Utah Foundation releases Public Funds, Private Endeavors: A Primer on Local Economic Development Incentives in Utah. It is the first in a series of reports analyzing Utah’s incentive programs at the state and local levels.
In the current legislative session, there are at least five bills that directly deal with how local governments award business incentives. Others may indirectly affect local governments’ ability to do so. This preliminary report provides background on the incentives that local governments can provide to private businesses. It examines the types of incentive tools, sources of funding and analytical processes. It also touches on transparency, the potential for competition between local governments, state-local strategic alignment, and various issues that have arisen with regard to incentives, both in Utah and nationally. The subsequent reports in this series will address local and state incentives in more detail.
Key findings of the report include:
The effectiveness and efficiency of local economic development incentives using tax increment financing depend heavily on local policies and processes for evaluating the appropriateness of such incentives.
While redevelopment agencies are required to publish data on incentives in annual reports, the availability and quality of these reports vary widely, making it difficult to evaluate the prevalence or effectiveness of incentives on a broad basis.
The potential for local governments to engage in unhealthy competition using incentives is a matter of concern both nationally and in Utah. However, several factors may work against such competition among local governments in Utah.
A given economic incentive package can have differing fiscal impacts on different tax-recipient bodies. As a result, the state, counties, cities, school districts and special districts may have differing motivations and strategies when it comes to incentives.
“Economic development incentives represent unique expenditures of public funds, but public funds nonetheless,” said Utah Foundation President Peter Reichard. “As such, they deserve careful oversight from both policymakers and citizens. This report aims to provide the public with a basic understanding of how the incentives work and the potential challenges surrounding them.”
Public Funds, Private Endeavors: A Primer on Local Economic Development Incentives in Utahis available on the Utah Foundation website,www.utahfoundation.org.