Driving through Minnesota, it is easy to see the beauty and prosperity of our state as a whole, however, but it is easy to overlook areas of economic distress. Areas that once thrived have slowly become forgotten as businesses move to more prosperous regions.
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Since 2003, Minnesota has sought to develop programs for new businesses and give support to already existing businesses that wish to expand in order to bring about economic growth. The project is called JOBZ. Its main goal is to provide tax relief in an effort to create new jobs in specific parts of the state, especially those area experiencing economic distress.
In order for businesses to take advantage of JOBZ, they will need to qualify before the last day of December, 2015. The benefits will include tax exemptions for corporate franchise tax, capital gains tax, any sales tax on goods and services purchased during the qualifying period, property tax on improvements, wind energy tax, and employment taxes on high paying jobs. These benefits are meant to be a draw to businesses in return for improvements to the local community.
Everyone wins in this situation and there are no problems..right? Legislative Auditors, James Nobles and John Yunker, have done a study showing that overall JOBZ criteria provides an opportunity for economic growth. However, the auditors also feel that there should be more time and scrutiny given to specific areas of the state in order for the program to be truly effective. Even though 350 businesses have already received substantial tax relief, the auditors maintain that some of those businesses would have expanded even without JOBZ subsidies. In order to improve oversight, the auditors suggest that the program limit the number of new businesses entering the program.
There is also concern by some that the JOBZ program could harm already existing businesses. Lawsuits have sprung up in regards to these complaints, but no new legislation has been filed in regards to the allegations. The main concern is that this legislation will benefit competitors to already existing businesses. Governor Pawlenty is not considering discontinuing the program. However, he has heard from senators that in order for the program to continue receiving support in legislator, there must be consideration in making the needed changes for the program to be successful. Suggestions for changes in the program include involving local governments in follow-up details such as the number of individuals hired and the number of employees maintained by targeted businesses.
Regardless of the positives or negatives of this program, the overall effectiveness of JOBZ rests on implementation of changes that affect the overall outcome of the program. The auditors have been very effective in evaluating the areas needing change. Their suggestions are made to protect business in Minnesota as a whole. The willingness of our government to follow through with the accountability of all areas of the program will definitely provide for a better outlook for Minnesota and a more positive result from the audits in years to come. The success of the JOBZ programs lies in the hands of everyone involved. It is evident that government and business must do their part and follow through with their commitments in order for JOBZ to be effective. Will everyone win in this situation and there will be no problems? Of course not. But, even so, as Benjamin Franklin once said, “Without continual growth and progress, such words as improvement, achievement, and success have no meaning.”