Post series confirms need to review enterprise zone program
We have been saying for several years that Colorado's enterprise zone program has not been effective at promoting economic growth.
In 2009, we released a review of research that showed enterprise zone tax credits resulted in minimal long-term investment and few, if any, jobs – the primary objectives when the program was established in 1987.
When jobs were created, they came at a very high cost, and many of the investments that qualified for the credits would likely have happened anyway, without the incentives.
We urged state officials to review the effectiveness of the tax incentives and said that if they were not meeting public policy goals, they should be reformed, revised or repealed.
This week, The Denver Post has published a three-part series on Colorado's enterprise zone program. The Post's analysis of the program makes it clear that a thorough review of the program is needed, now more than ever. The Post found:
- The program that was created to "spark economic development and job growth in the poorest areas of Colorado now covers 70 percent of the state."
- In 2010, companies filed requests for tax credits totaling $75 million for making capital investments or training workers in enterprise zones. Those companies created 564 jobs -- "a cost of nearly $133,000 per job."
- Since the end of 2004, companies participating in the program cut jobs more than 4,000 times while claiming credits.
- The enterprise zone program was designed to help small- and medium-sized companies, but large companies such as Qwest (now CenturyLink), oil and gas companies and even the Colorado Rockies have been beneficiaries.
Denver City Council member Jeanne Faatz, a former Republican lawmaker who sponsored legislation that created the program, told the Post: I don't believe, at this point, that it's nearly as effective a tool as it was supposed to be. It's just become corporate welfare."
During the 2010 legislative session, as lawmakers considered a bill to cap tax credits within enterprise zones, we said: "At a time when basic programs are being eliminated, revenue that the state loses because of tax exemptions could be used to improve roads and bridges, offset the costs of higher education and maintain funding for P-12 education."
We have made further cuts to P-12 and higher education since we made that statement. We applaud the Post for its rigorous examination of the enterprise zone program, and we urge state lawmakers to apply the same rigor in evaluating the program in 2012.