Department of Economic Development

Economic Development Zone Program

Under the economic development zone program, businesses in economically distressed areas called economic development zones are given tax credits and other financial incentives in return for a commitment to create or retain jobs. About 1,100 businesses are certified to participate in the program in 40 economic development zones. The program was created in 1986 and is overseen by the Department of Economic Development. We examined the Department's administration of the program and found that, despite legislative requirements to the contrary, the Department has not taken the actions necessary to determine whether the program is accomplishing its objectives. The Department has neither established a system nor collected the data needed for making this determination. The Department also does not collect data relating to the financial benefits given to businesses participating in the program. As a result, it is not known whether program benefits exceed program costs. In addition, businesses may receive financial benefits from the program without fulfilling their commitment to create or retain jobs. The weaknesses we identify in Department oversight are caused, to some extent, by legal provisions denying the Department access to certain information maintained by the Department of Labor and the Department of Taxation and Finance.

For a complete copy of 95-S-78 click here.
For a copy of the associated follow-up report click here.
For a copy of the 90-day response click here.