State’s Economic Development Efforts Create Jobs, Raise Questions

The state has invested more than a half-billion dollars in economic development incentives over the last eight years and created thousands of jobs but lacks information on the effectiveness of many programs, an LFC survey has found.

The LFC survey, presented to the committee during its May meeting, found the Main Street, Small Business Development Centers and other programs use best practices, but many programs cannot report on the cost-per-job-created or other accountability measures.

For example, the Main Street Program, accredited by the federal government, reports 1,288 jobs were created from a $2.5 million investment, but, while managers of the Job Training Incentive Program say $22 million in grants between FY07 and FY09 resulted in 4,800 workers receiving training, they cannot say how many jobs were created.

The review notes the state has no statewide economic development plan, and its programs often overlap.

Incentives are not linked to performance, job creation and retention requirements don’t exist and, unlike 23 other states, New Mexico has only one program with “clawback” provisions that require programs to repay the state if a company closes, moves or fails to meet commitments.

Investment agencies reported that equity investments and loan incentives resulted in the creation of more than 6,000 jobs from FY07 to FY09. As of December 31, the state and partner investment companies had committed about $454 million.

The Taxation and Revenue Department reported that companies claimed $110 million in incentive tax credits from FY02 to FY07, mostly for film productions and investments. The companies are not required to report on the number of jobs created and the department says it would need $600,000 to $750,000 a year to analyze the effectiveness of the credits.