Scathing report takes aim at Kasich’s controversial economic development program
Cites “grossly exaggerated job creation claims,” appearance of “pay to play,” and resistance to basic oversight
COLUMBUS – Governor John Kasich’s controversial JobsOhio program received top-billing in a report released today by Good Jobs First, a non-profit, non-partisan research center that seeks to make economic development subsidies more accountable and effective. The report, titled “Creating Scandal Instead of Jobs,” offers a deep dive of JobsOhio’s troubled history, specifically citing its institutional lack of transparency, cronyism, and ineffectiveness relative to states that have not privatized economic development efforts. The full report, which is well worth a read, can be viewed HERE.
Three years ago, newly elected governors in several states, most notably Wisconsin and Ohio, decided that the best way to create jobs was to transfer economic development business-recruitment functions to “public-private partnerships.” These experiments in privatization have, by and large, become costly failures. Privatized development corporations have issued grossly exaggerated job creation claims. They have created “pay to play” appearances of insider dealing and conflicts of interest. They have paid executives larger salaries than governors. They have resisted basic oversight. [Executive Summary]
JobsOhio, created in 2011 at the urging of newly elected Gov. John Kasich, has been plagued by accountability and transparency problems since the start. There have also been numerous political controversies, which is not surprising given that it is often difficult to distinguish between the agency and the governor’s office. JobsOhio’s first annual report featured Gov. Kasich prominently, and statements regarding the agency are as likely to be issued from his office as they are from JobsOhio itself. [JobsOhio, p5]
While JobsOhio was ramping up, the state continued to award large subsidy packages to some major Ohio employers that threatened to leave the state. The headquarters of American Greetings Corporation, Inc., Diebold, Inc., and Bob Evans were awarded over $200 million in combined subsidies in the spring of 2011 in controversial deals that were criticized for fueling suburban sprawl and succumbing to job blackmail. (Some of these deals ultimately failed to go through.) During his 2011 State of the State speech, Gov. Kasich announced that the state had already “clawed back” $900,000 from subsidized companies that failed to meet job commitments. The statement was called misleading by Politifact Ohio, which determined that while notices of intent to recapture funds had been distributed, no funds had actually yet been recovered by the state. [JobsOhio, p6]
In an analysis of public funds contributed to the young agency, the Columbus Dispatch identified a number discrepancies between what JobsOhio reported it had received in start-up funding from the state, and what was reported in a federal tax filing by a subsidiary of JobsOhio. Multi-million dollar discrepancies were also identified between documents supplied pursuant to a public records request by the Dispatch and the agency’s annual report. [JobsOhio, p8]
Privatization favors big business when small business deserves more help. The privatization structures we describe here, including the increasing use of corporate seats for sale on governing or advisory boards, absolutely favor large businesses that have the money and executive staff time to pay and play at such levels. But small businesses already get short shrift in economic development resource allocation, and they are still suffering the most in the Great Recession’s aftermath. [Policy Conclusions, p33]
There is no evidence that public agencies are not “nimble”… Amidst lingering high unemployment, painful budget cuts and struggling small business prospects, taxpayers deserve job-creation agencies that are transparent, ethical and effective. Privatization delivers none of these qualities. Amidst lingering high unemployment, painful budget cuts and struggling small business prospects, taxpayers deserve job-creation agencies that are transparent, ethical and effective. Privatization delivers none of these qualities. [Policy Conclusions, p33]
The full report can be viewed HERE.