Accountable USA - Utah

Through the 1990s and early 2000s, Utah’s primary economic development subsidies were issued as cash grants.  During that time, the state approved all economic development funds through legislative appropriations.  This changed under former Gov. Jon Huntsman, who moved Utah to a system based on tax rebates, and later, tax credits.  Economic development subsidies of this variety (tax expenditures) do not require legislative approval via the budgetary process.

The Economic Development Tax Increment Financing (EDTIF) program, enacted in 2005, has been the big driver of increased subsidy spending.  As EDTIF was originally structured, cash rebates came directly from the state general fund.  The explosion of tax rebates had a big impact on the general fund, prompting the state to restructure the program into a tax credit.  As a result, EDTIF credit obligations have grown substantially.  The actual value of tax credits utilized through the EDTIF program in 2011 was just $4.5 million in 2010, but future contractual obligations through the program amount to a staggering $447 million.

Other major subsidy programs in Utah are delivered via the Industrial Assistance Fund, through which the state issues standard grants and “Economic Opportunity” awards.  Utah also administers an Enterprise Zone program through which it issues multiple tax credits. 

One of the biggest beneficiaries of the new emphasis on tax breaks was Procter & Gamble, which in 2007 got an unprecedented $85 million deal to build a manufacturing plant north of Salt Lake City (see below).  The following year Oracle got $16 million in tax credits to locate a new data center in West Jordan (see below). The online merchant eBay has received more than $30 million from the state since 2008. In August 2010 Adobe Systems was offered a $40.2 million tax credit deal for a software development facility in Lehi.

Recipients of some economic development subsidy programs examined by Good Jobs First are disclosed regularly by the Governor’s Office of Economic Development.  The state created an "Incentives Dashboard" in 2013 for the dual purposes of disclosure and advertising its subsidy programs to business.

Key Subsidy Programs

Subsidy Program Recent Annual
Cost
Online Recipient
Disclosure
Recipient Disclosure
Score
Job-Creation/
Job-Quality Score**
Monitoring/
Enforcement Score***

Economic Development Tax Increment Financing

refundable corporate income tax credits worth up to 30% of new state revenues (from sales, corporate income, and employee withholding taxes) over the life of new commercial projects

$12.9 million (FY2013)
43/100
60/100
63/100

Economic Opportunity Fund

a post-performance grant for job creation

unknown
18/100
60/100
60/100

Enterprise Zone Program

geographically based subsidy program that provides multiple types of income tax credits

$12.3 million (FY2013)
0/100
not included
not included

Life Science and Technology Investment Tax Credits

refundable tax credit up to the amount of the new state revenue generated by the project for three consecutive years

unknown
0/100
not included
not included

Motion Picture Incentive Fund

cash rebates of up to 25% of qualified expenditures

$5.1 million (FY2013)
0/100
10/100
40/100

* The score is derived from the Good Jobs First report Show Us the Subsidized Jobs (January 2014).

** The score is derived from the Good Jobs First report Money for Something (December 2011).

*** The score is derived from the Good Jobs First report Money-Back Guarantees for Taxpayers (January 2012).

Major Subsidy Deals

Procter & Gamble (2007)

In 2007 consumer products giant Procter & Gamble convinced Utah officials to provide $85 million in tax breaks for a $300 million manufacturing plant 75 miles north of Salt Lake City in Tremonton. The deal, reached with the Governor’s Office of Economic Development, far exceeded any previous subsidy package in the state. The $85 million was to come from the state in the form of 20-year rebates on corporate income, employee personal income, and sales tax payments. The plant – P&G’s first new U.S. manufacturing facility since the 1970s – was expected to have 300 employees initially and make Bounty, Charmin, and Puffs paper products. The deal was announced six months after a Utah federal court jury imposed $19 million in damages on a prominent Amway distributor in the state for spreading the claim that P&G’s corporate logo symbolizes Satanism. The plant opened in March 2011. (Key sources)

Oracle (2008)

Utah gave Oracle up to $15 million in tax credits to attract the California-based software giant's new data center. The $300 million facility was expected to create only about 100 full-time jobs. The city of West Jordan agreed to divert $11.8 million in property taxes over ten years to pay for infrastructure costs. The project was put on hold in 2009, but construction resumed in 2010. (Key sources)

Walmart in Utah

  • At least 3 Wal-Mart locations have received subsidies worth about $13.7 million in Utah.
  • At least 1 Wal-Mart location in Utah has challenged its property tax assessment.
  • Wal-Mart was found to have more workers than any other employer in the state relying on publicly-funded health insurance. This shows how taxpayers end up subsidizing Wal-Mart’s policy of providing low wages and inadequate benefits.
  • Wal-Mart receives about $2 million a year from a state policy that allows retailers to keep a portion of the sales tax they collect from customers.

For more information, see the Utah page of Wal-Mart Subsidy Watch.