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Miami Valley businesses land more than $1.3M in state-funded tax credits

This is an architectural endering of the planned General Electric Dayton research facility on land owned by UD and Dayton's economic development non-profit CityWide at the corner of Patterson Boulevard and Stewart Street in Dayton. The company is investing $51 million in the facility and will receive $8.8 million in incentives to locate the faciltiy in Dayton.

GE Aviation/University of Dayton This is an architectural endering of the planned General Electric Dayton research facility on land owned by UD and Dayton's economic development non-profit CityWide at the corner of Patterson Boulevard and Stewart Street in Dayton. The company is investing $51 million in the facility and will receive $8.8 million in incentives to locate the faciltiy in Dayton.

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Chris Stewart/Dayton Daily News Staff Photogra Ohio has spent billions of dollars in recent years on tax-assistance programs aimed at luring or retaining jobs, and high-profile companies like General Electric, Bob Evans and Diebold are among the companies this year that have cashed in on lucrative deals to grow their operations in Ohio.

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By Ken McCall, Tim Tresslar and Randy Tucker
Staff Writers Updated 6:57 PM Sunday, May 1, 2011

Miami Valley businesses landed more than $1.3 billion in state-funded tax credits over the past three years to lure or retain 12,000 jobs, putting the cost of each job at about $104,000.

And in some Ohio counties, the average per-job cost of the state incentives was considerably higher than that, according to a Dayton Daily News examination of data from the Ohio Department of Development.

Mahoning County secured $863.4 million to create and protect 1,863 jobs, or an average of $463,000 per job — the highest rate in the state.

Butler County ranked third in the state at $349,177 per job created or retained.

In each case, Ohio taxpayers shoulder the risk of companies falling short of their hiring goals while the private sector reaps the benefits. Critics decry these as government handouts that often go to corporations that have the most political influence.

Despite the inherent risk, state and county development officials say financial incentives in the form of tax breaks, grants and loans are vital to job creation, especially now when many companies are making decisions on where to locate based on how much it costs to do business there.

“The fact is that everybody has them,’’ said Michael Juengling, director of the Butler County Department of Development. “Does it give us an advantage over somebody else by offering the same incentives that they have? Probably not. But if those incentives aren’t available, then we’re out of the game.’’

Martin Russell, Juengling’s counterpart at the Warren County development department, described state-funded tax breaks as an essential part of the equation for bringing jobs to the region.

“Sometimes it’s straight out tax incentives to reduce the cost of doing business and sometimes it’s coming up with creative ways to meet companies’ infrastructure needs,’’ Russell said. “Each community has to be very aggressive to demonstrate to businesses that have significant options as to where they can go about why they should come to Warren County or the state of Ohio.’’

Reversing the state’s job losses has become almost an obsession in Ohio. In his State of the State address, Gov. John Kasich said only Michigan and California, “which has completely lost its way,” have lost more jobs” than “our beloved Buckeye state.” He even titled his first two-year budget proposal “The Jobs Budget.” The economic development nonprofit corporation Kasich and the legislature launched carries the name JobsOhio.

But growing and maintaining jobs in Ohio will continue to carry a price tag no matter how the state goes about economic development. Unless someone changes the rules of the game, competing with other states for jobs — or even within the state — will mean doling out tax breaks, loans and grants — benefits that often go to big, profitable companies that can leverage one community or state against another. While the inducements might seal the deal, they can also result in other burdens on communities and taxpayers. Critics say the costs for each job created are so high it takes years of tax collections from each worker to recoup the investment.

Zach Schiller, research director for Policy Matters Ohio, a left-leaning think tank, said recent major incentive packages for companies such as Diebold and Bob Evans were focused primarily on keeping the jobs the state has rather than growing employment.

That was supported in the Ohio Department of Development data studied by the Daily News. The number of new jobs promised in the eight-county Dayton region from 2008 through 2010, for example, was 5,222. Meanwhile, the number of jobs retained through those incentives was 6,920.

Schiller said Ohio should only provide incentives to companies that really demonstrate a need. But that’s hard to do, he conceded, when everybody is playing the game.

“It’s not like we’ve done this and nobody else has,” he said. “This has become the generalized environment and it’s not just happenstance.”

Samuel Staley, an adjunct professor at the University of Dayton and director of urban growth and land use policy at the California-based Reason Foundation, said there is no guarantee companies will stay in Ohio long enough for taxpayers to realize a full return on their investment.

“The companies that are in a position to take advantage of those tax incentives are also pretty fickle,’’ Staley said. “If a project is not making the money they want it to, they will go ahead and leave, regardless of the commitments they’ve made.’’

The Daily News analysis showed that Ohio spent $5.4 billion in tax incentives across the state to create and protect just over 81,000 jobs during the three years. The average per-job cost during that time was $66,658.

One way to recoup the state’s investment is seeking reimbursement from companies that don’t live up to their promises. But while Ohio has gotten more aggressive at pursuing these so-called claw-back cases, it can be a lengthy process with little to show for it.

So far this year, the state has “clawed back’’ about $1.6 million in Rapid Outreach Grants, said Nate Green, director of the development department’s Strategic Business Investment Division. But the money hasn’t actually been collected.

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