Business Subsidies: Accountability and Transparency

How much are we paying to get jobs through subsidies?   That is indeed the big question.  Subsidies include property tax abatements, tax increment financing, JOBZ programs and others.  The information below should give you an idea at least of the process involved in granting subsidies.  Measuring the value or success of a subsidy is another matter that the community needs to address.

“Former DFL Senator Hottinger sponsored Minnesota’s groundbreaking law instituting new standards of transparency and accountability for state and local economic development subsidies. The 1995 law and its subsequent enhancements required that companies who receive public subsidies but fail to reach job creation goals repay the subsidy with interest. The legislation also mandated increased corporate disclosure, wage standards for the jobs created, and public hearings before large subsidies could be granted. The law is credited with recouping millions of dollars in state funds and increasing civic engagement around issues of economic development.”

Below is a link to an excellent video about how Minnesota has addressed issues of accountability and transparency in business subsidies, and to understand the process currently in use in Red Wing and throughout the State.  This video quickly helped me get a better understanding of our current system.

You can get the link to the video here, or download the mp3 podcast.   This link will take you to the Minnesota Dept. of Employment and Economic Development (DEED) page on Business Subsidy Reporting.  Minn. Stat. §116J.94 is the statute on regulating business subsidies.

Kent D. Laugen

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4 Comments

Filed under Accountability, Economic Development, JOBZ, Minnesota, Red Wing, Red Wing City Council, Red Wing Port Authority

4 responses to “Business Subsidies: Accountability and Transparency

  1. sueinmn

    Who’s job is it to provide oversight and possibly claw back some of the subsidy money when companies do not live up to the requirements set forth? Also has a study been done in RW to see just how much we pay in subsidizing jobs? This would be a good research project for the Blue Ribbon team.

  2. Great questions and comments.

  3. Carol Duff

    Adding to Sue,

    We need to examine the balance of the cost to other businesses and city as well as what we gain by the assistance that we give. We also need to look at long term company production and survival.

    We also need to be aware of all the subcommittees. What is being done in a sub-committee out of sight? I still object to the Finance committee work for the city being done outside of public scrutiny. Outside of an investment decision, I see no reason for this. Both the Port and the city have worked together on this committee.

    Along with finance, is the Personnel Committee when it sets policy and pay recommendations for the city council.

    • Carol,
      By the way, who are the members of the City Finance Committee and the City Personnel Committee? Are there sub-committees as well?
      Why should a discussion of an investment decision be out of view? So much work is done at the committee level, for the Port and City,

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