Dayton
Daily News...
More than
half of firms fail to meet job creation promises
January 8, 2012
More than
half of the companies that accepted state tax incentives to bring new
jobs to
the Dayton area or keep existing ones here failed to follow through on
their
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
given to
companies in Montgomery County and surrounding counties.
But only 38
percent of companies in the Dayton region delivered fully on the
promised
number of new jobs or training. The statewide average was 52 percent.
The state
has not yet sought to recover any of the money from most companies.
In some
instances, the state extended its deadline.
In one
case, Computer Sciences Corporation in Beavercreek, the state reduced
the
company’s 15-year tax credit from 65 percent to 55 percent after it
failed to
retain or create the required 350 jobs and retain 200 more. The amount
by which
the company missed the mark was not available.
Eight
companies have still not turned in their final reports, due in 2010.
That makes
it impossible for government officials to determine whether or not they
held up
the deal.
The state
plans to use the attorney general’s report as a benchmark for
improvement, said
David Zak, chief of the Ohio Department of Development’s business
services
division. “We’re not happy about the percentage (of compliance),” Zak
said.
He said a
new process, which includes JobsOhio, the nonprofit corporation created
to lead
Ohio economic development initiatives, should improve the quality of
economic
incentive deals.
“As we move
forward, we’re going to get better and more efficient,” he said.
The new
administration will also have the benefit of foresight. All the
Dayton-area
deals the AG’s office reviewed were struck before or in the early
stages of the
recession.
Companies
are struggling to meet the pre-recession employment numbers; they are
instead
hiring temporary employees to save money, said Timothy Downs, Dayton’s
assistant director of economic development.
For
instance, Dayton in 2007 gave Gem City Metal Technologies a $150,000
grant to
create 15 jobs and retain 55 more by the end of 2011. Gem City was also
the
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
submit a
final report. A message left with the company for comment was not
returned.
When Downs
checked in on Gem City last September, he found the company had hired
17
temporary employees and retained 50 full-time employees. The company’s
deadline
has expired. If nothing has changed, Dayton could technically try to
recoup its
money. But the city is hesitant to drop the hammer on financially
struggling
companies, Downs said.
“We don’t
want to try to squeeze $50,000 if that is going to cause them to lay
people
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
overall
helped bring jobs to the area and kept them here. In 2007, the county
gave
Caterpillar $750,000 to create 500 jobs. Tuss expects the result to be
closer
to 600 jobs.
“It’s one
of those situations where you have to look at what is in the best
interest
overall in terms of preserving the tax base growing the tax base” while
protecting taxpayers, Tuss said.
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