Companies getting extensive tax breaks from the Economic Development Commission provide thousands of jobs and millions in tax revenues, capital expenditures and charitable donations – crucial benefits during today’s tough economy, Economic Development Authority Chief Executive Officer Percival Clouden said in budget hearings Friday.
The EDA oversees a variety of economic development programs, including the EDC, the Industrial Park Development Corporation, the Small Business Development Agency and the Enterprise Zone Commission.
"The critics have argued that we are giving away too much and that beneficiaries contribute little to our economy. They could not be more wrong," Clouden said, defending the agency he heads.
There are 84 companies in the EDC program currently, Clouden said. That is down by 14 from the 98 he reported during budget hearings last year. So far this fiscal year, the EDC has received 18 applications, of which 15 were new, two were for extensions and one was a request to transfer the EDC status, he said. That is up about 20 percent from last year, when it saw 15 applications, of which 11 were new.
The 15 new and two extension applications represent a projected annual payroll of $14.5 million- more than double the $6 million projected for last year. Those companies are expected to invest roughly $36.3 million in the territory over the fiscal year and account for about 223 new jobs for the territory, Clouden said.
Sen. Nereida "Nellie" Rivera-O’Reilly said the tax benefit program generated more than 300 jobs back in its infancy in 1967, questioning whether it had led to much economic progress over the intervening decades.
From 1999 through 2009, EDC beneficiaries paid out $618 million in capital expenditures, Clouden said, an average of about $56 million for each of the 11 years. Over the same time frame, beneficiaries spent $25.6 million, an average of $2.3 million per year. EDC beneficiaries had gross sales amounting to $14.9 billion and paid $1 billion in local taxes – roughly $91 million per year on average.
The EDA is requesting a General Fund appropriation of $4.7 million – nearly unchanged from last year’s allotment. Along with its government funding, EDA anticipates generating $624,000 internally, bringing the total EDA budget to $5.3 million for fiscal year 2013. Of that, $2.4 million is for salaries and wages; $768,000 for benefits and employer contributions to Social Security and Medicare; utilities are expected to consume $229,000 and the catch-all category "other services and charges," $1.8 million.
No votes were taken at the information-gathering hearing of the Senate Finance Committee.