Brice Wallace
While a state agency is boasting it had a “historic and prosperous year” during the most recent fiscal year, most of its incentivized economic development project figures were substantially off from the record-setting prior year.
A recent news release from the Governor’s Office of Economic Opportunity (Go Utah) emphasized the “exponential” increase in capital spending on the 16 projects it awarded incentives to during the July-through-June fiscal year. But it mostly failed to put the other numbers into context with those from the 2022 fiscal year, during which 25 companies received incentives.
Projects receiving tax credit incentives from Go Utah are expected to result in nearly $12.4 billion in capital expenditure over the next few years, up from $1.97 billion in spending expected from projects awarded incentives during fiscal 2022. The 2023 figure was boosted by an $11 billion Texas Instruments Inc. semiconductor wafer fabrication plant project in Lehi, the largest economic investment in Utah history.
Go Utah statistics also show that capital spending in rural Utah from fiscal 2023 projects is expected to reach nearly $1.26 billion, just a little short of the prior year’s $1.27 billion.
Go Utah administers the Economic Development Tax Increment Financing (EDTIF) tax credit program and its rural counterpart, known as REDTIF.
“This has been a historic and prosperous year for Utah’s economic growth,” Ryan Starks, Goi Utah’s executive director, said in the recent news release. “We met new milestones, including the largest economic investment in Utah history with the expansion of Texas Instruments. The EDTIF and REDTIF tax incentive programs continue to attract investments from companies representing a variety of industries, and I want to express thanks to our team for their collective efforts.”
The fiscal 2023 incentivized projects are expected to collectively create 3,630 new jobs (including 1,380 in rural Utah), generate more than $574.6 million in new state tax revenue, and provide more than $4 billion in new wages over the next 20 years.
The Texas Instruments project boosted all of those figures, to the tune of 800 jobs, $111.45 million in new state taxes and wages of about $2.44 billion over two decades.
But compared to several prior fiscal years, the FY23 figures fall short. Incentivized projects in FY22 are expected to create a record 20,478 jobs (including 8,972 in rural Utah). Projects awarded incentives in FY21 are expected to create 8,841 jobs (2,474 in rural Utah). The total figures were 14,364 (1,823 in rural Utah) for fiscal 2020; 6,121 in FY19; and 7,182 in FY2018.
Capital expenditures in recent years include $464.3 million in FY21, $1.13 billion in FY20 and about $990 million in FY19.
State tax revenue from incentivized projects in FY23 totaled $574.6 million, including $417 million in rural Utah projects. The total was $941 million in FY22, including $572 million in rural Utah. FY21 projects are projected to generate $341.3 million ($116.7 million in rural Utah, while FY20 projects figures are $591 million total and $95.5 million in rural Utah.
Total project wages of $4 billion (including $897.7 million in rural Utah) in FY23 fall short of figures in four of the five prior fiscal years: $12.7 billion ($5.27 billion in rural Utah) in FY22, $5.5 billion ($1.97 billion in rural Utah) in FY21, $9.73 billion ($1.1 billion in rural Utah) in FY20, and $5.2 billion in 2018. The figure was $3.2 billion in FY19.
Incentivized projects from the most recent fiscal year are expected to pay 74 percent above the average county wage for rural projects and 67 percent above the average in urban areas.
Daniel Royal, Go Utah’s director of business incentives, noted at the Go Utah board’s June meeting that fiscal 2022 was “a bit of an outlier” with several large projects. Four companies that fiscal year had projects of more than 3,000 jobs and one had over 4,000. In fiscal 2023, two companies had more than 800 jobs each: Texas Instruments and Morgan Stanley.
“Our state continues to do a phenomenal job of retaining and recruiting companies that bring more high-paying jobs to Utah and continue to diversify our economy,” Carine Clark, chair of the Go Utah board, said in the news release. “This is a direct result of our combined efforts that result in strategic economic plans.”
Go Utah’s recruitment and expansion partner, the Economic Development Corporation of Utah, likewise saw some of its fiscal-year figures fall short of the fiscal 2022 records and short of its internal goals.
At the June Go Utah board meeting, EDCUtah still had a few weeks left in its fiscal year, but it reported that it had so far reached 4,187 created or retained jobs, only 35 percent of its 12,000 goal for fiscal 2023. It had sought 35 project “wins” but had only 24. It topped its goal of 2.5 million square feet used in the projects, getting 2.6 million. The capital spending goal was $1.5 billion but reached $12 billion, with $11 billion from the Texas Instruments project.
For comparison, 37 EDCUtah projects in fiscal 2022 are expected to create or retain 21,600 jobs, result in $2.2 billion in capital spending, and use 3.5 million square feet.
“We’re proud of the collaborative efforts that have helped create and sustain high-paying jobs for Utahns,” Scott Cuthbertson, EDCUtah’s president and CEO, said in the release. “The companies choosing to invest in Utah are leaders in their respective industries and good corporate citizens. They will have an immense impact on the prosperity of our communities for generations to come.”
Among project win information provided by EDCUtah during the June meeting, eight projects involved companies expanding into Utah, 12 were expansions by Utah companies, three were relocations into the state and one was a company expanding elsewhere in the state.
Both Royal and Erin Farr, EDCUtah’s vice president of business development, said trends are showing higher capital spending figures but smaller job-creation numbers because of job automation. Farr added that companies are taking longer to make expansion decisions, hurting both the “wins” and job-creation numbers.
Royal said the average number of jobs per project likely will continue to shrink in the future, mostly because of companies’ investments in technology and automation. But that reduction likely will be offset by higher average capital spending on projects, he said.
Go Utah and EDCUtah numbers never match exactly because not all of EDCUtah projects go through the state incentive process. At the June meeting, EDCUtah said 3,143 jobs were tied to its projects that were awarded state EDTIFs while 1,044 jobs were not tied to that incentive program.
Created by the Legislature in 2005, the EDTIF program provides a post-performance tax credit that offers companies a reduction in their marginal tax rates, up to 30 percent of new state tax revenues during a defined period, typically five to 10 years. The program is aimed at projects creating high-wage jobs.
The tax credit is available to Utah companies expanding and other businesses relocating or establishing additional operations in Utah. Since its inception, about two-thirds of the program’s tax credits have gone to Utah-based companies to help them expand and create more jobs for Utahns.