Then-Lt. Gov. Jon Husted (right) welcomes President and CEO of JobsOhio J.P. Nauseef to the podium at a groundbreaking ceremony for Intel’s new semiconductor manufacturing site on Sept. 9, 2022, in Licking County, Ohio. (Photo by Graham Stokes for the Ohio Capital Journal / Republish photo only with original story)
The Ohio Controlling Board is slated on Wednesday to decide whether to extend JobsOhio’s lease of the state liquor franchise — which is worth many millions a year — until 2053.
Attorney General Dave Yost has asked the board to delay the decision, saying that it doesn’t appear that the controversial economic development entity is providing anything to taxpayers in exchange for the extension. Meanwhile, questions persist among policy experts about whether JobsOhio is responsible for all the economic successes it claims.
Under the leadership of former Gov. John Kasich, JobsOhio was created in 2011. It was controversial from the start because a “private” corporation created by the state was offered the sole opportunity to bid on the lease of the state’s lucrative liquor monopoly.
The agency floated bonds to cover the $1.4 billion it paid for the lease. But taxpayers clearly were getting a big haircut. The Ohio Legislative Service Commission in 2013 projected that JobsOhio would still have $100 million a year after “payments to the state and debt service payments on the economic development bonds.”
By 2021, that amount had ballooned to $338 million, according to a later briefing by the Legislative Service Commission. Over the same period, the JobsOhio payroll increased from $2.5 million to $19.1 million — more than sevenfold — and its 106 employees in 2021 pulled down an average compensation package worth $180,000. By 2023, the agency was paying $26.3 million in salaries and benefits, according to its annual report.
Meanwhile, the agency has handed out well more than $1 billion in incentives to corporations — including some whose officers were also JobsOhio insiders.
JobsOhio was subjected to legal challenges as soon as it was created, with critics arguing that it violated provisions in the Ohio Constitution prohibiting the state from giving special treatment to a single corporation, including by extending credit to it. The Ohio Supreme Court threw out the challenge, saying those who filed it didn’t have the right to sue.
In a dissent, then-Justice Bill O’Neill accused his colleagues of shirking their duty.
“Hundreds of millions of dollars in public funds are being funneled into a dark hole to be disbursed without public scrutiny, and the highest court in the land is looking the other way,” he wrote. “The Supreme Court of Ohio is the last house on the street, and passing on this case is an abdication of our duty as protectors of the (Ohio) Constitution.”
Now Yost, the attorney general, is saying it appears the state is poised to give JobsOhio 15 more years’ profit from the state liquor franchise for nothing.
“After reviewing the current amendment to extend the deal by an additional 15 years, it appears to me JobsOhio is required to pay nothing for a 15-year extension of this limited, one-time franchise,” he wrote last week to JobsOhio President and CEO J.P. Nauseef. “How is it in the best interest of the people of Ohio to extend such a valuable franchise under these circumstances?”
Yost sent a second letter to Kim Murnieks, director of the Ohio Office of Management and Budget, requesting that the Controlling Board delay the extension of the franchise. In her response, Murnieks cited state law saying the franchise could be extended for “an additional period in return for cash, deferred payments, and other considerations… “
Saying the new agreement “merely extends the time frame,” Murnieks added, “The terms of the agreement between the Ohio Office of Budget and Management, the Ohio Department of Commerce, and JobsOhio are not proposed to change.”
The letter did not say, however, whether JobsOhio would pay the state any more to extend its profitable deal by a decade-and-a-half.
In her letter, Murnieks went on to laud what she said were the many contributions JobsOhio has made to Ohio. She listed the growth of the state’s economy, its diversification and the fact that Ohio now has an AAA credit rating as three examples.
However, her office was short on evidence to support those assertions.
Along with many other states and cities, Ohio has been quick to give big corporations huge taxpayer handouts — even when those corporations seemed set on locating, expanding, or staying here already.
For example, Gov. Mike DeWine is touting enormous tax breaks to energy-guzzling data centers even after a Microsoft executive told the New York Times, “I can’t think of a site selection or placement decision that was decided on a set of tax incentives.”
Those comments fit with research indicating that in at least 75% of cases, tax incentives don’t make the difference as businesses decide where to locate.
A DeWine spokesman didn’t answer directly when asked whether the governor was satisfied that the tax breaks Ohio was giving big tech companies were necessary, or whether they were a good deal in light of the relatively small number of jobs they promise to bring.
A spokesman for Murnieks was asked how, exactly, JobsOhio makes sure that the incentives (that used to be public dollars) it awards actually do make the difference as businesses decide whether to locate in Ohio, expand here, or choose not to leave. He referred that question to JobsOhio.
Asked the same question, JobsOhio spokesman Matt Englehart simply asserted that the agency’s claims of success are true.
“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,” he said in an email without providing further evidence. “JobsOhio’s Vibrant Communities Program, which supports economic development in small and medium-sized communities; JobsOhio’s Ohio Site Inventory Program, which establishes speculative sites and building inventory to make it easy for companies to invest in Ohio quickly; and JobsOhio small business grants are exceptions.”
Despite claims made by Murnieks and JobsOhio, job growth in the Buckeye State has been decidedly substandard.
Arizona State University ranked Ohio 35th in job growth last year. And when the Economic Policy Institute in 2023 looked at state unemployment rates by state since 2007 — the year the Great Recession struck — Ohio ranked near the bottom of states.
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