ST. PAUL - A new statewide economic development program that replaces one strictly aimed at rural Minnesota provides state officials $24 million to lure business expansion by giving tax breaks of $1,000 to $3,000 per job they create.
Gov. Mark Dayton and Commissioner Katie Clark Sieben of the Department of Employment and Economic Development announced the launch of the new program Friday, after lawmakers approved it last year. They said they expect 5,000 new jobs because of the new Job Creation Fund program.
Minnesota and firms from other states may take advantage of the new program if they create at least 10 new jobs in the state and invest at least $500,000 of their own money in a new or expanded facility.
State officials estimate the new program will bring in $450 million in new investment.
The money will flow to businesses through tax breaks, which are provided annually as long as firms maintain the new jobs.
The Job Creation Fund replaces the Job Opportunity Building Zones program that was created by then-Gov. Tim Pawlenty and a group of mostly rural legislators. Pawlenty said rural Minnesota needs the most economic help, so he targeted aid there.
JOBZ provided a break from most state taxes to new and expanding businesses in rural areas.
The new program works throughout the state. However, businesses in rural areas may get tax breaks for seven years, while those in the Twin Cities area are limited to five years.
Dayton used Agco agriculture equipment manufacturer as a success story for targeted economic aid. In the small southwest Minnesota community of Jackson, Agco has become the region’s largest employer and continues to expand. Dayton said JOBZ tax breaks help attract the expansion away from Agco’s home base in Georgia.
To qualify for the new program, each job must pay at least $26,000 a year, Sieben said. Tax rebates given to businesses rise as salaries rise, an attempt to attract more high-paying jobs, she said.
Aid is capped at $1 million a year for each business.
The new job program tax breaks can be used in addition to up to $1 million available in loans and grants to expanding businesses from the Minnesota Investment Fund. Other state programs also may be used to attract business.
“We are still a fraction of what other states offer,” Dayton said.