Just a few months ago, Utah’s top economic development officials expressed concern about whether the slowdown in corporate recruitment was a short-term blip or the start of a long-term trend.
It appears now to have been a blip.
With a surge in recruitment and retention projects in December, both the Governor’s Office of Economic Development (GOED) and the Economic Development Corporation of Utah (EDCUtah) finished the halfway mark of the fiscal year with high numbers of jobs expected to result from their respective projects.
For the last half of the calendar year — the first half of the current fiscal year — GOED-incentivized projects are expected to create 7,112 jobs. That figure was boosted by several projects in December alone that are projected to create 2,933 jobs over the next few years.
The GOED year-to-date project figures also indicate that the recruitment and retention projects should generate $4 billion in wages, $228 million in capital investment and $232 million in new state tax revenue.
“We had a couple of big months here that have brought us to over 7,000 jobs halfway through the year,” Tom Wadsworth, GOED associate managing director, said at the December GOED board meeting. “So, [we’re] really excited about that [and] ahead of where we’ve been historically.”
Regarding the tax revenue figure, “if things keep up the way they look like, we may set a record for this group,” he said.
Capital expenditure was lower than in the prior-year period because local developers — rather than the companies themselves — are spending on building the space that companies then lease. “Nevertheless, there is that capital expenditure in our community,” Wadsworth said.
EDCUtah figures indicate that for the July-through-December period, its projects are expected to create or retain 8,496 jobs. That compares with 10,450 jobs for the entire 2018-19 fiscal year.
“We are well ahead of where we were last year, at now the six-month mark,” Theresa Foxley, EDCUtah’s president and CEO, said in briefing the GOED board.
In the fall, GOED board members wondered aloud if Utah’s lower corporate recruitment figures at the time represented something concerning in the long run and if Utah was part of a national slowdown.
“If you recall, a couple of months ago we talked about a potential slowdown,” Wadsworth told the board in December. But in speaking with site selectors, company representatives and other economic development officials at a recent conference, that slowdown was part of a national trend in the third quarter, “but then it’s picked up quite a bit in the fourth quarter. … We’re excited about that and excited about some projects we have in the future, so we think we’re on pace with where we’ve been historically,” he said.
GOED typically approves 19-20 corporate incentives in a fiscal year, and the current figure of 11 so far puts GOED “a little bit ahead of schedule,” he said.
“Reports of our pipeline health were valid,” Foxley said. “We were validly concerned at the time, in August and September, when things were feeling very soft, but they’ve just come roaring back, and we’re of course very happy to be finishing the year strong.”
Other fiscal-year-to-date figures for EDCUtah are capital investment of $177.9 million, while the 2018-19 fiscal year had $1 billion, and square footage of 1.2 million, compared with 2.5 million for the full prior fiscal year.
Numbers reported by GOED and EDCUtah vary because not all EDCUtah projects come to the GOED board for a financial incentive.
GOED also released a report looking at recruitment and retention projects for the calendar year 2019. Twenty companies were awarded incentives from the state’s Economic Development Tax Increment Financing (EDTIF) tax credit program, up from 16 in 2018. Those 20 companies are expected to create 9,643 jobs, up from 5,062 in the prior calendar year; generate $306.2 million in new state tax revenue, up from $176.6 million; and produce nearly $603 million in capital investment during the next 15 years.
The EDTIF is a post-performance tax rebate of up to 30 percent of new state revenues — Utah sales, corporate and withholding taxes — during a defined period, typically five to 10 years. Since its inception, approximately two-thirds of the program’s tax rebates have gone to Utah-based companies to help them expand and create more jobs for Utahns. The program is designed for companies offering high-wage jobs, paying at least 10 percent above the average county wage.
“Utah’s current unemployment rate is 2.4 percent,” Val Hale, GOED executive director, said in a prepared statement. “The national average is around 3.5 percent. Utah continues to be a leader in job growth and low unemployment. It’s because of programs like the Legislature’s EDTIF post-performance tax rebate program that Utah’s economy continues to outperform other states.”
“Utah is known for the diversity of its economy, and the companies that announced expansions here in 2019 reflect that diversity,” Foxley said. “This year, GOED and EDCUtah worked with tech leaders like Amazon Web Services; fintech leaders like Plaid and Brex; and healthtech leaders like Ancestry, OODA and Castlight Health. Balancing the tech side of our economy were some exciting manufacturing expansions such as Oatley, Tyson Fresh Meat and Intermountain Electronics, and outdoor product companies such as Amer Sports and Ventum. We’re already recognized as having America’s most diverse economy. Diversity delivers resilience and opportunity for Utahns.”