It would have been difficult to duplicate under normal circumstances, but adding COVID-19 impacts helped leave the Governor’s Office of Economic Development (GOED) figures for incentivized economic development short of repeating 2020’s record-high numbers.
The GOED board’s 2021 fiscal year ended with its June meeting, and while falling short of the 2020 statistics, most of the numbers topped those of fiscal 2019 and the years prior to that.
Nineteen companies were approved by the GOED board for incentives in the 2021 year, and those companies are projected to create 8,595 new jobs over the next few years. The 21 fiscal 2020 projects were approved based on a projected 13,364 jobs being created. In fiscal 2019, the number of projects was also 19, but the job-creation projection was 6,121.
Another GOED measure is new total wages over the coming years. The 2021 projects are expected to create jobs ultimately paying more than $5.2 billion. That’s down from $9.7 billion in fiscal 2020 but above $3 billion in 2019.
New state tax revenue generated by the projects is expected to reach nearly $330.8 million, down from $591 million in 2020 but up from $207 million in 2019.
The starkest contrast is for capital investment. Fiscal 2021 projects are expected to have “capex” of about $456.3 million, far below both the fiscal 2020 figure of $1.13 billion and fiscal 2019’s $1.09 billion.
The primary incentive used by GOED is the Economic Development Tax Increment Financing (EDTIF), which allows companies to receive tax credits of up to 30 percent of the state taxes they paid over a certain period, up to 20 years. Their contracts with the state are post-performance, meaning they receive the credit only if they meet their job-creation obligations.
Since its inception of the EDTIF program in 2005, roughly two-thirds of approved projects’ tax credits have gone to Utah-based companies to help them expand and add more jobs.
Daniel Royal, GOED’s director of corporate growth and business development, noted that GOED would have matched last year’s project number of 21, had it not been for two projects being delayed from June to July.
Still, he characterized the fiscal 2021 projects as smaller, with fewer jobs per project, with lower capital investment and lower state revenue and new wages.
“A good thing to see, however, is that it’s larger compared to the years before that, so that’s definitely a step in the right direction,” Royal said.
“One thing I have seen recently, as in the past few months, is that those numbers have started to creep back up a little bit,” he said. “The capex and the average jobs per project have started to go back up, so that’s one thing that we’re glad to see, especially in this economy, where things are kind of on fire right now.”
The upswing could get a big boost next month, he said. “We should have quite a busy July board meeting and get our next fiscal year off to a good start, off to a bang,” Royal said.
“I think we have a fat pipe going into next year,” said board chair Carine Clark, “so it’s going to be busy, busy, busy.”
GOED’s economic development partners, the Economic Development Corporation of Utah, will release its fiscal 2021 numbers at the GOED board’s July meeting. Its fiscal year ends at the end of June. EDCUtah’s numbers typically closely match those of GOED, although not exactly — not all of EDCUtah projects go through the state incentive process.
“I would say as far as where the GOED numbers are ending up for the year, I think what we will see next year is that capital-investment-per-project number creep up,” said Michael Flynn EDCUtah’s chief operating officer. “We are seeing the capex numbers per project go up dramatically, and we are seeing the headcount numbers per project shrink as companies move away from human capital and more towards automation and investment in facilities.
“So I do think we’ll see numbers, if these deals continue to progress and go through the incentive process, I think we’ll so those numbers shift even more next year and [we’re] hoping to see some of the office project pipeline come back on the pace it was earlier in the year.”
The 2021 fiscal year numbers will be the last ever for GOED. Legislation passed earlier this year renames GOED as the Governor’s Office of Economic Opportunity — stylized as “GO Utah” — starting in July. HB348 also created an overarching Unified Economic Opportunity Commission, to be chaired by Gov. Spencer Cox and charged with developing a comprehensive statewide economic development strategy for the next decade.
GOED was created in 2005 at the insistence of then-Gov. Jon Huntsman Jr. The Department of Community and Economic Development was split to create GOED and the Department of Community and Culture.
GOED’s June meeting was the first for new members Tanner Ainge, Kira Slawson and Geri Gamber. They succeed departing members Mel Lavitt, Peter Mouskondis and Margaret (Margo) Jacobs.