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Report gives Salt Lake County good marks on tax incentive use

Nationwide frenzy for Amazon HQ2 leads to look at impact of luring firms

FILE - A new Brookings Institution report that looked at local-level impacts of tax incentive programs was borne of the Amazon HQ2 chaos last year. Findings give Utah's largest county high marks, and some suggestions for improvement.
FILE - A new Brookings Institution report that looked at local-level impacts of tax incentive programs was borne of the Amazon HQ2 chaos last year. Findings give Utah's largest county high marks, and some suggestions for improvement.
Ravell Call, Deseret News

SALT LAKE CITY — The unprecedented frenzy ignited last year when Amazon sought a host for its secondary headquarters — with some areas offerings incentives worth billions of dollars — has prompted one think tank to look at the relative effectiveness of tax incentive programs in four U.S. municipalities, including Salt Lake County.

Authors of the Brookings Institution report noted that critics questioned why a company worth over three-quarters of a trillion dollars was seeking a public subsidy, but also highlighted the outsized interest in responding to Amazon's request for proposals was driven, at least in part, by the dearth of opportunities to attract big investments.

Eventually, over 200 cities, states and provinces would submit bids, including Utah, and some hoped to entice the $5 billion investment and 50,000 new jobs with tax incentive proposals that reportedly rose as high as $7 billion.

"The incredible volume of city bids, and the historic size of the incentive packages, reflects not only the scale of the Amazon investment, but the intense pressure that economic development officials in U.S. cities and states are under to deliver economic opportunity in the face of widening socioeconomic disparities," the report reads.

The Brookings report gave Salt Lake County high marks for incentive outcomes across numerous metrics, including effectiveness at supporting business growth in depressed neighborhoods, supporting businesses that boosted export growth and creating the highest average annual salaries for incentivized businesses, over $104,000, among the four study cities.

Salt Lake County Mayor Ben McAdams said the Brookings report reaffirmed both highlights and some weaknesses in the county's work to leverage incentive funding to spur growth.

"The report notes we're doing a good job in attracting high-growth industries and our incentives are targeted in the right places," McAdams said. "But it also shows that we need to do a better job in preparing the workforce for the jobs that are coming here."

A 2016 report from the Economic Policy Institute noted Utah had the lowest socioeconomic gap in the country, and the state's most populous county acquitted itself well in Brookings' comparison to Cincinnati, Indianapolis and San Diego. However, the report did highlight the need for a higher degree of transparency and a more specific effort to direct funding at job training/employment improvement efforts.

Data collected in the report included both state and local-level incentive efforts to attract new companies or to entice local businesses to keep expansions at home versus looking out-of-state. Utah state and local officials say they've stuck to a fiscally conservative approach in utilizing incentive programs driven by tax dollars and have refrained from being dazzled by big corporate brands. They also underscored efforts underway to both elevate incentive transparency and build more inclusion into outcomes.

Brookings notes from 2012-16, the state of Utah and Salt Lake County combined invested over $400 million in incentive programs focused on projects, new business and business expansions in Salt Lake County. Of that, just over $140 million went into post-performance incentives overseen by the Governor's Office of Economic Development and the majority of county funding, about $214 million, was spent via tax increment financing in designated redevelopment areas.

GOED Director Val Hale said while post-performance incentives have been an effective way to boost the state's economic vitality, his agency is increasing its focus on creating more qualified workers to match evolving employer needs.

"As the economy has evolved toward full employment, we've elevated our emphasis on fulfilling critical needs in workforce development," Hale said. "GOED, the Legislature and the Department of Worforce Services are finding ways to solve some of these workforce challenges."

Hale noted new additions to the state's Talent Ready programming, efforts to entice businesses to add job opportunities in rural Utah and a new program, approved in the recent legislative session, that will offer some tuition reimbursement for students with science, technology, engineering or math degrees who stay in-state to work.

Similarly, McAdams threw his support behind last session's HB480, a bill that would have created new opportunities to funnel state economic development dollars to job training/employment improvement programs. While the bill did not make through the legislative process, McAdams believes it will earn support in 2019.

Hale also outlined a new public web portal that GOED will be launching "in the very near future" that will facilitate access to data and information on recipients of state incentive funding, including metrics that detail how well companies are tracking with promised job creation and capital investments.

The track records of both Hale and McAdams have reflected that corporate caché fails to figure into their economic analysis.

Back in 2016, McAdams withheld his support of a proposed new Facebook data center in West Jordan, underscoring that the $240 million in tax breaks the city was offering was out of scale for the estimated 70-100 jobs that would ultimately be created by the investment.

And, in the midst of a continent-wide scrum to assemble incentive packages to impress Amazon executive team late last year, Hale and company stood fast on an approach that values caution over chaos.

"We're never going to be throwing money out in terms of just trying to buy a project," Hale told the Deseret News following the release of the Amazon HQ2 call for proposals last year. "We don't get flashy and our incentives are never the most lucrative. We protect the taxpayer by not paying companies up front."