Jobs still trail state incentives
Report: Ohio didn’t follow up when employers who got 76 awards fell 7,000 workers short
Thursday, January 6, 2011
By Mark Niquette
The state often has failed to take action when companies don’t create or keep jobs in return for tax credits and other assistance, and it’s difficult to track whether companies comply with their agreements, a new report concludes.
Ohio Attorney General Richard Cordray released the report to the legislature today as required by a 2009 law instructing his office to survey companies that received tax incentives from 2004 through 2009.
The report said that companies failed to keep job commitments in at least 9.25 percent of the tax awards reviewed. Cordray’s office singled out 76 such awards for which recipients failed to create or keep more than 7,000 jobs as promised without any state enforcement action as a result.
Companies sometimes lack basic knowledge about their requirements, contracts can be ambiguous, and although the state can say who received assistance, taxpayers have limited access to information about the outcomes, the report said.
“I think it’s obviously and inevitably a point of significant concern,” Cordray said in an interview.
Cordray’s office sent out 3,310 letters to award recipients and received back about 2,000 responses covering a little more than half of state awards during the time studied.
The report findings are consistent with findings by The Dispatch, which also has sought to track the overall performance of companies that received state assistance for economic development.
In 2008, state leaders freely admitted that more had to be done to improve the state’s ability to track and report results. Since then, officials have said staff members worked with computer systems and data to produce databases showing projects receiving tax credits, grants and loans.
Cordray’s report acknowledges that improvements have been made, and that some noncompliance likely can be attributed to the recession.
Lisa-Patt McDaniel, the outdoing director of the Department of Development, pointed to the 400 “clawbacks” of state tax breaks and other enforcement actions that the state has taken during the past four years for noncompliance.
“It’s a sign of how far we have come,” she said.
What the legislature or state will do with the report is unclear. Gov.-elect John Kasich has vowed to privatize the Development Department and has said he plans to review all current tax-incentive programs.
The department under outgoing Gov. Ted Strickland’s administration had been committed to investing $500,000 to analyze and upgrade reporting systems, and it also remains to be seen what will happen with that initiative.
The complete report can be read at: www.ohioattorneygeneral.gov/2010EDAPReport.