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State must get money’s worth from incentives

January 4, 2012
Salem News

Economic development too often is an incentives game. States offering the best financial lures land the biggest businesses and the most new jobs - theoretically, at least.

Frequently, it doesn't work out that way. States provide juicy tax breaks, outright grants and other incentives, then sometimes learn the recipients are not holding up their ends of the bargain.

That happened nearly half the time the state of Ohio provided business incentives from 2005 through 2010, according to an investigation by Attorney General Mike DeWine's office. His staff reviewed 420 awards to businesses that were required, in exchange, to meet certain conditions such as creating new jobs.

In 200 of those situations, businesses receiving incentives failed to comply with the state's conditions, DeWine's staff found.

State Department of Development officials say they are looking into how much money was handed out to non-compliant businesses. Clearly, in view of the number involved, the amount was high.

Ohio is not the only victim of businesses that accept economic development incentives, then fail to meet requirements for them. Virtually every state has at least some unpleasant experience with the phenomenon.

Especially now, with the state's budget finally being put back in balance, the Buckeye State cannot afford to hand out incentives with little or no return, however.

Development department officials indeed should determine how much money was flushed away through bad deals involving incentives. Information on how many new jobs actually were created through incentives, with per-job figures, should be provided.

It is unlikely the state can simply stop providing incentives to new and growing businesses. Again, in order to compete with other states, Ohio probably needs to maintain some system of incentives. Clearly, however, more safeguards are needed to ensure the state and its taxpayers are not left holding the bag for businesses that either never planned to comply with conditions or were so incompetently led as to make that impossible.

 
 

 

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