Auditors: Not many problems in the program that incentivizes businesses

By Brice Wallace

A recent audit of the state’s major business recruitment and expansion incentive program revealed only minor issues.

At a recent meeting of the Governor’s Office of Economic Development, representatives of Tanner LLC indicated that between July 2014 and June 2016, the Economic Development Tax Increment Financing (EDTIF) program had only a couple of calculation or documentation errors, such as incentive applications without company signatures. They were found during Tanner’s review of 60 randomly selected incentive disbursements from among 113 that occurred during that period. The audits are conducted every three years.

{mprestriction ids="1,3"}The review also noted some inconsistent calculations and language in GOED annual reports, which was attributed to personnel turnover on the GOED compliance team.

Still, from a dollar standpoint, the problems resulted in only a $7,000 overpayment to an incentivized company.

Board member Christopher Conabee compared that figure to a program that, during that period, had incentives leading to $194 million in direct tax money to the state.

“This is the third audit we’ve looked at that has found nothing, other than an overpayment of $7,000 which we recognize, in three audits over the last five to six years,” he said. He commended the staff as it “continues to be in a larger and larger microscope with people looking at what you’re doing. And it seems like every time I turn around, you keep passing with flying colors.”

The EDTIF tax credit is a post-performance, refundable tax credit rebate for up to 30 percent of new state revenues over the life of the project, which is typically five to 10 years. It is available to companies seeking relocation to or expansion in Utah. Companies must be in a targeted industry — no retail business operations — and create jobs paying at least 10 percent above the county average wage.

Conabee said GOED’s staff does “a phenomenal job” of being stewards of taxpayer dollars, protecting the proprietary information of applicant companies, and “having enough information to satisfy anyone who wants to come look.”

Reed Chase, partner at Tanner, described some of the issues uncovered through the audit as “housekeeping” problems.

“As far as whether or not incentives are being issued that are not in accordance with state law, we haven’t found anything like that. … Certainly, GOED isn’t pulling jobs numbers out of the air or adding factors or multiples or doing anything like that.”

Board chairman Jerry Oldroyd also said the GOED employees have done a phenomenal job and that GOED continues to look at its processes and contract provisions for possible improvements.

“There have been no real, significant problems,” he said. “This group has done a remarkable job, and everybody needs to understand that.”

Mel Lavitt, chairman of the board’s incentives committee, said GOED is “doing a fabulous job” and has been “a huge part of what I call the ‘Utah miracle.’”

Val Hale, GOED’s executive director, agreed. “When you look at all the transactions that have happened, all the things we’ve done, our team has really done a great job,” Hale said, “and I think the taxpayers can feel good about what they’ve gotten that way.”{/mprestriction}