JOBZ Program Loses Jobs, Tax Breaks Increase

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April 22, 2011; Source: Star-Tribune | Suzlon Rotor Corp., a wind energy company located in rural Minnesota, was one of the biggest job losers in a state program to encourage job creation. Yet it still remains eligible to receive $297,000 in tax breaks. Critics are wondering why.

JOBZ, which stands for Jobs Opportunity Building Zones, is a signature rural job creation bill started in 2004 by then governor Tim Pawlenty. The program touted creating 6,992 jobs since its launch. But a program publication released last week reported that only 6,366 jobs were created through the program through the end of 2009, a 9 percent decline. Yet as job creation has stalled, program subsidies rose to nearly $34 million to participating companies.

Since it began, 379 JOBZ companies received $144 million in tax breaks including 77 businesses that were booted from the program for not meeting goals.

“It is further evidence that economic development subsidies cannot defy gravity,” notes Greg LeRoy, executive director of the nonprofit group, Good Jobs First. Similar efforts in other states have produced similar results, he added.

Bob Isaacson, director of JOBZ and business finance manager for the state department who issued the report, emphasized that manufacturing companies in Minnesota suffered nearly 11 percent of job declines in 2009. Participating JOBZ companies expanded operations and added jobs because of the subsidies, he reports.

An analysis by the Star-Tribune reveals that many other job creation programs supported by local and state governments from 2004 to 2009 didn’t meet hiring goals.

At Suzlon Rotor Corp., their employee numbers fell from 500 in 2006 to 30 today. It is scheduled to receive the $297,000 property tax reduction because it met its JOBZ goal of 23 new jobs. Former employees of the company are frustrated because they believe a job goal so low doesn’t warrant such a large subsidy.

Jason Bush and his wife were both laid off from Suzlon in December. “What I don’t think was very good is the number they are required to maintain – 23 jobs – seriously,” says Bush. “McDonalds employs more people than that.”—Nancy Knoche