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JOBZ Report: 'Local Relocation' Problematic

HIBBING, MN-Although Gov. Tim Pawlenty's program has yielded some 60 projects worth nearly $100 million, a new report worries that nearly one in six involves a local relocation simply for the tax break.

By Jim McCartney | Updated on August 30, 2004

HIBBING, MN-The state of Minnesota’s Job Opportunity Building Zone appears to be working — some 60 projects representing nearly $100 million in development are underway. However, a new report raises concern that a significant portion of the expansions were local relocations.

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.”

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