OGDEN — Despite a disruptive, unpredictable end to its fiscal year, the Utah Governor's Office of Economic Development says its tax credit program is on track to create a record number of jobs in 2020.
Tony Young, media relations manager for GOED, said the agency's Tax Increment Financing program is projected to create 13,364 new jobs from contracts signed with companies during Fiscal Year 2020, which is scheduled to end in July.
Young said 21 companies participated in the EDTIF program over the past year and in addition to the jobs, the contracts are collectively projected to create $1.13 billion in capital investment, about $591 million in new state revenue and $9.7 billion in new state wages. Young said the jobs projection is the highest it's ever been in the 15 year history of the program.
The numbers aren't final because companies are typically given five to 10 years to meet employment targets specified in contracts with the state. But Young said the projections are encouraging, especially considering the economic uncertainty created by the COVID-19 pandemic during the past four months.
"In the middle of a pandemic, we want to let Utah know that we are still trying to create jobs," Young said.
The state's EDTIF program is a post-performance tax credit that offers companies the chance to earn back up to 30% of their Utah sales, corporate and withholding taxes, so long as certain performance milestones are reached. The program is available to Utah companies expanding and other companies relocating or building additional operations in the state.
Young said the program has most often been used by Utah-based companies. Since its inception in 2005, about 66% of the program’s tax credits have gone to Beehive State companies.
The program is geared toward higher paying jobs and usually requires companies to pay at least 110% of the average county wage where they are located.
Young said that, by design, the program has a ripple effect, creating additional jobs that support the corporate expansions.
Several Northern Utah businesses have taken advantage of the program.
Amer Sports Winter and Outdoor Company expanded its operations in Ogden under the program and will add up to 265 jobs through 2028. Oatly Inc., a food manufacturing company that develops oat-based drinks and foods, recently opened a new factory at Boyer Business Depot Ogden with help from the program, planning to add up to 50 jobs by 2026. Aerospace and Defense giant Northrop Grumman is expanding operations in Weber County, with a plan to add up to 2,250 jobs and $380 million in capital investment over the next two decades. Proctor and Gamble also inked a deal with the EDTIF program in 2020 and has pledged to expand its Box Elder County production facility and add 221 news jobs over the next 20 years.
GOED Executive Director Val Hale said the coronavirus has "far-reaching economic consequences," but he hopes the TIF program will continue to attract jobs to the state as the fiscal year calendar flips to 2021.
According to a 2019 report from the Utah Foundation, state and local tax incentives are often seen as controversial. Critics view them as public subsidies that distort true economic growth and cause local governments to (at least for a time) forgo tax revenue. Proponents see certain tax credits as a necessary tool to spur development when the private sector can't.
The nonpartisan, nonprofit public policy research firm says post-performance tax incentives carry less risk for the governments doling them out.
"Structuring incentives in a post-performance fashion allows local governments to ensure that they get the promised benefit before paying out any financial incentive," the Utah Foundation report says. "It also limits the liability of local governments, because if an awardee fails to meet its thresholds, the local government does not have to provide the financial incentive."