State officials must do their homework before they give money and tax breaks to companies that promise to expand and create jobs. They need to be vigilant about monitoring incentives already bestowed — including those by previous administrations — to ensure that the recipients are keeping their promises.
The case of Perrysburg-based Willard & Kelsey Solar Group underscores the need for Gov. John Kasich’s administration to focus harder on this issue — especially since it has pushed back reporting deadlines for more than 800 businesses that have gotten job-creation tax credits.
Willard & Kelsey got $10 million in state loans in mid-2010, along with a $500,000 grant. Nine months after Gov. John Kasich took office in January 2011, the state learned that the solar-panel manufacturer had installed only one production line since it was formed in 2008.
The company blamed manufacturing delays and operating issues for the lack of a second line. In January, it laid off more than half of its work force.
The company’s staffing apparently peaked at 72 workers. That’s far short of the 400 jobs required in its $5 million loan agreement with the Ohio Department of Development, and the 450 jobs required by a $5 million Ohio Air Quality Development Authority loan.
State officials insist that the case is an exception. Of 427 state loans tied to job-creation requirements, they say, 71 already have been paid back while just 10 have ended in default.
The state lost $5.5 million from those 10 defaults. But it has collected $61.8 million in interest on other loans, according to the Department of Development.
David Zak, chief of the department’s business services division, says sales and marketing functions related to state loans have shifted to JobsOhio, the private economic-development corporation created by Gov. John Kasich. That will allow the department to focus more on compliance, Mr. Zak says.
Administration officials say the state is hiring a compliance officer and a quality-assurance specialist who will review incentives. The administration says it is updating information on outstanding loans and other job-creation incentives that preceded Mr. Kasich’s tenure.
Much like the Obama Administration’s massive investment in the bankrupt Solyndra solar-power company, the Willard & Kelsey loans raise red flags about government screening and oversight. But it is not, and should not be portrayed as, an indictment of solar power’s future.
The Kasich administration is saying the right things about greater accountability for public investments in private companies. There will be hits and misses as the state encourages the private sector to create jobs. But taxpayers deserve the best available oversight of such spending, especially in this economy.