Targeting incentives

State may tweak program as it reassesses economic development priorities

Colorado economic development officials are looking for ways to let up on the gas pedal when it comes to incentives, which have brought thousands of jobs to the state but also contributed to a population surge now straining roads, housing and other infrastructure, especially along the northern Front Range.

Fiona Arnold, director of the Colorado Office of Economic Development and International Trade, and her staff are working on ways to recalibrate the state’s highly popular Job Growth Incentive Tax Credit (JGITC), which offers qualifying employers a rebate of payroll taxes for new positions they bring to Colorado or retain.

“The commission can be more strategic in funding,” Arnold suggested to the Colorado Economic Development Commission at its monthly meeting Thursday.

Currently, the incentives can kick in for new jobs that at least match or exceed the average wage in a county, regardless of how many jobs that county has already attracted. The commission rarely turns down requests that meet all the criteria.

Tweaks include dialing up incentives for companies that bring in very high-paying jobs, operate in desired industries like advanced manufacturing or high tech, or locate jobs to more distressed areas like Grand Junction or Pueblo.

Changes could also include more flexibility to offer lower awards to marginal prospects or to reject homegrown companies who threaten a move to obtain incentives.

“It decreases the grants to people who we know are going to stay here,” said commissioner Dick Monfort.

Arnold is seeking to make the changes through a board resolution, which likely will come up for a vote next month, in part to retain flexibility if the economy does rapidly deteriorate. Usually, when the public rises up in anger over too much growth in Colorado, recessions aren’t that far behind.

“If there is a recession, within one meeting you could change it back,” she said.

With the state staring down a budget shortfall of between $237 million and $330 million next fiscal year, Arnold also warned that the department’s Strategic Fund may not get its usual $5 million allotment.

The cash fund, now about $17 million, can be used to offer more tailored incentives. But it is mostly held in reserve to compete with deeper-pocketed states, such as Texas, for winning large corporate headquarters.

Those recruitment opportunities aren’t common, but the state needs to be ready when they do come up, said Arnold. She suggested the commission vote to designate $10 million as reserves for recruitment efforts and explore new programs for the remaining $7 million.

One idea might be to create a new small business community designation modeled after the Colorado Creative Districts that would foster entrepreneurial efforts statewide, especially in rural areas, she said.

The commission approved two JGITC awards on Thursday. The first would provide up to $371,771 for a locally advanced manufacturing company if it adds 48 new full-time positions, paying an average wage of $49,604 in Adams County rather sending the work to a competing location on the East Coast.

A Houston energy company also received approval for $8.9 million in incentives if it locates 328 headquarter-type jobs paying an average wage of close to $200,000 a year to the state. The company is still looking for a location.

Any payroll tax rebates depend on a company actually creating and retaining the jobs it lists within an eight-year period.