WORTHINGTON - The proposed Minnesota House jobs and energy bill includes language that would eliminate an existing economic development program for some southwest Minnesota counties.
The Job Creation Fund, administered by the Minnesota Department of Employment and Economic Development, grants tax credits to businesses that set up shop in the state to create or retain jobs for up to $2 million. The funds are typically given to businesses in manufacturing, distribution, information technology and other professional or technical services.
The omnibus bill would change the program to make it available only to businesses that are in a county in which the average unemployment rate for the prior 12 months is equal to or greater than the state average.
Under this standard, Nobles, Pipestone and Rock counties, among others, would be cut off from the fund, based on their low unemployment rates.
Shane Delaney, communications director with DEED, said the department was not in favor of the proposed change.
“We don’t want Greater Minnesota to be harmed in any way and this proposal in the House, for some of the Greater Minnesota counties, would not be beneficial,” he said.
The fund, initiated in 2014, has been projected to create or retain 4,682 jobs, with 1,672 of those in Greater Minnesota.
The fund has not yet made a large impact in southwest Minnesota, with only a few startups being funded throughout the region. One notable example is Hocking Laboratories, an ag chemical manufacturer that selected Pipestone for its $5.9 million facility, which is estimated to create 36 jobs.
With a large majority of the funding going to operations in the Twin Cities, both Gov. Mark Dayton and Republican legislators want to modify the program to better benefit rural Minnesota.
In limiting the fund to counties with high unemployment rates, the Republican proposal excludes all seven counties in the metro area. However, it would also exclude 24 Greater Minnesota counties.
Dayton’s proposals are much different. It would lower the minimum job creation requirement from 200 jobs to 75 jobs for a business in Greater Minnesota to qualify for a large award of between $500,000 and $1 million.
It would also provide an additional $1,000 per job incentive above current award levels for businesses in Greater Minnesota and businesses owned by people of color, veterans, women, and people with disabilities, as well as lower the minimum job creation and minimum capital investment requirements for such businesses.
“The Governor’s proposals to entice the program for greater Minnesota is definitely a strategy we align with,” Delaney said. “We think business expansion, job creation and retention is vital in Greater Minnesota, especially in border communities.”
The House bill, currently stationed in the Ways and Means Committee, would also provide $5 million a year for two years for the job fund. In 2020 and beyond, the base number would expand to $6.5 million annually.