No one ‘does anything even remotely similar to the way Ohio funds its economic development’: Part 5

If the JobsOhio economic development scheme does not benefit Ohio taxpayers, the obvious question is, who does?

And, if performance doesn’t drive JobsOhio’s decisions, what does?

An in-depth Ohio.news investigation reveals that the Buckeye State operates on a structured and sanctioned system of political favor, insider access, and financial feedback loops. Republican Gov. Mike DeWine appoints JobsOhio’s board members, and his former staffer and current advisor, Josh Rubin, serves as the board’s chairman.

“There is no other state that I’m aware of that does anything even remotely similar to the way Ohio funds its economic development,” John C. Mozena, president of The Center for Economic Accountability, told Ohio.news in an interview.

“This is not the way you design an economic development agency if you are worried about transparency and accountability,” Mozena added. “It is the way you design a political slush fund for the governor and their allies.”

In 2011, Republican Gov. John Kasich created JobsOhio with the help of Mark Kvamme, a venture capitalist who now heads an investment firm that funds Ohio-based businesses. Critics suggest that the approach is less concerned with improving the Ohio economy and more about evading public oversight.

“I think that’s pretty clear, that that was the intention,” Mozena said. “I’ve talked to legislators in Ohio who are frustrated about JobsOhio’s lack of transparency. …Economic development agencies [inherently have issues], but this is adding a whole other layer on top of that. The only good reason to do it is to try to insulate corporate welfare from public oversight,” he said.

“The state does pat itself on the back, or at least JobsOhio pats itself on the back, and the governor’s office often does as well,” Mozena added. “The pretty clear intent of setting up the way they did is that it divorces economic development from appropriations, which means it divorces it from oversight, and it makes it a tool or a plaything of the governor, rather than a government agency with all the transparency and oversight that would come along with that.”

While Ohio’s economic development arrangement may be unique, some experts say the Buckeye State’s numbers are in line with those of other states. Officials in some states, such as Georgia, have been known to undermine reporters who question the efficacy of tax incentives.

“Having worked directly with JobsOhio during my five years as a faculty member at Ohio University focused on economic development, I’d say that these numbers [are] in line with other states that use public funds for private-sector job creation,” Gilbert Michaud, an assistant professor of environmental policy at Loyola University’s School of Environmental Sustainability, told Ohio.news. “The real question isn’t the cost per job, but whether these jobs are high quality, permanent, and tangibly help local economies.

“JobsOhio has clearly attracted many major projects and employers,” Michaud added. “Some of the broader impacts of their work, such as supply chain growth and tax contributions, take years to materialize. While the citizens of Ohio could use more transparency with evaluating how JobsOhio is doing, I don’t necessarily find this evaluation of their return on investment troubling.”

Andrew Wilford, director of the Interstate Commerce Initiative and a senior policy analyst at the National Taxpayers Union Foundation, told Ohio.News that Ohio’s numbers are in line with those of other states.

“Somewhere between two and 25% of tax incentives actually end up impacting investment decisions,” Wilford said. “Most of the time, you’re just paying businesses to do what they would have done anyway,” he added.

“There’s almost no situation in which a targeted tax incentive that only goes to businesses to bring them into the state is better than just tax reform, fixing your current tax code that applies to everyone else,” Wilford said. “And I think that’s really the crux.”

The other aspect of such incentives is that they alienate current businesses that didn’t receive the tax incentives.

“It’s kind of a double-edged sword, because in the case where the tax incentive is actually necessary to bring a business in, it leaves open the question of, ‘Why are you only offering this to certain businesses?’” Wilford said. “If your tax code is so uncompetitive that you have to offer incentives, well, what about the businesses that are currently in the state? They’re the ones that are already dealing with your uncompetitive tax code.”