Thomson plans 2,000-job expansion; asks for millions in tax breaks
Thomson's board has given preliminary approval to a plan for a 500,000-square-foot expansion that would include a new office building and a data center.
The company declined to comment on the average salary of the 2,000 new employees who would work in the new facilities. But state officials estimate that salaries could run around $70,000. Those high wages would be a boon to state income tax collections. And officials say those well-paid employees would then spend their money in the local economy.
Minnesota Revenue Commissioner Ward Einess, says those advantages would make the state's subsidy of the expansion pay for itself in just a few years. He says granting the company's request for a $9 million sales tax exemption on construction and other materials would be good policy.
"I think it's a reasonable response when you think of the benefit that would accrue to the state of Minnesota with that expansion," he said. "Opportunities like the one with Thomson West come along very infrequently."
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Einesss says the state contributed $20 million in transportation money for road construction related to a Medtronic expansion. By contrast, he says Thomson wouldn't need money for such extensive infrastructure upgrades.
"They did need something to make Minnesota competitive with the other two sites they were looking at," he said.
Those other sites were in Ohio and Texas. Thomson spokesman John Shaughnessy says the company's board voted to move forward with an expansion in Minnesota because the infrastructure here was already well developed.
"Thomson already has an extensive campus here already and an infrasturcutre that has supported operations for a number of different thomson businesses for quite some time," Shaughnessy said. "Of all the locations that we considered, this was the one location that could accommodate all the job growth that we anticipate between now and 2012."
But Thomson could still go with the other proposed locations if Minnesota does not approve the subsidies the company is seeking.
Some state legislators such as, Sen. John Marty, DFL-Roseville, question whether Thomson should get special treatment with tax breaks. But other legislators say the proposal is worth pursuing, including Sen. Tom Bakk, DFL-Cook, chair of the Senate Taxes Committee. He says he hopes Thomson officials will spend time with the committee's members to make their case for tax breaks. But overall, he thinks supporting the company make sense.
"They have some high-paying jobs in the state, and we certainly don't want to do anything in the Legislature that derails what appears to be, at least tentatively, a very significant economic development project in Minnesota," according to Bakk.
But Art Rolnick, director of research at the Federal Reserve Bank of Minneapolis, cautions that the proposed tax breaks are a bad move.
"From a national perspective, we call this a zero-sum game. The winners are the companies, the CEOs, the stockholders, who are getting the subsidies," Rolnick says. "The losers are the taxpayers. This is preferential treatment. You could make the case that Thomson's going to create jobs, but what about all the companies in Minnesota that are already creating jobs."
The proposed sales-tax exemption for Thomson's construction project isn't the only tax break at stake. There's also a proposal that would capture the company's property taxes to pay for some of the expenses related to the expansion. The city of Eagan would receive no property taxes on the project for 10 to 15 years.
"We haven't seen a specific proposal or request from Thomson West, " says Eagan Mayor Mike Maguire. "We're very pleased and excited that they would like to expand in Eagan. Our city will, as it always has, work with them in any way to facilitate its plans and see if we can accommodate through a very public process."
If Thomson gets the support it wants from the state Legislature and the city of Eagan, it plans to break ground on the new data center in April and will start work on the office space in August.
