This year 11 states have proposed rural jobs bills and Utah Republican Gov. Gary Herbert signed one into law last week, Fifield writes. "Three firms—Advantage Capital Partners, Enhanced Capital and Stonehenge Capital—have led the lobbying for the programs and have been the main participants in several states. The laws, through which states have awarded billions in tax credits, are generally structured in such a way that these and other firms that participate can profit from the deals even if the businesses they fund never create another job." (Stateline graphic: Rural jobs bills)
"Under the new rural jobs bills—being considered in Arizona, Georgia, Kansas, Kentucky, Massachusetts, Minnesota, Missouri, New York, South Carolina and Washington state—investments would be made in small, rural businesses," Fifield writes. "The idea behind the programs is that they will generate economic activity that exceeds the cost of the tax credit. Unlike many other economic development programs, in which the state directs the flow of money, these programs rely on private firms or nonprofits—often investment firms or their affiliates—to act as brokers, directing the investments and loans made under the program."
State reports from Alabama, Colorado, Missouri and New York found that programs failed to create as many jobs or as much state revenue as promised and recommended they be shut down, Fifield writes. Only one state, Maine, "has concluded that the economic benefits of a program outweighed its costs." That study found "the state’s New Markets program would generate millions more in tax revenue than the state offered in tax credits. But some analysts cast doubt on its conclusions, arguing that the authors used methods for counting jobs, backed by the investment firms, that overestimate the number of jobs directly linked to the tax-credit program."