Examine enterprise zones with caution

Meetings that began in Denver this week are reviewing the state’s enterprise zones, which were created with the intention of aiding business and job development in economically vulnerable areas.

The enterprise-zone program — which began in the 1980s — deserves a thorough review and probably some careful reform. but the program itself should not be scrapped or become unnecessarily restrictive. It has helped promote business growth and jobs in many parts of the state. Mesa County has an enterprise zone that covers much of the Grand Valley, from Palisade to Loma.

Companies operating within enterprise zones may be eligible for state tax breaks for capital investments they make and for jobs they create. An analysis by The Denver Post last year found that, while enterprise zones originally covered roughly 30 percent of the state, they now cover more than 70 percent of Colorado.

However, the Post found that, in the past eight years, companies in the state claiming enterprise-zone tax breaks have cut thousands of jobs. Also, in 2010, some 564 jobs were created by companies claiming enterprise-zone status, but those jobs cost almost $133,000 apiece in tax credits.

Obviously, the state shouldn’t be in the business of providing tax credits — meant to create jobs — to companies that are actually cutting jobs. And it needs to be mindful of the cost for each job created.

But enterprise zones and the tax credits that accompnay them can also be valuable tools in attracting new companies to an area such as Mesa County, and in helping existing businesses to grow and create jobs.

One bill introduced in the state Legislature this year would have significantly changed Colorado’s enterprise-zone system and would have set arbitrarily low caps on the amount of tax credits a company operating in an enterprise zone could receive.

But that bill stalled at the Capitol, and a compromise bill was passed instead. It required the director of the Colorado Office of Economic Development to create a 15-member task force to study criteria for enterprise zones and the tax breaks associated with them. That’s the group that began meeting in Denver this week.

It also requires, beginning in 2016, that existing enterprise zones be reviewed every few years to ensure they continue to meet their original purpose.

All that’s fine. But we hope the committee now meeting and state lawmakers will find ways to deal with the problems in the program without effectively gutting its benefits.

Colorado lags well behind many other states when it comes to providing money for economic development. So a program that can offer tax credits to prospective businesses remains extremely important.


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