Panel backs bill slashing tax breaks under JOBZ

Gov. Tim Pawlenty's leading job-creation program, criticized for giving tax breaks to companies that don't need them, would be curtailed under a tax bill passed Thursday by a Senate committee.

The bill says that, after May 1, firms could not apply for new tax exemptions under the Job Opportunity Building Zones (JOBZ) program. The 350 firms now receiving the breaks would continue to do so through 2015, when the program is set to expire.

Pawlenty had proposed allowing additional firms to join the program and continuing their benefits after 2015.

Sen. Tom Bakk, DFL-Cook, chairman of the Senate Taxes Committee, said the program should be curtailed because the Pawlenty administration has not adequately responded to criticism of it from Legislative Auditor Jim Nobles.

Nobles said in a recent report that JOBZ gives tax breaks where they aren't needed to create jobs while overstating its accomplishments and understating its costs. He recommended better oversight and capping the program's size.

But efforts to curb the JOBZ program are likely to face opposition when the tax bill comes before the full Senate.

Senate Minority Leader David Senjem, R-Rochester, called JOBZ "vitally important" and something "we need to hang onto."

The program began in 2004, and the 350 firms have received more than $50 million in tax exemptions of all types.

"I'm not sure how we fix it," Bakk said of JOBZ. "The auditor's report showed a lot of deficiencies. I would have thought the administration would have taken the auditor's report more seriously."

Also in the tax bill

The tax bill passed by the committee Thursday also rejects Pawlenty's recommendation to cut the state sales tax by one-eighth of 1 percent and instead pushes for an additional $116 million in state aid for cities, counties and townships in 2009. Bakk said that approach would effectively relieve pressure on cities and counties to raise property taxes.

The bill also includes a provision that would use property tax dollars from the Mall of America's Bloomington site to pay for roads, sewers and parking needed for a large expansion.