November 1, 2014

$400 million for Sears? Ohioans deserve to see the ROI

Even as he and his administration cut billions from Ohio schools and local governments, Gov. Kasich seems to think Ohio is a bottomless well when it comes to doling out tax breaks and other “incentives” to corporations. Indeed, tax incentives often seem to be the biggest part of the Kasich “economic development” strategy.

But according to the Governor, taxpayers have nothing to worry about: he and his JobsOhio team know what they’re doing. No incentive is proffered unless it will bring Ohio a positive “return on investment”, or ROI, as the experts call it.

Of course, they won’t share with the rest of us what their actual calculations are on any given deal. Nor, for that matter, will they tell us what their ROI formula is or how they calculate it. They claim “proprietary information” and all that. They tell Ohioans we should simply trust them not to waste taxpayer money and just have faith that the ROI will be positive.

And so it was in the wake of news reports that the Kasich team had offered Sears $400 million worth of “incentives” to move its corporate headquarters from Chicago to Ohio. Ultimately, Sears opted to stay put. But that didn’t stop our Corporate Cheerleader in Chief from bragging about his bold offer. “We got really close,” he said this week, “and that gets everbody’s attention.”
Yes, it did.

But what’s also gotten everyone’s attention is yesterday’s announcement by Sears Holding Co. that it will soon shutter up to 120 Sears and K-Mart retail stores nationwide. A drop in “holiday sales” is part of the reason–but so is the fact that sales were down over 5% in the 8 weeks leading up to Christmas. On-line sales have so hurt Sears that shares of the company have plunged nearly 50% in the last year.

To the layman, of course, all this makes Kasich’s $400 million offer to Sears look a little, well, suspect.

But we’re sure the Governor, Mr. Kvamme, and the rest of the JobsOhio team know something that we (and Wall Street) don’t.

And to prove it, how about they break precedent–just this once–and tell us what the ROI was for the proposed Sears deal? Or, at least, how they calculated that ROI. It would make a lot of skeptical Ohioans breathe easier.