Fewer takers for program that uses tax breaks to expand business

Last update: April 13, 2008 - 12:23 AM

WORTHINGTON, MINN. - An economic development program that uses tax breaks to lure Minnesota businesses to economically distressed areas is finding fewer takers this year than in the past.

The Job Opportunity Building Zones (JOBZ) program has had two signups so far this year, compared with 17 in the same period last year. JOBZ allows businesses to operate mostly free of state taxes if they promise to relocate to or expand in economically distressed regions.

In 2004, the program's first year, about 120 companies signed up. The number of new projects since then has fallen an average of 26 percent a year. In JOBZ's first three years, the tax reductions totaled nearly $46 million.

Department of Employment and Economic Development Commissioner Dan McElroy said the number of new agreements signed so far this year doesn't tell the whole story. "There are probably 10 more that I know that are in process," he said. "But it is not as robust as it would have been in 2006."

The program is due to expire in 2015, but legislators are debating whether to curtail it even sooner. Gov. Tim Pawlenty, who has championed the measure, wants it expanded.

One legislative effort would extend the number of years companies receive tax breaks. A company signing up this year gets eight years of tax breaks; a business entering the program in 2004 received a dozen years of benefits.

ASSOCIATED PRESS

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