As one of the hardest-hit Rust Belt states, Ohio has been playing defense in the interstate job-piracy game for decades, and like other industrial states, it has been hit hard by offshore job flight. In an attempt to retain its manufacturing base, Ohio enacted plenty of large economic development subsidy programs. In their early forms, these programs were so poorly targeted that localities within a given metropolitan area ended up stealing jobs from one another.
This intra-metro piracy problem was partially addressed in 1990 when Chuck Horn, a Republican state legislator from Dayton, won a bill requiring that firms applying for subsidies disclose the details of relocation deals. Ohio later became the first state to put its Enterprise Zone relocation data online. While providing transparency, these steps didn’t stop the proliferation of Enterprise Zones and intrastate job poaching. Regional job sprawl trends are demonstrated in Paid to Sprawl, Good Jobs First’s 2011 study of intra-metropolitan Enterprise Zone and Community Reinvestment Area relocations. In the past, the state published regular reports containing wage data on programs such as the Job Creation Tax Credit, but these reports are now released only sporadically.
Ohio’s current disclosure system consists of grant, loan, and tax credit databases that contain less detailed information than previous annual reports but are useful tools nonetheless. Users can view subsidy recipient names, facility locations, subsidy values, and promised job creation details through these databases, which were launched in early 2010.
Some Ohio firms have left despite the state's aggressive tax cuts, further weakening the tax base. For example, in 2009 NCR Corp. announced that it was relocating its 125-year old headquarters from Dayton, Ohio, to a suburb of Atlanta, costing Ohio nearly 1,300 jobs. The announcement took place not longer after Ohio eliminated two taxes deemed unfriendly to business: the corporate franchise tax and tangible personal property tax.
Ohio has had numerous subsidy disputes in the past. A $230 million subsidy package offered to DaimlerChrysler in 1998 to retain its new Jeep plant in Toledo led to a Constitutional lawsuit (Cuno v. DaimlerChrysler) that went all the way to the U.S. Supreme Court. The Court in 2006 dodged the Constitutional issue, ruling narrowly that the plaintiffs, some of whom lost homes and businesses, had not been harmed enough and lacked standing to bring the case. In 2004 the state offered the German-owned express shipper DHL a subsidy package originally expected to be worth $100 million (plus a $300 million bond guarantee) only to see the company announce its departure from the U.S. market four years later.
In 2007 Amylin Pharmaceuticals was offered well over $100 million in job subsidies after it agreed to expand a planned manufacturing facility in West Chester, a suburb of Cincinnati (see below). That same year, Goodyear Tire & Rubber got its own $100 million-plus deal to build a new headquarters in Akron, but the project remains stalled (see below). More recent subsidy deals include the $100 million state and local package Diebold was awarded in 2011 to maintain its headquarters in the state after playing Ohio off of Virginia and North Carolina and another $100 million given to American Greetings after it threatened a move to Illinois.
Recent subsidy controversies have been more highly politicized in the context of the major changes to the state’s economic development practices ushered in by Gov. John Kasich, who got the legislature to pass a privatization plan in 2011. Under this plan, the Department of Development will be abolished and replaced with a privatized, corporate board appointed by the Governor in early 2012. The new agency, called JobsOhio, is already fraught with controversy over its constitutionality and Gov. Kasich’s proposal to appoint a nonresident to lead the organization.
Two reports issued by the state Attorney General at the behest of Ohio's legislature evaluate the state's accountabililty practices with regard to job creation subsidies. The first report, released in late 2010, found shortcomings and inconsistencies in the Department of Development's transparency and enforcement practices. The second report, issued at the end of 2011, found that just over 50 percent of active economic development subsidy recipients were in compliance with their job creation obligations.
Ohio’s economic development spending is substantial but more transparent than in most states. The Job Creation Tax Credit program currently costs the state over $50 million annually, according to the state’s tax expenditure budget. A similar program, the Job Retention Tax Credit, costs more than $20 million. These programs – along with the Rapid Outreach program (private infrastructure subsidies), the Workforce Guarantee program (training subsidies), and the Community Reinvestment Area program (the less-regulated successor to the state’s controversial Enterprise Zone program) – all provide online disclosure of recipients.
Key Subsidy Programs
|Subsidy Program||Recent Annual Cost||Online Recipient Disclosure||Recipient Disclosure Score*||Job-Creation/Job-Quality Score**||Monitoring/Enforcement Score***|
Facilities Establishment Fund
revolving loan fund that feeds a number of economic development loan programs in the state
|$50.0 million (FY2015)||
|23/100||not included||not included|
Job Creation Tax Credit
refundable Commercial Activity Tax/income tax credits based on employees' personal income tax withholding
|$40.7 million (FY2015)||23/100||60/100||75/100|
Job Retention Tax Credit
tax credits for companies that retain employees in the state; may be applied against the Commercial Activity Tax
|$12.6 million (FY2015)||38/100||35/100||53/100|
Motion Picture Tax Credit
refundable tax credit that equals 25 percent off in-state spend and non-resident wages and 35 percent in Ohio resident wages on eligible productions
|$19.2 million (FY2015)||
|0/100||not included||not included|
Ohio Incumbent Workforce Training Voucher
training vouchers worth up to $4,000 per employee per year
|$30.0 million (FY2015)||
|23/100||not included||not included|
* The score is derived from the Good Jobs First report Show Us the Subsidized Jobs (January 2014).
** The score is derived from the Good Jobs First report Money for Something (December 2011).
*** The score is derived from the Good Jobs First report Money-Back Guarantees for Taxpayers (January 2012).
Major Subsidy Deals
Goodyear Tire & Rubber (2007)
In April 2007 the mayor of Akron announced that he had been in negotiations for months with Goodyear and a major developer, Industrial Realty Group (IRG), about the tiremaker’s desire to replace its 80-year-old headquarters building with a modern office and retail center. Subsidies, of course, were part of the discussion, and in December 2007 the city agreed to use tax increment financing to provide $98 million for infrastructure improvements around the site. That was after the state approved a $20 million low-cost loan and up to $30 million in tax credits for the project, which was expected to cost $900 million. In November 2008 the state made available another $2 million grant, even though work on the project had not begun.
In March 2009, after IRG admitted it was having difficulty obtaining private financing, the Summit County Port Authority agreed to issue $17 million in taxable, short-term bonds for the developer. In June 2010 the city of Akron and Summit County together agreed to make available up to $42 million in federally authorized Recovery Zone Facility Bonds. After a delay, construction began on the project in 2011. (Key sources)
Amylin Pharmaceuticals (2005)
San Diego-based Amylin Pharmaceuticals announced in December 2005 that it would locate a $70 million manufacturing plant for its new diabetes drug at a site in West Chester between Cincinnati and Dayton. The move came as Butler County offered a 75-percent property tax abatement and the state provided tax credits valued at about $3.5 million. In May 2007 the company said that it would expand the size of the facility, then still under construction. This increased the size of the investment to at least $400 million and the estimated number of jobs from 150 to 500.
At the same time, Gov. Ted Strickland said that the combined state and local subsidy package would now be worth more than $117 million. Local authorities were now offering Amylin a 100-percent abatement for 15 years. The state share was later said to be about $46 million. A 2010 report published by Good Jobs First concluded that the state subsidies were actually $98 million. The report also questioned whether the company looked very hard at another state, as Ohio officials had claimed, given that the West Chester location is close to a key manufacturing partner. (Key sources)
Wal-Mart in Ohio
- At least 10 Wal-Mart locations have received subsidies worth about $49.9 million in Ohio.
- At least 17 Wal-Mart locations in Ohio have challenged their property tax assessment, recouping about $327,000.
- Wal-Mart was found to have more workers than any other employer in the state relying on publicly-funded health insurance. This shows how taxpayers end up subsidizing Wal-Mart’s policy of providing low wages and inadequate benefits.
- Wal-Mart receives about $3.4 million a year from a state policy that allows retailers to keep a portion of the sales tax they collect from customers.
- The state of Ohio received $1.7 million in a settlement last year when it clawed back Job Creation Tax Credits after the company closed down an eyeglass plant near Columbus.
For more information, see the Ohio page of Wal-Mart Subsidy Watch.