Property tax breaks originally intended to revitalize older areas of Ohio are instead fueling suburban sprawl as companies use state economic development programs to shift locations outward, abandoning the urban core, according to a valuable study by Good Jobs First, a Washington, D.C., think tank. Sadly, such relocations widen disparities in wealth and opportunity, make using public transportation difficult if not impossible and result in less efficient use of infrastructure.
Good Jobs First studied two state programs providing tax relief, focusing on relocations within the Cleveland and Cincinnati metro areas from 1996 through 2010. In what was described as the largest study of its kind, the think tank tracked 164 companies with some 14,500 workers.
What did the state get for an estimated $38.5 million in tax breaks through the Enterprise Zone and Community Reinvestment Area programs? Overwhelmingly, the relocations involved small- and medium-sized business moving from Cleveland and Cincinnati to the suburbs.
By quantifying the problem, Good Jobs First adds an important voice to other studies and initiatives, all grounded in the realization that shifting jobs within a region does virtually nothing to advance competitiveness in a global economy. While individual units of local government may benefit from plant relocations, such moves do not boost significantly overall job growth and often mean local governments must subsidize improvement to roads and other utilities. Good Jobs First rightly recommends greater transparency in reporting tax subsidies, enabling accurate cost-benefit analyses.
A state task force reached similar conclusions in a report issued early last year. Meanwhile, what usually are described as “anti-poaching” agreements are being pursued in both Cuyahoga and Summit counties as communities take into better account the high social and economic costs associated with sprawl.
As part of such deals, tax-sharing agreements would help to reduce economic competition among communities in the same region. The state has an important role, too, realigning economic incentives in a way that recognizes the benefits for the whole, not just a few suburban communities looking to shore up their tax bases.