Economic development deals falling short as beneficiaries fail to meet obligations

12/15/2012

COLUMBUS — Many of the companies that receive economic development incentives from Ohio, many promising to add or retain jobs, do not hold up their end of the deal. Last year, 64 percent kept their promises, according to a report from Attorney General Mike DeWine.

The annual report shows that of 255 economic development contracts concluded in 2011, 93 of the beneficiaries failed to meet their obligations. Most of the contracts were with companies; some were with local governments.

In all, the recipients signed agreements that were to give them $114 million worth of benefits — loans, tax breaks, or grants — in exchange for employee training or hiring or maintaining certain wage levels.

The compliance level is not as high as officials would like, but at least some of the blame can be placed on economic conditions, said Greg LeRoy, executive director of Good Jobs First, a nonprofit research group in Washington that tracks incentive spending.

“You expect that more deals won’t achieve 100 percent of their job targets in a prolonged, deep recession like this,” he said.

The good news is that Ohio provides more disclosure about such programs than many states, he said.

Mr. DeWine’s office separated the contracts into the following four categories:

●Employee-training aid worth $7 million: 80 of 89 companies complied.

● Hiring tied to grants worth $35 million: 36 of 74 companies complied.

●Hiring or wage levels tied to tax credits worth $7 million: 25 of 42 companies complied.

● Hiring tied to loans worth $65 million: 21 of 50 companies complied.

Many times, hiring pledges were a combination of new jobs and the retention of existing jobs. Most of the awards represented in the report were approved between 2006 and 2008 and then ended in 2011.