The following article was originally published in the Ohio Capital Journal and published on News5Cleveland.com under a content-sharing agreement.
The Ohio Controlling Board on Wednesday awarded JobsOhio billions more in what used to be public money without demanding that the “private” corporation pay more for the privilege. Attorney General Dave Yost had questioned the arrangement, but his office wasn’t present at the hearing, nor did it answer questions on Thursday.
JobsOhio was created in 2011. It was allowed to lease Ohio’s lucrative liquor franchise for less than it was worth so that it could provide economic incentives for businesses to locate in the Buckeye State, expand existing operations, or at least not leave. Even though it was created by the state legislature and it operated with what used to be public money, the new agency was deemed a private corporation and thus exempt from open-government laws.
Under the original agreement, JobsOhio was given control of the liquor franchise until 2039 in exchange for $1.41 billion to be paid to the state. The Controlling Board on Wednesday extended the agreement to 2053 for no additional money.
Yost last week asked how that was fair to taxpayers, given that JobsOhio operates on money that used to go into state coffers. Rep. Tristan Rader, D-Lakewood, repeated that question during Thursday’s Controlling Board hearing.
Christina Frass, assistant director of the state Office of Budget and Management, replied that the money went to pay off specific debts that are now retired, so more isn’t needed.
But that doesn’t mean Ohio is now flush with cash. For example, House Speaker Matt Huffman, R-Lima, has proposed slashing funding for public education, saying the state can’t afford it. As economic development priorities go, economists say a well-funded public school system should be high on the list.
Perhaps more significantly, JobsOhio has struggled to show that the state has gotten value for the billions that have gone to it instead of the state treasury.
Measuring the success of such “economic development” efforts is tricky because it’s hard to tell if businesses would have done the same thing if they weren’t given what are effectively public subsidies. Sure, they’re glad to get money that could have funded other public needs, but research has indicated that in at least 75% of cases, incentives effectively pay businesses to do what they would have done, anyway.
Rader noted that if JobsOhio is working as well as it claims, it’s not showing up in the big picture.
Since the agency’s creation, “We haven’t been competitive with some of our neighboring states and we’ve been behind the national average in job creation, so I’m questioning the efficacy of this organization,” he said. “How is it a good deal for Ohio when we’re behind on growth, and places like Indiana, Michigan and Pennsylvania have been ahead of us? There’s no real transparency and accountability mechanism built into this.”
Frass responded by citing a 2022 JobsOhio-funded analysis that said that since its creation, the agency was responsible for creating 240,000 jobs and $14.6 billion in new payroll. But in the scientific community and elsewhere, such industry-funded research is viewed with skepticism because of the inherent conflict — if you’re being paid by the outfit you’re analyzing, you have a strong incentive to arrive at conclusions favorable to your funder.
Frass’s office was asked earlier this week what evidence it had that JobsOhio wasn’t in many cases paying businesses to do what they would have done, anyway. The Office of Management and Budget referred the question to JobsOhio.
When it was asked, a spokesman for JobsOhio simply asserted without evidence that his agency was the difference maker in the vast majority of business decisions it refers to as “won projects.”
“With very few exceptions, all JobsOhio assistance is provided for competitive projects that would have otherwise gone to another state or not moved forward without the support of JobsOhio,” the spokesman, Matt Englehart, said in an email.
