Free Market

New Audit Fires Accusations at Governor’s Office of Economic Development

A newly released audit of the Governor’s Office of Economic Development—an institution of which we have often been critical—claims that their primary tactic to lure business into the state entails “questionable incentive awards.”

The audit also alleges corruption within the office in the form of manipulation of data. “GOED regularly reports inaccurately” on certain items, and “provided special treatment for some companies by altering post-performance assessments for companies that failed to meet GOED’s contractual threshold.” Further, the audit alleges that GOED has:

  • used existing company employees to inflate wages of new employees in order to gain corporate incentive awards;
  • used incorrect benchmarks to improperly issue an economic development tax increment financing award;
  • removed low-paying jobs from averages; and
  • handed out incentives to companies that failed to meet the wage criteria under their contracts with the state.

The audit further states that GOED has “misinformed stakeholders, including the public,” and in another instance offered nearly $3 million in tax credits to a pair of companies for which GOED “could not verify actual employment”—one of the required metrics to qualify for the credit.

As the audit states, GOED’s impact is significant:

Though advised by a board of industry professionals, GOED’s executive director has sole authority to authorize incentives with minimal oversight. GOED has committed over $600 million in corporate incentives, which will likely double by 2024 if recent trends continue.

While GOED points to (allegedly manipulated) stories of success to bolster its efforts at incentivizing companies to migrate to and operate within Utah, what is not seen are the unintended consequences of this manipulation in the marketplace, and the financial disadvantage competing companies—including those already within Utah—are forced to bear.

We expect and will be encouraging legislative reform to restrain GOED’s authority, add necessary oversight and accountability, and minimize the state’s ability to violate free enterprise through the artificial and arbitrary incentivizing of a few businesses that have courted GOED’s favor.