Economic development? Or government waste?
The Legislative Auditor criticizes DEED’s fund for failure to show results.
Just one line from the Legislative Auditor’s recent critical evaluation of the Minnesota Investment Fund (MIF) tells you everything you need to know about the taxpayer-funded program.
“The MIF program’s impacts are unclear because businesses do not have to demonstrate they need the assistance in order to expand,” it said.
Translation: There’s no evidence the state program needs to exist. But that hasn’t stopped the spigot of state subsidies from flowing to Minnesota companies, which banked $51 million from the program between 2014 and 2017. MIF is administered by the Minnesota Department of Employment and Economic Development (DEED) to encourage businesses to invest and create jobs. While businesses receiving state “financial assistance” have added jobs, they aren’t even required to prove they need the public “loans” to increase their workforce in order to get DEED to rubber stamp their applications for free taxpayer money.
Consequently, it’s anyone’s guess as to the effectiveness of a program that appears to be more about doling out dollars than creating economic development.
The report’s executive summary detailed a veritable laundry list of problems:
• DEED has overstated the amount of private investment leveraged by the MIF program, and its public reporting on the outcomes of MIF projects is incomplete.
• DEED allowed some businesses to meet their MIF commitments by counting hiring and expenditures that occurred before they received their MIF award approvals.
• DEED does not use consistent criteria to determine the amount of MIF loans or whether the loans will be forgiven.
• DEED often does not require businesses to pay workers at the wage levels listed in their approved MIF applications.
• A statute requiring MIF businesses to pay workers at least a minimum level of compensation is ambiguously worded.
• Local governments sometimes receive money for local revolving loan funds as an outcome of the program, but these funds’ purposes and value are unclear.
In addition to concluding that DEED be more transparent in its administration of the MIF program, the report recommended that the legislature tighten assurances that MIF funding is necessary for individual projects.
What are the chances lawmakers will follow up on the Legislative Auditor’s recommendations to tighten up the program and demand more transparency in who gets grants and why?
Better yet, why not just zero out a crony capitalism program that delivers little bang for the taxpayers’ buck and even less reason to exist in a free market economy in the first place.