Wednesday, August 30, 2006

JOBZ helps ... move local firms 

I thought this was an odd quote last week in the International Falls The Daily Journal
We, too, had some concerns about the program when Gov. Tim Pawlenty first launched it. The program appeared to target rural areas, but when places like St. Cloud were designated JOBZs we wondered about the intention of the program. And already, the St. Cloud zone has attracted the most JOBZ projects.
JOBZ is a brainchild of the Pawlenty administration. Rather than being a motivator for people moving from out-of-state, however, it's largely helping local businesses stay open and move to JOBZ-designated areas.
"We've provided incentives to move economic activity around the state, from one part to the other," [U of M Prof. Laura] Kalambokidis said. That can be beneficial if the business is moving from a congested part of the state with low unemployment to an area with high unemployment. But it's not clear that's happening with the JOBZ program, she said.

Some economic developers who have tried to entice companies away from the Twin Cities say they've had better luck helping companies in their back yard expand or make a short move to a JOBZ development site.

Although St. Cloud is one of the areas closest to the Twin Cities, it hasn't drawn any Twin Cities companies north, said Tom Moore, president of the St. Cloud Area Economic Development Partnership.

Moore attributes the high number of JOBZ projects in Stearns County to a focus on local businesses interested in expanding.

"We did land Arctic Cat from Thief River Falls," he said. "They would have gone to Wisconsin if we hadn't had JOBZ."

The Arctic Cat plant, which will make engines for all-terrain vehicles, will employ 50 people when it opens this fall. The main competition for the plant was a site in River Falls, Wis. Wisconsin had offered $3.75 million to Arctic Cat in a package including city financing, land, property tax breaks and state assistance.
So when I hear people brag about JOBZ, my question is whether it is simply moving firms around the state -- in which case the cost-benefit analysis would be, well, interesting -- or if it's moved a company from one place to the next? If it's the latter, then the question is whether such tax programs help. This is one of those times when I think the liberal answer might in fact be right, as this small business owner seems to agree.