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AUSTIN-State officials have approved 33 enterprise zones through June and anticipate setting a new high before the state’s fiscal year ends Aug. 30. The highest number of enterprise zoned Ok’d in one year was 36 in 1990. In 2001, 14 enterprise zones were approved.

The reason for the rush is that municipalities throughout the state are trying to ready themselves for a turnaround in capital spending, says Patrick Shaughnessy of the Texas Department of Economic Development. “These communities are trying to increase the number of economic development tools at their disposal for when the economy turns around again,” he says.

Although there is evidence of growth in the economy, general capital spending has been sluggish. Companies aren’t using all the production capacity they have (utilization is just under 75% of capacity) and they’re reluctant to shell out big bucks for capital projects until they see evidence of a stronger rebound and increasing profits.

“There aren’t that many projects out there right now that can be attracted with enterprise zones,” Shaughnessy says. “But when those projects once again start becoming available this is a very valuable tool communities can use to attract business.”

Enterprise zones are designated areas where companies can get tax breaks for providing jobs. Benefits include a refund of sales and use taxes up to $1.25 million over a five-year period and a possible reduction or credit on state franchise tax liability.

Since September, enterprise zone projects in Brownwood, Longview and Cleburne have created or saved more than 1,100 jobs, Shaughnessy says.

The Bastrop Economic Development Corp. earlier this year reconfigured its enterprise zone to include a resort hotel development east of the city. Joe Newman, executive director of the development corporation, says the developers wanted to take advantage of the enterprise zone’s benefits. But, he tells GlobeSt.com, the development would have proceeded without inclusion in the enterprise zone.

Bastrop, he says, sees the enterprise zone as a tool to attract businesses to the community. About 40% of its population works in Austin and leaders would like to help more of them find work in Bastrop.

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