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Minnesota Legislature: Committee OKs industry tax breaks for Perham

A legislative committee's decision to give Perham and Jackson industries tax breaks set off debate Thursday about a rural economic development program.

A House committee approved a bill allowing expanding businesses in Perham and Jackson to enroll in the Job Opportunity Building Zones program that provides tax breaks to some rural businesses.

The House jobs committee passed the plan on a split voice vote, sending it to other committees before it receives a full House vote.

The bill began as one to allow Tuffy's Pet Foods and Industrial Finishing Services in Perham to be relieved of most taxes in the next several years. The committee amended the bill to include AGCO in Jackson.

All three plants plan expansions. Together they would add more than 1,000 jobs.

Wayne Caughey of Tuffy's Pet Foods' parent company said a planned expansion would double the Perham plant's capacity. The pet food firm has increased from 35 workers to 160 in a decade, and boosted production from 20,000 tons a year to 120,000 tons.

Without tax relief, Tuffy's could go elsewhere.

"The alternative we have ... is looking at facilities in other areas of the country," Caughey said.

Tuffy's sister company, Barrels of Fun snack foods, received JOBZ help in 2004, which Caughey said helped increase annual sales from $35 million to $100 million.

President Steve Campbell of Industrial Finishing Services in Perham, Deer Creek and New York Mills said his company received JOBZ help in 2005.

"The business climate has changed so much that we need to invest in new equipment," Campbell said.

Rep. Tim Mahoney, DFL-St. Paul, criticized JOBZ, a program promoted by then-GOP Gov. Tim Pawlenty.

Mahoney said eliminating many taxes on new and expanding businesses can cost up to $64,000 per job.

Rep. Bev Scalze, DFL-Little Canada, said the overall bill offered by Rep. Mark Murdock, R-Ottertail, and Hamilton's amendment favor a few businesses over others.

Mahoney warned committee members that as the Murdock bill advances, other legislators will want to add projects in their areas to the tax-break list.

"This is the Christmas tree for JOBZ," Mahoney said. "The cost to our state will start to escalate."