half of firms fail to meet job creation promises
January 8, 2012
half of the companies that accepted state tax incentives to bring new
the Dayton area or keep existing ones here failed to follow through on
end of the deal, according to the Ohio Attorney General’s Office.
As part of
a first-of-its-kind review, the AG’s office looked at nearly 3,000 Ohio
Department of Development tax incentive agreements statewide with 2010
deadlines. That included 50 awards worth $21.2 million in state money
companies in Montgomery County and surrounding counties.
But only 38
percent of companies in the Dayton region delivered fully on the
number of new jobs or training. The statewide average was 52 percent.
has not yet sought to recover any of the money from most companies.
instances, the state extended its deadline.
case, Computer Sciences Corporation in Beavercreek, the state reduced
company’s 15-year tax credit from 65 percent to 55 percent after it
retain or create the required 350 jobs and retain 200 more. The amount
the company missed the mark was not available.
companies have still not turned in their final reports, due in 2010.
it impossible for government officials to determine whether or not they
plans to use the attorney general’s report as a benchmark for
David Zak, chief of the Ohio Department of Development’s business
division. “We’re not happy about the percentage (of compliance),” Zak
He said a
new process, which includes JobsOhio, the nonprofit corporation created
Ohio economic development initiatives, should improve the quality of
“As we move
forward, we’re going to get better and more efficient,” he said.
administration will also have the benefit of foresight. All the
deals the AG’s office reviewed were struck before or in the early
stages of the
are struggling to meet the pre-recession employment numbers; they are
hiring temporary employees to save money, said Timothy Downs, Dayton’s
assistant director of economic development.
instance, Dayton in 2007 gave Gem City Metal Technologies a $150,000
create 15 jobs and retain 55 more by the end of 2011. Gem City was also
recipient of a $600,000 state loan near the same time to create
25 jobs and
secure 23 more at-risk jobs by the end of 2010. The company has yet to
final report. A message left with the company for comment was not
checked in on Gem City last September, he found the company had hired
temporary employees and retained 50 full-time employees. The company’s
has expired. If nothing has changed, Dayton could technically try to
money. But the city is hesitant to drop the hammer on financially
companies, Downs said.
want to try to squeeze $50,000 if that is going to cause them to lay
off. It’s sort of a balancing you have to do,” Downs said.
The risk of
economic incentives not panning out is worth the reward, said Joe Tuss,
assistant Montgomery County administrator. County incentives have
helped bring jobs to the area and kept them here. In 2007, the county
Caterpillar $750,000 to create 500 jobs. Tuss expects the result to be
to 600 jobs.
of those situations where you have to look at what is in the best
overall in terms of preserving the tax base growing the tax base” while
protecting taxpayers, Tuss said.
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