The Free Press, Mankato, MN

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February 21, 2008

Our View: JOBZ needs serious revision

In the beginning, JOBZ was was touted aggressively in economically disadvantaged communities throughout Minnesota. But it soon became evident to potential job creators that their capacity to revitalize depressed areas need not be so limited. The program, originally targeted for the most distressed counties in outstate Minnesota, was allowed to seep into areas not nearly so needy.

Therein lies one of the more egregious mistakes with the centerpiece program created in 2004 by the Pawlenty administration. To get the most out of JOBZ, it must more surgically target areas with the most need.

Where has JOBZ benefitted most? Not necessarily in the rural areas it was intended to benefit. Stearns County, a rapidly growing county that includes St. Cloud, appears to be a winner. So is Chisago County, bordering the Twin Cities. As for the the outstate areas originally embraced by JOBZ, their overall economic picture remains largely unchanged.

Now it has become depressingly clear that JOBZ, by itself, isn’t going to be enough to paper over longstanding economic realities that repel these kind of well-intentioned government fixes.

Almost from the beginning, some warned that giving large tax breaks to industries for the purpose of creating or expanding jobs doesn’t benefit communities in the long run. And now, with last week’s report from Legislative Auditor Jim Nobles, more questions cloud JOBZ on a variety of fronts.

The report says the program lacks oversight and dangles tax breaks to companies and communities that don’t always need them. Standards for eligibility are too loose and companies often aren’t required to add a significant number of jobs, or maintain existing jobs, to qualify. Oversight is so lax, goes the charge, that some businesses continue to receive subsidies even after they leave the program. The program lacks a strategy and accountability is absent, the report states.

The state Department of Employment and Economic Development (DEED) credits JOBZ with creating almost 5,500 new full-time jobs in greater Minnesota from 2004 to 2006. Nobles’ report puts the total 20 to 30 percent lower than that.

What are we to make of Nobles’ assertion that almost seven in 10 companies that received tax breaks would have expanded even without them? It’s a number that’s hard to quantify. How directly does the availability of JOBZ subsidies focus companies’ final decision to avail themselves of them? How accurate is the 7-of-10 figure? And if three of 10 were inspired to create jobs solely due to JOBZ, is that reason for disappointment or reason for cheer?

Overall, JOBZ is not the failure some make it out to be. But it is far from the success it was intended to be. Many adjustments are required, most importantly scaling it back to focus more exclusively on the depressed zones it was conceived to benefit and increasing government oversight and accountability. One way to be more accountable is to renew the debate on where the level of job creation must be set for the amount of tax breaks to be given.

JOBZ may never be the centerpiece it was once intended, at least as the entire state now stands poised to descend into an economic slump. But with better monitoring, it can become a sharper arrow in the state’s quiver of economic development incentives.

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