In rural communities across the country, jobs are disappearing and people are moving away, driving a desperation that helped elect Donald Trump president.
But as state lawmakers look for ways to bring life to these long-struggling areas, many are falling prey to a complex economic development approach, pushed hard by investment firms that stand to benefit, that has failed to live up to its promises.
The so-called rural jobs bills have been proposed in at least 11 states this year, and last week in Utah, Gov. Gary Herbert, a Republican, signed one into law. Under the bills, state tax credits are awarded to companies that agree to invest in or loan money to funds set up by investment firms or other brokers. The funds then invest the money in rural businesses. The proposals are the latest iteration of an approach that at least 20 states and Washington, D.C., have turned to in the last three decades.
But states that have evaluated the multilayered subsidized lending programs — originally CAPCO (certified capital companies) programs and later New Markets Tax Credit programs — have found that they failed to deliver promised jobs and tax revenue.
Three firms — Advantage Capital Partners, Enhanced Capital and Stonehenge Capital — have led the lobbying for the programs and have been the main participants in several states. ….