The Utah State Auditor released an audit of the Governor’s Office of Economic Development’s Corporate Incentive Program Tuesday.
The audit shows that GOED’s efforts to increase the number of quality, high-paying jobs in the state through the use of post-performance tax incentives is not functioning as well as it should. In the report, state auditors say that GOED has gradually reduced the requirements businesses have to meet in order to receive an incentive. They also accuse GOED officials of changing how they measure performance in the middle of a contract to help a company meet their goal and receive an award.
Chis Otto is the Audit Supervisor. He says the level of autonomy the current law gives to GOED officials has led to these inconsistencies.
“GOED can make an award decision from as little as $35 thousand for five years, or as much as $1.6 million dollars for up to 20 years," Otto says. "All of this without qualifying, defining, or weighing applicable factors according to a defined and consistently applied policy.”
But GOED Executive Director Val Hale says they act in complete accordance with the law. He also says the law was written so broadly on purpose.
“It’s sales just like in any other profession," Hale says. "And if we don’t have flexibility and we don’t have the ability to adjust and really close the deal, then it’s not going to be effective, no.”
GOED officials have already committed more than $600 million in tax incentives to businesses since 2006. According to GOED, the rate of return on that money is about $3 gained in revenue for every $1 spent.
The Audit recommends more than 30 changes, several of which ask the legislature to clarify the statute by better defining what GOED officials can and can’t do.
The audit will now go before the legislature’s Business, Economic Development, and Labor Committee.