FARGO - North Dakota trails the nation when it comes to policies that monitor and enforce terms of taxpayer subsidies aimed at boosting job creation and other public benefits, a report released Wednesday shows.
Overall, states do a poor job of documenting and publicizing whether companies that receive subsidies keep their promises and many states have weak penalties for addressing noncompliance, according to the study released by Good Jobs First, a nonprofit, nonpartisan research center based in Washington.
"It isn't enough for states to have good job creation and other performance requirements on paper in their subsidy programs," said Greg LeRoy, executive director of Good Jobs First. "They must enforce those requirements diligently and consistently."
Under the study's scoring system, North Dakota received a 30 out of a possible 100, which placed it 49th among the states and the District of Columbia.
Minnesota scored a 49, the average for all states, ranking it 23rd in the nation.
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Minnesota was tied for 23rd with four other states: Indiana, Mississippi, Ohio and Utah.
The report gave Minnesota a C- grade and North Dakota a D+
No state received an A or an F.
By one of the report's measuring sticks, North Dakota's Renaissance Zone program received 20 points out of a possible 100.
Listed shortcomings include the fact the program has no requirement that subsidy recipients report performance outcomes and the program requires no online disclosure of companies that are penalized for not meeting requirements.
Fargo's Renaissance Zone provides income and property tax breaks.
The city has seen more than $100 million in new investment downtown since the zone was instituted about 10 years ago, said Jim Gilmour, Fargo's director of planning and development.
He said the city has also seen the value of non-Renaissance Zone properties increase by more than
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$100 million over the same period.
North Dakota Commerce Commissioner Al Anderson, said he had not seen the report, nor was he familiar with the organization that issued it.
He said it is difficult for him to accept the report's critical view of North Dakota's approach to economic development, given that the state leads the nation in positive economic benchmarks.
"Shoot," Anderson said. "We've got the lowest unemployment. We've got 20,000 jobs open.
"For the last decade," he said, "we've added about 50,000 new jobs while the nation has lost jobs. I'm not exactly sure what they're looking at, but the outcomes we're seeing don't fit with that (report).
"We're very conservative," Anderson added. "We hold people accountable. We're not just providing free dollars out there. We have high expectations."
Wednesday's report found an ally in Dustin Gawrylow, executive director of the North Dakota Taxpayers Association.
"Economic development programs in this state over the last 10 years have been designed in a way that the people who push those programs don't really want to know what the actual results are," Gawrylow said.
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"We've found that when tax exemptions are given, there is no way to find out how much those tax exemptions were worth because company tax returns are confidential," he said.
While Gawrylow acknowledged North Dakota may not be hurting for revenue these days, he maintained that subsidy programs are inherently unfair.
"Anyone who promotes good tax policy prefers to create reductions for everybody, so everybody gets the same deal," he said.
On the local level, he said, when one property owner gets a break, "other local taxpayers have to pick that up."
Nationwide, the report looked at what it considered the most significant subsidy programs in the country - 238 in all.
All told, the programs cost taxpayers more than $11 billion a year, the report stated.
Highest scores and lowest scores
A report released Wednesday ranked the 50 states and the District of Columbia based on their policies for holding companies accountable for economic development subsidies, especially in the area of job creation.
The states with the highest scores - a score of 100 being the best possible - were:
1. Vermont, 79
2. North Carolina, 76
3. Nevada, 74
Areas of the country with the lowest scores were:
49. North Dakota, 30
50. Alaska, 19
51. District of Columbia, 4
- Dave Olson
Readers can reach Forum reporter Dave Olson at (701) 241-5555
