Caledonia Argus

JOBZ businesses must pay for tax benefits

Posted: 3/16/04

By Shannon McKinney
Argus News Reporter

Tax breaks given to businesses for the JOBZ program need to be reflected in how much they pay future employees, said commissioners at the county board meeting on Tuesday, March 9.

The board approved requiring that new businesses provide at least one job that pays $9.73 per hour for every $20,000 in tax benefit that they receive. This does not apply to businesses already here that are expanding.

The boardís decision still needs to go through a public hearing before it becomes mandatory. There may be a joint public hearing with other cities on the matter.

The board made the motion during a visit from Joyce Iverson, community development coordinator for Southeastern Minnesota Development Corporation. She provided board members with an example of material that they will be giving applicants for JOBZ (Job Opportunity Building Zones).

JOBZ was introduced by Governor Tim Pawlenty in December 2003, to allow business to move into an area and operate in an environment that is nearly free of state and local taxes.

Depending on the size of the business, the cost savings during a 12 year period could be upward of $1 million dollars.

However, the state has suggested that businesses pay a minimum wage that is 110 percent of the state poverty level for a family of four for 2003, which is $20,000 per year or $9.73 per hour.

Commissioners acted on Iversonís suggestion that one job be created per $20,000 of projected savings from the tax benefit from JOBZ. For example if the company benefited $100,000 annually in tax benefits, then five jobs would be created at the $9.73 rate.

Commissioner Ann Thompson said, ìYouíve got to make it up someplace with all the tax breaks.î

The business would also have to have the projected number of jobs in place within two years of being established.

Thompson had questions about application fees.

Iverson said that there might be a $25 loan application fee and a minimum deposit of $500 for expenses related to putting together an agreement and dealing with the cost of attorneys. ìIt could be more,î she said.

All JOBZ applications would require a public hearing with the cities.

Referring to Iversonís suggestion, Dave Corcoran said, ìYouíre basically talking about lowering the job pay?î

ìIím just stating that there be one job per business with a reasonable amount of benefit,î responded Iverson.

ìWho polices that?î said Kelleher.

ìThereís an annual reporting to the DEED (Department of Employment and Economic Development) that follows the subsidy law,î said Iverson.

Referring to the complexity of getting the JOBZ program up and running, Commissioner Kevin Kelleher said, ìThis is political football. Itís a bureaucratic nightmare. Itís something so someone can hold this up and say, ëI did thisí even though no one can do it.î

He continued, ìWe put this out like weíre going to be building jobs, but were building a bureaucratic nightmare.î

Commissioner Larry Graf said, ìIt would be nice if these smaller towns had nice livable paying jobs.

Commissioners were in favor of higher paying jobs.

Kelleher said, ìWe donít want a company that comes in with a low wage; $9.73 is not asking a lot. If they donít want to pay that, then they can go someplace else and give someone else the problems.î

Top of Page