A Dallas-based company asked Shakopee for $2.1 million in assistance to build a $67 million server farm that would create 40 jobs. The Mayo Clinic in Rochester wants the state to fund $500 million worth of infrastructure projects that would support the clinic’s planned $3.5 billion expansion. And then, of course, there are sports teams like the Twins, Vikings and Saints that have all convinced legislators to fund public stadiums.
As these plans attest, major projects aren’t just about finding a business plan that works. They’re also about finding a governmental partner willing to share a portion of the costs in the hopes of creating jobs and economic benefits.
Governments can waive taxes and fees, pay for associated infrastructure costs and earmark increased tax revenue for the project area.
Officials have historically used a “but for” test to determine if the government subsidies are worth it—as in a project couldn’t happen “but for” the extra help. Yet that covers a swathe of gray area.
Is assistance justified simply because a business can find another community willing to pay more? Is the type of assistance requested the kind that a community can easily provide? What kind of jobs should the community expect in return?
Shakopee officials wrestled with questions like these to such an extent that they’re now eyeing a much-reduced $406,000 assistance—a package that, with county tax abatement, would still work out to $12,000 of local government money per job.
Patch wants to know when you think taxpayers should help private projects. Share your thoughts in the comments below.