End or overhaul JOBZ

Gov. Tim Pawlenty’s job program has been ineffective and lacking in oversight.

The 2008 Minnesota legislative session begins today. Gov. Tim Pawlenty and his administration want lawmakers to extend Pawlenty’s 2003 Job Opportunity Building Zones program sometime this session. This past Friday, however, the Office of the Legislative Auditor reported the program has been, overall, ineffective and lacking in oversight.

Implemented in 2004, JOBZ offers tax reductions to businesses that start up, expand or relocate in specified zones outside the seven-county metro area. The program is intended to not just encourage job security and growth, but to also maintain the working class way of life many Minnesotans are losing as employers and industries have, in recent years, moved closer to metropolitan areas, gone overseas or simply gone out of business.

The auditor said the state Department of Employment and Economic Development, which is responsible for JOBZ oversight, has failed to focus on Minnesota’s neediest areas, where the impact of JOBZ should be made, and has even overstated the program’s actual effect in the past three years. In one case, DEED double-counted some jobs.

Prior to the JOBZ program, northern Minnesota had the highest unemployment rate in the state. According to the auditor’s report, however, the northern Minnesota region “has benefited less from JOBZ than other parts of Minnesota.” JOBZ has even subsidized new companies that compete with already-existing Minnesota businesses – spreading the customer base too thin.

From 2004 to 2006, some 350 businesses were relieved of $46 million in taxes through the JOBZ program – averaging $75,000 a year in tax breaks per company. DEED reported JOBZ created 5,500 new full time jobs and kept 4,500 positions in state. Those figures, however, should be 20 percent less, according to the auditor, as DEED misrepresented the actual totals. Considering the state’s recent economic downturn and growing need for jobs, these numbers are unimpressive.

JOBZ must either be ended or overhauled this legislative session. Instead of jobs being created and sustained, business owners are largely only seeing the benefit as they have received large tax cuts at the expense of all Minnesotans.