The Minnesota State Senate passed legislation two weeks ago to axe Governor Tim Pawlenty’s signature rural economic development program known as the Jobs Opportunity Building Zones (JOBZ) program. This is the latest development since GJF blogged in February about the state Legislative Auditor’s report concluding that the subsidy program is unaccountable and ineffective.

JOBZ subsidizes companies located outside the Minneapolis-St. Paul metro area and has granted $46 million in tax breaks to 350 businesses since 2004. However, two-thirds of businesses admitted to the Auditor that they would have expanded without the subsidies – including 11 percent which admitted they would have made the same investment in the exact same location.

Still awaiting action by the House, the Senate legislation is part of a larger omnibus tax bill. The bill would not allow new JOBZ agreements after May 1 but would preserve existing ones. The entire package would increase state revenues by $150 million in the 2008/09 fiscal year.

The Senate vote is linked to an ongoing fight between the Democratically-controlled Legislature and the Republican Governor on how to balance Minnesota’s growing deficit. Last week, Pawlenty vetoed funding for a Minneapolis-St. Paul light rail project that he has previously supported. Local observers believe the governor may use the light rail funding as a bargaining chip in exchange for continued funding of the JOBZ program.

Competing legislation that would reform, but not eliminate, the JOBZ program has been referred to the Senate Committee on Taxes.

It’s not often that a TV program takes on issues of tax equity and corporate giveaways, but they are exactly the focus of this week’s edition of the PBS series NOW, which aired in most places Friday night and is available in its entirety on the show’s website.

The report focuses on Alabama, where there’s been an effort by activist groups such as Alabama Arise! to reform a state tax system skewed against the poor. Alabama depends heavily on the regressive sales tax—and it is one of the only places in the country that applies the tax to food, which accounts for a larger portion of spending by those with lower incomes. State income taxes are designed so they “soak the poor.”

For some state legislators, all this is apparently not a problem. NOW interviews State Rep. Robert Bentley (R-Tuscaloosa), who says of the unequal tax burden on the poor: “I don’t get upset about it. I really don’t…I have too many things to worry about…You can be happy and be poor…Money does not make you happy.” If that’s the case, Alabama, with its lopsided distribution of income, must be one of the happiest places on earth.

The NOW segment notes that while the poor are overtaxed, large corporations are often undertaxed in Alabama. The state has given large tax breaks and other subsidies to automakers such as Mercedes, Hyundai and Honda to lure their assembly plants. Last year, the state put together an $800 million package for a steel mill proposed by the German company ThyssenKrupp. Asked by NOW correspondent Maria Hinojosa whether it is right to allow a large company to operate essentially tax-free for 30 years when the poor are struggling, Rep. Bentley says he supported the deal because it will create jobs. When Hinojosa asks “Did it have to come at so high a price?” Bentley responds: “It does if you’re going to recruit that kind of company…We were in competition with a number of states.”

Actually, ThyssenKrupp chose Alabama even though it was offered a larger package by Louisiana, suggesting that maximum subsidies are not always what make corporations most happy.

Full disclosure: Good Jobs First was consulted by NOW producers during the preparation of the program. Although we are not mentioned in the program, there are a couple of links to our material on the NOW website.