The Free Press
Minnesota business should find a lot to like in Gov. Mark Dayton's plan to shore up and bolster fading economic development programs.
Job seekers should like it too.
Dayton is proposing expanding the Minnesota Investment Fund from about $3 million to $15 million annually. This fund is used to provide loans to business in Minnesota or locating in Minnesota mostly for capital expenditures. The program has been around for 30 years and has over that time enjoyed bipartisan support. In the past few years, however, funding has been cut and ranged from $3 million to $7.5 million. There is currently no money in the fund.
The Minnesota Investment program is a partnership between the state and municipalities. Applicants must go through cities where they will locate and cities get interest from the loans to replenish their own economic development funds.
Companies who qualify must meet certain wage and employment objectives and these are tracked by the state and local governments.
Dayton has also proposed annual funding of $12.5 million for a new Minnesota Job Creation Fund that would be a grant program for companies who add jobs to the current workforce. Companies and the state would sign a contract detailing new jobs and wage levels. When the company achieved the performance measures, they would be awarded a grant not to exceed $1 million.
The job creation fund is designed to eventually replace the JOBZ program Minnesota has long been using to mixed success. In fact, an audit some years ago showed that program to have a very high cost per job created.
The JOBZ program is currently budgeted at $45 million a year.
Government subsidies to business should, of course, not be the first solution to business growth, but a supplement to other tax policies that keep Minnesota competitive with other states.
While increasing the loan fund from zero to $30 million over two years, we have to consider the competition. Texas has a similar fund with $200 million and Michigan has a $50 million fund.
A version of the governor's plan passed the House earlier this week and garnered at least two Republican votes including former Jobs and Economic Development Committee Chair Bob Gunther of Fairmont.
Outstate cities have also put forward a plan to expand or modify the current JOBZ program to target benefits to economic development needs of regional centers and rural Minnesota. Some of those ideas are worth considering in a final economic development compromise bill.
But for now, it looks like there will be more investment in something that Republicans and Democrats say they want: more jobs.