Backed by a state tax credit, the Sacramento region is in the running for 1,500 back-office jobs with a major health insurance company, including about 1,000 information technology jobs.
With Sacramento bidding against Arizona, Texas and Illinois, the Governor’s Office of Business and Economic Development on Thursday approved a $7 million tax credit for Centene Corp., a St. Louis-area company that runs Medicaid programs for states. Centene, which already employs several hundred workers in the Sacramento region, will only receive the tax credit if it delivers the new jobs.
Multi-state economic development competitions can be wildly unpredictable; California officials were mightily disappointed at losing out to northern Nevada in a four-state fight for thousands of Tesla Motors Inc. battery-factory jobs two years ago. But Sacramento officials said they believe they have a serious shot at the Centene jobs.
“It feels very real,” said Barry Broome, chief executive of the Greater Sacramento Area Economic Council. Broome, whose organization has been talking to Centene officials for nine months, joined Sacramento Mayor-elect Darrell Steinberg in pushing for the tax credit.
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Broome said the company is exploring eight possible locations in the region and could make a decision in about two months. Officials at the Fortune 500 company weren’t immediately available for comment. The company greatly expanded its California footprint earlier this year with the acquisition of Health Net Inc., an insurer based in the Los Angeles area.
If Centene picks Sacramento, it would represent one of the biggest economic development coups for the region in years. In July, Amazon.com announced it would bring 1,000 warehouse jobs to a spot near Sacramento International Airport, with the opening expected sometime next year.
Centene would deliver a far greater economic boost. Broome said many of the jobs would pay $75,000 and up, and about two-thirds of them would be in information technology. The Sacramento organization has worked hard to persuade Centene that the region has the available workforce.
“We were able to show convincingly there’s a major workforce for technology,” Broome said.
Centene would ramp up slowly, bringing a total of 1,532 new jobs to the area by 2020, according to state records.
“This is everything from back office to IT to administrative staff,” said Brook Taylor, spokesman for the governor’s economic development office.
Taylor said the tax credit was approved by the Go-Biz California Competes Tax Credit Committee, an arm of the California agency, during a meeting at its office near the Capitol. The committee awards tens of millions of dollars in state income tax credits annually in an effort to lure businesses to the state.
Centene officials told the state committee that other states are offering “bigger packages” of economic incentives, but the company is interested in Sacramento because of its workforce, according to Steinberg spokeswoman Crystal Strait.
“Today was a really strong step for Centene, for showing they’re interested in expanding their footprint in Sacramento,” she said.
Broome said Centene already employs several hundred workers in the region through Health Net and the California Health & Wellness subsidiary.
The company has recently been in expansion mode. Earlier this week, aldermen in the St. Louis suburb of Clayton approved a tax abatement agreement worth $75 million to facilitate Centene’s plan to greatly expand its headquarters, adding two 30-story office towers and 2,000 additional employees, according to the St. Louis Post-Dispatch.
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Centene is now the largest Medicaid insurer in the country, according to a recent article in Modern Healthcare.