The report, recently presented by the Center for Rural Policy and Development at a conference here, suggests at least 17% may have simply moved across town for the tax break. The JOBZ program offers a variety of local and state tax incentives to companies that start up, expand or relocate in rural Minnesota. The program offers breaks on state income tax for businesses and property tax on improvements.
"A significant majority of the approved JOBZ business deals involve local firms that are seeking to expand and/or relocate," the report concludes. "In fact, 42% of the JOBZ deals reported in the first six months were local expansions, while another 17% were local relocations. This trend, if it continues, may be problematic (especially the local relocations) and certainly needs to be monitored."
On the other hand, 19% of the approved JOBZ deals were non-local relocations and/or expansion and 22% were startup companies, the report said. The program is generating "substantial interest from businesses" for three-quarters of the 329 targeted communities, and a third of those had applications in the first six months, the report says.
Most of the businesses are manufacturers, easing the concern that "inappropriate retail businesses" would apply for the tax breaks. The report concludes that the "program is off to an adequate start," but cautions it is too early to draw any conclusions. A future assessment should examine both program benefits and program costs to determine its "net value."
However, as such costs are yet unreported, such conclusions could not possibly be reached now.
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