Governor Kasich made a personal appearance at Monday’s meeting of the Ohio Tax Credit Authority to tout a record-breaking achievement: 30 deals approved at a single meeting. We wondered: how does the current pace of tax credit-based deal-making compare to the efforts of the Ohio Department of Development prior to the creation of JobsOhio?
What we found was that, aside from the increased number of deals approved this month, the Kasich administration’s other primary claim to fame is that they have greatly increased the amount that was spent on tax incentives — issuing over $301 million in corporate tax breaks for first eleven months of calendar year 2011, compared to $155 to 213 million for the three previous calendar years, according to the state’s Tax Incentives Reporting database.
What did the administration get for that additional spending? It turns out, JobsOhio delivers a lot less bang for the buck than the Department of Development acting alone. Looking at the first 11 months of 2011 for which data is available (and eliminating the double-counting of jobs for which multiple types of tax credits were awarded to a single employer), the awards approved by the Tax Credit Authority so far in 2011 have valued each job created or retained at $6,112 each. This compares to an average tax credit of $4,721 per job over the three previous calendar years. In other words, thanks to JobsOhio, taxpayers are now subsidizing employers to the tune of an additional $1,400 per job.
While the number of deals approved at a single meeting may be interesting numerically, it’s not what we should be measuring. Instead, we need to ask what we are getting for the dollars spent. Or, as Governor Kasich is so fond of saying, what is the Return on Investment? Looking at a simple measure of how many dollars are spent per job, it would appear that JobsOhio has not yet delivered on its promise of improving the return on the taxpayer’s investment.
Below is a comparison of the deals approved by the Ohio Tax Credit Authority, as reported in the aforementioned database, for each of the past four years:
116 deals, $212.4 million, 37,015 jobs
$5,737 per job
125 deals, $213.5 million, 48,080 jobs
$4,441 per job
189 deals, $154.6 million, 37,860 jobs
$4,083 per job
2011 (January through November):
168 deals, $301.6 million, 49,343 jobs
$6,112 per job