased. “TEF is a performance-based financial incentive tool used only in competitive situations when a single Texas community is competing with another viable out-of-state option for an economic development project that will create new jobs and investment,” the report states.
In fiscal 2022, more than $78 million in TEF grants were awarded for 15 projects. Since fiscal 2004, more than $834 million TEF grants were awarded for 201 projects that claimed to create 114,019 new jobs, according to the report.
The Texas Public Policy Foundation has long called for the TEF to be eliminated and expressed concerns about similar programs, which it and others describe as corporate welfare.
TPPF points to a 2014 State Auditor’s Office report that found “serious flaws in the monitoring of job target completion; many early recipients never submitted a formal application but obtained sizable grants nonetheless.” Because of reported insufficient documentation and monitoring, “it was not always possible to determine whether award decisions were supported, or to determine the number of jobs that recipients of awards from the Texas Enterprise Fund have created.”
By 2019, another report found that job creation requirements weren’t met. Instead of pulling TEF funding, agreements were amended “generally to the benefit of businesses;” deadlines were extended, new created job totals were reduced and “a created job” was redefined, according to the report.
“By its very nature, the TEF must pick winners and losers. It must decide who deserves public investment and who does not. Established companies will always have a step up in navigating that process,” TPPF argues. “The interstate subsidy race represents an ever-spiraling stairway to more government intervention in the market. The solution is to step off and focus on the mechanism proven to create the most growth without extra cost to the taxpayer: the Texas Model.”
