Lawmakers seek to grow rural economies

Brice Wallace 

One of Gov. Spencer Cox’s priorities has been to boost economic opportunity in rural Utah. Now the legislative branch is doing its part to make it happen.

A legislative interim committee recently advanced to the 2022 general session bills that would shift the priorities of the state tax credit incentive program toward rural Utah counties, and allow broader use of incentives for film and TV productions in rural Utah. Another committee moved to end a short-lived program aimed at rural Utah that economic development officials acknowledge has not been successful.

The Economic Development and Workforce Services Interim Committee backed the changes to the state’s main business recruitment tool, economic development tax increment financing (EDTIF) incentives, which provide tax credits for companies whose projects create high-paying jobs or have large capital expenditures. The credits are a percentage of the new state tax revenues the projects generate, received only if companies meet their obligations.

“This will be the largest change to our incentives process and our incentives programs here in the state of Utah, perhaps since its inception in 2005,” Ben Hart, deputy director of the Governor’s Office of Economic Opportunity (Go Utah), told the committee.

“At the end of the day, what we’re trying to do is to really narrow along the Wasatch Front who can get an incentive. But in rural Utah, we’re actually still putting our foot on the pedal, we’re still more aggressive where it’s most needed.”

The bill narrows the scope of projects eligible for state tax credits to those in targeted industries identified by the new Unified Economic Opportunity Commission or otherwise approved by the commission, projects in rural counties, and projects that that create remote work opportunities. It also calls for Go Utah to conduct economic impact studies to determine whether a company meets eligibility requirements for a credit.

The bill also would have the Unified Economic Opportunity Commission identify which industries to target for economic development in the state. That has been handled by Go Utah under its previous name of the Governor’s Office of Economic Development (GOED). It identified aerospace and defense, energy, financial services, life sciences, outdoor products and recreation, and software and IT as targeted “industry clusters.”

Sen. Ann Millner, R-Ogden, said “incredible work” had gone into the creation of the bill.

“And as someone who has been working on this issue for a long time, really being able to finally get to a point that we say, ‘Here’s where we’re trying to go, here’s how we align our incentive program with it, here’s how we make sure we take care of urban and rural and do what’s right for the state at this point in time,’ I think is really important.”

“It is a massive undertaking here and really a great bill,” added committee co-chair Rep. Stephen Handy, R-Layton.

The committee also advanced a bill that exempts rural TV and film productions from total incentive limits that Go Utah faces each fiscal year. The film incentive program has a cap of nearly $8.4 million for the current fiscal year and nearly $6.8 million for subsequent years.

“This will help rural Utah, it will help expand the infrastructure for Utah filmmakers, and it will help promote Utah across the nation,” Jeff Johnson, president of the Motion Picture of Association of Utah, told the committee.

Meanwhile, the Revenue and Taxation Interim Committee voted to end the Targeted Business Tax Credit program, created in 2016 to grow rural businesses. Applicants compete for a total of $300,000 in tax credits annually, with a $100,000 tax credit cap for any company, and they receive the credits only if they meet proposed capital expenditure and job-creation benchmarks.

But the program has not generated the interest nor the results that were expected.

Thirteen companies have been awarded $1.26 million in tax credits, based on projected capital spending of $7.8 million and the creation of 112 jobs. However, only four claims on the credits actually have been made, only $200,000 in credits have been issued, capital spending on those projects has been less than $300,000 and only 26 jobs have been created.

“It’s not like people are coming out of the woodwork saying, ‘Hey, we’ve got to sign up for that program,’” Ryan Starks, managing director of business services at Go Utah, told the committee. “We’re actually doing everything, we’re rattling the chains, going around the state saying, ‘Hey, we have this program,’ and sometimes it’s hard to get people to apply in the first place.”

Companies have found that the Enterprise Zone Tax Credit is a better option because the tax credit application and compliance process is easier.

The legislative committee backed the expiration of the program although still honoring outstanding contracts through their expiration dates. The program likely will be merged into the Rural County Grant program, “and that way, we have fewer tools to work with but more effective tools to really move the needle,” Starks said.