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Tuesday, July 19, 2011

Subsidy Transparency Only Works if Citizens Make Governments Comply

Minnesota is the home to the first statewide law mandating subsidy transparency, way back in 1995 ( Among other things, the law provided that state and local subsidy programs had to create job creation and wage level requirements, though it did not specify what they had to be.

The law made it possible to analyze some aspects of Minnesota economic development, including wage performance, subsidies and sprawl, and subsidized relocations within the state (

However, a new study by the St. Cloud Times (July 17) shows a troubling unevenness in cities' compliance with the law's reporting requirements, a full 15 years after it was first adopted. While some programs, like the state's Jobs Opportunity Building Zone (JOBZ) program, generally make it easy to see whether job creation and wage commitments have been met, some cities do a bad job reporting on whether local subsidy programs do the same.

For example, the article says the city of St. Cloud (northwest of the Twin Cities) has at least seven tax increment financing (TIF) projects since 1995 that did not establish job and wage standards as required by the 1995 law. By contrast, nearby St. Joseph  and Waite Park did attach such standards to their TIFs. Sauk Rapids, population 12,773 (2010 census), has adopted 22 subsidies (mostly TIF) since 1995, yet did not respond to the newspaper's request for job and wage information with data it should have at its fingertips.

This variation at the local level is important because in Minnesota because, according to Good Jobs First, local subsidies far exceed state subsidies, with $333 million in TIF provided in 2009.

The point, then, is that while transparency is the #1 precondition for subsidy reform, citizens have to keep on their toes to make sure transparency required by law actually exists in practice.

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