As he travels around Ohio, Gov. John Kasich regularly points out that the state’s unemployment rate is a full percentage point lower than the national average, and more than 123,000 jobs have been created under his watch.
But a Dayton Daily News investigation shows taxpayers are paying a high price for some of those jobs. Kasich’s administration approved $487.7 million in taxpayer-subsidized tax credits, grants and low-cost loans for businesses during 2011, his first year in office, according to state data. That’s a 44.3 percent increase over the $337.9 million approved in 2010.
More than $200 million of the 2011 incentives came in the form of tax credits to companies that simply agreed to keep existing jobs in Ohio after threatening to leave the state, the Daily News found.
Among 16 states with tax credits for job creation and retention, Ohio has the largest number of recipient companies, with 567, according to an April report by Good Jobs First, a Washington, D.C.-based incentives research group. These incentives give companies tax credits equal to a percentage of their employees’ withheld state income taxes.
The use of such incentives, commonplace across the country, is increasingly coming under fire as companies get breaks for moving within states and, in some cases, within metropolitan areas. Companies that get incentives frequently miss their employment pledges.
“Economic times are so desperate, a lot of times communities will do whatever it takes” to attract or retain employers, said Cuyahoga County Executive Ed FitzGerald, a Democrat who is considered a possible challenger to Kasich in 2014. “It almost ends up being an extortion situation.”
Kasich defended his administration’s choices. “Incentives matter,” he told the Daily News. “They’re critical, sometimes more critical than others. It’s a situation we measure on each and every company. We don’t just throw money at everything.”
Kasich’s critics say that’s exactly what he is doing. Phillip Mattera, research director for Good Jobs First, said NCR Corp.’s 2009 decision to leave Dayton for Atlanta has made the administration quicker to offer incentives to companies that threaten to move. “The Kasich administration threw a bunch of money at them to get them to stay,” Mattera said.
Kasich has handed out richer subsidies to fewer companies than did his predecessor, Ted Strickland, state data maintained by Good Jobs First show. And the biennial state budget Kasich signed in June 2011 allows more businesses to qualify for tax credits for retaining existing jobs.
In some high-profile 2011 cases, the state subsidized new corporate headquarters for corporations that ultimately used the money to move only a few miles, to wealthier communities.
• After securing $93.5 million in state incentives over 15 years, American Greetings last year announced it will leave its longtime hometown of Brooklyn and move a dozen miles away to Westlake. The new headquarters with its 1,750 workers will be in a chic lifestyle center part-owned by the family that controls American Greetings. The cost for each of those jobs: $53,429.
• Diebold received state and local tax credits sufficient to pay for a new $100 million headquarters in Green in Summit County. Diebold officials promised to keep 1,500 employees in Ohio for 18 years.
But in an allowable move, the company announced in April it will move 200 Ohio jobs to India.
• Columbus officials were surprised when Bob Evans Farms snubbed their incentives package and announced plans to leave the city’s south side for affluent New Albany. A spokesman for Mayor Michael Coleman said they planned to stay in Ohio, but used a relocation threat to squeeze $17.4 million in incentives.
• Wendy’s returned to Dublin after a brief corporate marriage to Arby’s in Atlanta.
The state ponied up $8.9 million and Dublin gave $8 million for 223 jobs, bringing the total public expenditure to $75,785 per job.
• Kasich granted $78 million to keep Marathon Petroleum in Findlay.