As state aid flows to big business, 'worth it' questions linger
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Five big businesses scored millions in tax breaks and state aid during the last legislative session.
But what do taxpayers really get for their money?
It's a question lawmakers have struggled for years to answer, from the Northwest Airlines bailout in the early 1990s to the Vikings stadium package last year. Does subsidizing business create more jobs? Or do companies simply use their political clout to get state aid for projects they would have undertaken anyway?
Those aid questions turned testy during the legislative session as the Mayo Clinic sought state aid to build a "destination medical center" in Rochester.
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As lawmakers questioned the scope of Mayo's request, Mayo chief executive Dr. John Noseworthy told reporters that other states would be eager for Mayo to expand there if Minnesota didn't provide a taxpayer subsidy.
It was a veiled threat that didn't sit well with many lawmakers, though the state ultimately agreed to a $457 million package of sales tax exemptions for construction materials, infrastructure and transit aid.
Mayo officials predict the expansion will add up to 15,000 medical positions and 25,000 additional spin-off jobs in southeastern Minnesota.
Minnesota needs the jobs, no doubt. And Mayo is a state institution. But many of these public-business deals never produce the predicted job counts.
A 2011 analysis by the Star Tribune found many of the job promises fell short:
More than 650 job-creation deals were put together from 2004 to 2009 that handed companies state and local tax breaks, low-interest loans, grants or other benefits.
Of those, 125 companies didn't meet their hiring commitments as business stalled, early jobs gains were wiped out by recession or firms failed entirely. At least 46 of the subsidized companies produced no lasting jobs.
So how should the public judge whether a public subsidy to business is worth it? Is it the best way to promote job growth in Minnesota?
The Daily Circuit parses the issue with Senate Taxes Committee members Julianne Ortman, R-Chanhassen, and John Marty, DFL-Roseville.
LEARN MORE ABOUT PUBLIC SUBSIDIES FOR BUSINESS:
•Tax breaks, government aid for five major MN businesses
"Several big companies that plan to expand existing operations or start new ones in Minnesota got a big financial lift from the state's lawmakers in the legislative session that ended this week. The funding will help Rochester and the non-profit Mayo Clinic. But millions in subsidies also are headed to the Mall of America, and three members of the S&P 500 —3M, Baxter International and Emerson Electric." (MPR News)
•Where are the jobs?
"17,300 jobs were created in Minnesota by companies receiving an array of state or local subsidies during the six-year period, while the state's private sector employment declined by 77,200. The results show the limitations of government programs to spur business and jobs, economists say." (Star Tribune)
