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More light on subsidies

A new study makes clear that Ohio must do a better job of telling taxpayers the costs of business incentives

Last month, Gov. John Kasich’s economic-development team announced several corporate incentive packages, including a tax-credit offer aimed at persuading Marathon Petroleum to expand its headquarters in Findlay, keep a new subsidiary there, and create 150 high-paying jobs in the city. Good news for northwest Ohio, if it happens.

But how well does state government do more generally at informing taxpayers of the deals cut by its major economic development programs: the costs of the subsidies, the jobs and wages they are expected to — and actually do — create, and related details? A new study suggests that the answer is: Not well at all.

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Good Jobs First, a nonpartisan group in Washington that seeks to make economic-development subsidies more accountable and effective, ranked the states on their online disclosure of business incentives — both the awards and their outcomes. Michigan ranked a solid second, behind only Illinois. But Ohio finished in a tie for a mediocre 21st place with California and Minnesota.

Why does this matter? The study’s authors note that “with unemployment still high, Americans need to know how many jobs and what kinds of wages and benefits their taxpayer investments are generating ... [Transparency] is the foundation for any meaningful assessment.”

Ohio does not disclose online who gets film production tax credits from the state, which will cost as much as $19.2 million this budget year, the study notes. The credit allows eligible filmmakers to cut their costs by 25 percent for employing non-Ohio residents and incurring other spending in the state, and by 35 percent for hiring Ohioans. In recent years, such big-budget movies as The Avengers and Captain America: The Winter Soldier were shot in Cleveland.

For other major subsidy programs that Ohio’s government operates — $53.3 million in annual tax credits for job creation and retention, $30 million in vouchers for employee job training, a $50 million revolving economic-development loan fund — the study says that online reporting is limited and that the state now “hides” essential information it disclosed just a few years ago.

The study concludes that Michigan does a better job than Ohio of disclosing data about key subsidy programs, such as the status of awards and enforcement actions. But it says that finding some information online is “tricky” and that some important details are excluded.

Good Jobs First plausibly argues that “taxpayers have the right to know exactly what they are getting in return for their economic development investments.” Too often, the study suggests, the state doesn’t give Ohio taxpayers — and policy makers — enough information to weigh effectively the cost of such subsidies against their benefits.

A special report in The Blade last fall described the failures of economic-incentive deals that have cost Ohio taxpayers tens of millions of dollars without creating the jobs that were pledged. The investigation concluded that state officials often don’t know whether the companies they give incentives keep their promises. Although these problems didn’t begin during the administration of Gov. John Kasich, the governor’s reliance on the private corporation JobsOhio to make development deals has reduced transparency.

State officials argue that publicly subsidized incentives are essential to job creation, economic growth, and competitiveness. They could make that case more plausibly if they gave taxpayers more details about how the state spends these dollars, and what they buy.

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