By Brice Wallace
A recent audit of the state’s main corporate recruitment and job retention incentive program indicates a roughly $90 million return on investment over a three-year period.
The Economic Development Tax Increment Financing (EDTIF) program, overseen by the Governor’s Office of Economic Development (GOED), featured tax credits and cash rebates to 145 companies during fiscal years 2017-19. They totaled $62.1 million, but new state tax revenues from those incentivized projects reached $152.9 million, according to the audit.
The audit statistics were discussed during a recent meeting of the Legislature’s Business, Economic Development and Labor Appropriations Subcommittee. GOED is required to undertake an independent audit of the EDTIF program every three years.
The audit indicated that the return on the incentives investments totaled $49.2 million in fiscal 2017, about $50 million in fiscal 2018 and $53.7 million in fiscal 2019.
EDTIF is used to attract new company operations to Utah or retain existing operations. It provides for a tax credit of up to 30 percent of new state taxes paid by a company for up to 20 years. Companies must create at least 50 jobs that pay at least 10 percent above the county average wage.
All EDTIF incentives are post-performance, meaning a company receives the credit only after it meets its obligations.
The audit, conducted by Salt Lake City-based Tanner, also reviewed 80 of the 145 tax credits during the three-year period to ensure they met ethical, statutory, contractual and procedural requirements. Other than some documentation recommendations, no material exceptions were noted.
“Based on our procedures and observations, the GOED team is diligently complying with ethical, statutory, contractual and procedural requirements of the EDTIF program during the periods that we evaluated,” Reed Chase, audit partner at Tanner, told the legislative committee.