Colorado increasingly relies on incentives to boost job growth
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Colorado is offering millions in taxpayer dollars to lure companies to the state as part of an increased reliance on incentives to drive job growth.
Why it matters: The strategy is controversial because some of the tax breaks go to billion-dollar corporations and take money away from schools, public safety and other government services.
State of play: Colorado has offered $1.5 billion in tax credits through its Job Growth Incentive Tax Credit program since its inception in 2009. In return, the awarded companies promised to create about 98,000 jobs, the Colorado Sun reports.
- United Airlines, Zoom, Strive Health, Crusoe Energy and Virta Health are among the billion-dollar companies granted incentives, joining a list with startups like 3D-printed home manufacturer Alquiss and lithium-ion battery maker Amprius Technologies.
By the numbers: The size of the incentives offered in 2023 reached $146 million — the highest in the four years since the pandemic. In return 35 companies offered to create 12,994 jobs.
- The largest total in recent years came in 2019 — Gov. Jared Polis' first year in office — when economic development officials approved $173 million in incentives through income tax breaks.
Yes, but: Just 5% of tax credits — or $66 million — were claimed through 2021 because companies have 18 months to launch after receiving the credit and eight years to create the promised jobs, the report found. About 20,000 jobs were created.
- In some cases, the companies don't accept the full amount because they picked another state, didn't meet their job goals or posted a tax liability that is less than the award.
What they're saying: The Polis administration touts the program. "In every single way, I believe it's a valuable incentive," Sean Gould, deputy director of financial analysis at the state's Office of Economic Development and International Trade, told the Sun.
- "There was one [economic development] commissioner that said, 'You know, if you're going to invite somebody over to your house, you at least got to offer him a cup of coffee or a glass of water,' and that's sort of what this is."
The other side: "It's long been our opinion that at a minimum, they (incentives) are too expensive relative to the benefits," added Jacob Whiton, a research analyst at Good Jobs First, which tracks incentives.
- In addition, research shows that many incentive programs don't work to convince a company to locate to particular states.
The big picture: Through December 2023, Colorado saw the largest annual increase in new business applications in the nation, according to an Axios analysis of seasonally adjusted Census Bureau data.
- The 21,937 applications amounted to a 115% spike, well above the national average of 7%.
Between the lines: The increase in new business filings is a result of the state temporarily lowering the cost of filing from $50 to $1 through mid-2023.
- The program cost the state $8.4 million in lost revenue.