Economic incentives paying off for Utah

0 Comments | Deseret News (Salt Lake City), Feb 17, 2007 | by Brice Wallace Deseret Morning News

With no companies applying for state incentives at its Friday meeting, the Governor's Office of Economic Development Board took a few moments to contemplate the incentives program's successes in luring businesses to the state.

Michael Nelson, in charge of business recruitment and incentives for GOED, told the board that $67 million had been offered to 28 companies during fiscal 2006 and so far in fiscal 2007. If companies accept and fully realize the growth spelled out in their incentive applications, over the next decade the state would see $413 million in new state revenue from corporate, sales and employment taxes; $2.4 billion in capital investment; and $3.7 billion in new wages paid to employees.

"So this is significant, and this is something we can all be proud of that we've been able to do," Nelson said. "In relation to other states, we use far less money to get a much larger return on the things that we do."

The state's return on investment would be 6-to-1 for state revenue, 26-to-1 for capital investment and 55-to-1 on new wages.

Among the companies approved for incentives are Dannon, Amer Sports, Rossignol, Barnes Aerospace, US Foodservice, IM Flash Technologies, KraftMaid Cabinetry and Backcountry.com.

The incentives came in two forms: the Industrial Assistance Fund and a tax-rebate program. But legislation passed last year allows GOED to offer a company both, and that helped land Amer Sports and Barnes Aerospace, he said.

"Without this change in legislation, we would have not been able to do these deals," Nelson said.

For example, Amer easily could have selected Oregon -- where it is "entrenched," Nelson said -- or other facilities across the country. Barnes had what he called "a very, very good offer from Singapore -- considerably more than we provided them in terms of incentives" -- yet Barnes' activities in Utah could lead to 1,200 new jobs.

Nelson noted that Utah has tried to court a variety of companies. By contrast, he said, North Carolina in 2005 granted Dell a $275 million incentive for 1,300 new jobs and Tennessee offered more than $300 million for 1,800 Toyota jobs. But if those companies suffer, supply and vendor companies that moved in along with them also would.

"If anything happens to that group, everything goes away, and that's not what happens in this state," Nelson said.

"We all learned in finance and everything that diversification is king, and that's really what we've done in this state. Five times less money -- $67 million, 28 companies, not only diversified in a single industry but diversified over multiple industries."

The GOED Board awards incentives after companies are recruited by the Economic Development Corp. of Utah and the companies' applications are vetted by GOED staff and the board's incentives committee.

"I think the GOED board, in partnership with EDCUtah and the GOED staff, should feel very good with how we've used the state resources to bring companies to the state," Nelson said.

E-mail: bwallace@desnews.com