A sudden spate of misinformation about Colorado’s economic development activities in the Referendums C and D campaign deserves a response.
How about this? The Colorado Economic Development Commission is entrusted with less than $1 million a year from the Colorado’s general fund for a host of projects statewide. The only reason we have been able to provide broad job-creation incentives for the past few years is because of a federal grant. These funds came to each state as an economic recovery tool after the 2001 national recession. Gov. Bill Owens used this grant for three major efforts – to fund incentives for quality job creation, provide job training and market Colorado to attract tourists, the latter sorely needed in the wake of Sept. 11, fires, drought and intense competition from other states.
Job-creation incentives are possible for any existing Colorado company, or any company considering relocation or expansion to Colorado, if they meet certain criteria. The commission reviews applications for job-creation incentive awards that are brought to it by local communities. The commission bases the amount of an award on the number of jobs proposed to be created, the average salary level proposed to be paid, the economic need of the area where the proposed facility would be located and economic benefits such as the level of capital investment.
The Office of Economic Development uses an economic impact model to analyze proposals in order to ensure that there will be a positive return to the state within a reasonable time period.
It is important to note that funds are not released to a business until after the proposed jobs have been created and the company has documented that the average salary meets the commitment. For example, the commission voted to extend an incentive to Red Robin for the expansion of the company’s headquarters, not the relocation of it within Colorado. The company has yet to be paid any incentive dollars and will not until it fulfills its contract by creating high-wage new jobs.
Because new companies typically grow over time, funds are usually disbursed annually based on the number of jobs actually created each year. Companies are required to maintain the jobs, generally for at least five years.
In the event a company relocates outside the state after incentive funds have been received, the contract provides that they must repay the commission.
Soon the federal dollars in the incentives pool will be gone. But before they pop the champagne corks in Texas and New Mexico (states that dole out huge incentives that, unlike Colorado’s, are not performance-based), we have the opportunity to come up with a better system. Our office has championed a job-creation incentive that would be universally available as part of Colorado’s tax structure if companies create net new jobs at higher-than-average salaries.
Colorado has a fair, common-sense, extremely modest approach to incentives in a world where public dollars are thrown around like confetti. Combined with a business-friendly environment, we have managed to win a number of economic development contests even when faced with heavy competition.
The facts are simple. If we are not at the table, we lose jobs. We provide incentives to companies for job creation because we are in a fierce competition with other states and countries. The jobs that are created pay a return to the state greater than the cost of the incentives. The Office of Economic Development and International Trade is one of very few that generates more income to the state than we cost the state.
So the next time you hear somebody call what we do corporate welfare or waste, hand them some facts. Better yet, talk to someone who landed a job at one of the companies we supported and ask them if it was worth it.
Brian Vogt is director of the Colorado Office of Economic Development and International Trade.
