COLUMBUS, Ohio (CGE) – Results of a report performed by the Attorney General of Ohio (AGO) and released Thursday, on whether business entities complied with the terms and conditions, including any performance metrics, on awards for economic development issued by the Ohio Department of Development (ODOD), showed that little more than half of the 420 awards made in 2010 made good on their performance promises.
Nearly half of businesses accepting taxpayer funds did not deliver on job promises
The purpose of this annual report, the second of its kind since state lawmakers mandated in 2008 that the AGO perform this monitoring task, is to create greater transparency with respect to awards issued by the State of Ohio. Ohio AG Mike DeWine, the second AGO to undertake the job – the first being his predecessor, Richard Cordray, who awaits appointment by President Obama to head the national Consumer Finance Protection Bureau in Washington – broke the task down into three phases: 1) The AGO identified every active economic development award administered by ODOD, of which there are 2,990; 2) The AGO conducted a data assurance audit to assess the reliability of the information reported by ODOD; and 3) The AGO identified those businesses for which it would be possible for ODOD to make a compliance determination.
According to information sent in the report, ODOD offers a variety of incentive programs that fall into four main categories: Grants, Tax Credits, Loans, and Workforce Guarantee awards. The AGO sought and received detailed information from ODOD regarding each active award, including the name and address of each business receiving an award, the type of award received, the performance metric pledged by the business, the actual performance numbers reported by the business, and where possible, ODOD’s compliance determination.
Once the AGO determined it could reply on the information provided by ODOD, it could analyze the information to determine the level of compliance of businesses with the terms and conditions of their economic development awards.
Among the 2,990 active awards, businesses receiving 420 awards had performance periods ending in 2010, meaning that the businesses were obligated to file a closeout report covering calendar year 2010. AGO communicators said ODOD then examined the information contained within the closeout reports to assess whether the businesses had complied with the terms and conditions of their awards. As reported to the AGO, businesses receiving 220 awards complied with the terms and conditions of their state awards for economic development, whereas businesses receiving 200 awards did not comply, representing an overall compliance rate of 52.4 percent.
JobsOhio did not participate
Contacted to comment on whether the AGO received any assistance from JobsOhio, Gov. Kasich’s signature creation that privatizes the formerly public resources associated with the state’s economic development efforts, the response from an agency spokesman was no. That was also the response given to whether General DeWine had formed an opinion on whether his office was the best suited for this monitoring task.
This report on the mixed results from the study comes out just as another report by a non-partisan group that tracks state subsidies says states are spending billions of dollars per year on corporate tax credits, cash grants and other economic development subsidies that often require little if any job creation and lack wage and benefit standards covering workers at subsidized companies.
The report – MONEY FOR SOMETHING: Job Creation and Job Quality Standards in State Economic Development Subsidy Programs, performed by Good Jobs First with funding from the Ford Foundation, Surdna Foundation and the Unitarian Universalist Veatch Program – ranks Ohio tied for 31st place with Michigan and Montana.
“With unemployment still so high, taxpayers have a right to expect that economic development
investments create significant numbers of quality jobs,” Good Jobs First Executive Director Greg
LeRoy said. “The days of ‘no strings attached’ are largely gone, but the fine print in many states is still full of gaps and loopholes.”
State awards for economic development are administered by the ODOD, and each year the agency offers hundreds of millions of dollars in economic development incentives to Ohio businesses for the purpose of expanding commerce in the state, attracting new businesses to Ohio, retaining existing jobs and training workers with new skills, the report said. During fiscal year 2010, for instance, ODOD awarded more than $1.02 billion in economic development incentives with an estimated value of $260.5 million.
Based on compliance rates from Ohio’s 12 regions, region 9 – five counties in the northeast, did best at 70 percent, while the worst region 10 – 10 counties in the east – could only muster 33 percent.
Other measures from the report:
Businesses receiving Rapid Outreach Grants were 16% compliant (7 out of 44); those receiving Roadwork Development Grants were 4% compliant (1 out of 25); those receiving ISIF grants were 80% compliant (4 out of 5); and those receiving Contingency grants were 0% compliant (0 out of 3).
Businesses receiving Job Creation Tax Credits were 53.3% compliant (48 out of 90) and businesses receiving Job Retention Tax Credits were 100% compliant (2 out of 2).
Businesses receiving 166 Direct Loans were 26% compliant (6 out of 23); those receiving Innovation Ohio Loan Funds were 7.7% compliant (1 out of 13); those receiving Ohio Enterprise Bond Funds were 0% compliant (0 out of 2); those receiving Regional 166 Loans were 20% compliant (6 out of 30); those receiving Research & Development Investment Loans were 33% compliant (2 out of 6); those receiving Pioneer Rural Loans were 50% compliant (1 out of 2); those receiving Rural Industrial Park Loans were 50% compliant (1 out of 2); those receiving Urban Redevelopment Opportunity Loans were 100% compliant (2 out of 2); and those receiving Rural Development Initiative Grants were 50% compliant (1 out of 2).
Businesses receiving Workforce Guarantee awards were 77.3% compliant (51 out of 66); those receiving Ohio Investment in Training Program funds were 84% compliant (74 out of 88); and those receiving Appalachian Training Investment Program funds were 86.7% compliant (13 out of 15).
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