Companies that do business near Ohio’s capital get far more tax breaks for hiring new workers than companies in Southwest Ohio – or anywhere else in the state.
Known as job-creation tax credits, the state tax breaks can be worth thousands or even millions of dollars to companies that receive them in exchange for expanding their workforce.
An Enquirer analysis found that Franklin County, home to Columbus, gets more tax-credit projects, more promised jobs, more potential payroll and more tax-credit value than any county in Ohio.
- Database: Where the tax breaks go
Over the past four years, Franklin County landed 98tax-credit projects – almost twice as many as any other county. It received more than 20 percent of all promised jobs and payroll tied to the state’s tax-credit program, compared to 5 percent of promised jobs and 7 percent of payroll for Hamilton County.
The potential value of tax credits to business: nearly $70 million in Franklin County, just $25 million in Hamilton County.
“We need to be more aggressive,” said Hamilton County Commissioner Greg Hartmann. “It certainly sounds like, because state government is based in Franklin County, they get a disproportionate amount.
“We need to push on the state to let them know we want a fair share.”
County population gap doesn’t explain disparity
The tax credits are one of the most important tools Ohio uses to lure companies from other states or to keep businesses here. The credits allow companies to write off a percentage of their payroll taxes based on the number of new jobs they create and the wages they expect to pay. Not everyone likes them – critics have described them as corporate welfare – but they are routinely part of the conversation when businesses talk about expanding or relocating.
Gov. John Kasich’s JobsOhio is in charge of putting together the tax-credit deals, but final approval must come from Ohio’s Tax Credit Authority, a board of economic development experts from across the state. It’s impossible to know how many applications are considered because the process is secret.
The Enquirer examined every deal approved by the Tax Credit Authority since 2010 and found Franklin County led the way in promised jobs and payroll each of the past four years. Franklin County’s population is about 400,000 greater than Hamilton County, but population alone doesn’t account for the disparity.
Southwest Ohio’s Hamilton, Butler, Warren and Clermont counties together have 400,000 more people than Franklin County, but combined they still got fewer promised jobs and about $30 million less in tax-credit value. Even Cleveland’s Cuyahoga County, the state’s largest county, lagged well behind Franklin.
“I’m surprised by the numbers,” said Jim McGraw, who leads the economic development arm of Keating Muething & Klekamp in Cincinnati. “It’s difficult to explain why there is such a large discrepancy.”
Growth, location might explain Franklin’s edge
JobsOhio and state development officials say no county receives preferential treatment. “We’re not getting any direction from JobsOhio or the Development Services Agency that says anything other than everybody has an equal opportunity,” said David Smith, a member of the Tax Credit Authority and director of economic development for Duke Energy. Instead, Smith and others say, several factors could play a part in Franklin County’s good fortune.
Some, like Hartmann, chalk it up to proximity. They say businesses in Franklin County are more aware of their options and better connected to state economic development officials, so they get more deals. That doesn’t mean anyone is breaking the rules, they say, only that those in Franklin County are better positioned to take advantage of the job-creation tax-credit program.
“They’re all playing in the same sandbox up there, government and business people,” said Dave Young, a Warren County commissioner and the owner of the Jobs Store staffing company. “When you get into central Ohio, government is so pervasive that I think there’s more of a sense that this is what everyone does, so I’m going to do it, too.”
He said businesses in Southwest Ohio may just be less inclined to seek tax credits, either out of a sense of “rugged individualism” or because they simply don’t know they might qualify for tax relief.
Smith lends some credence to the theory that location matters. “I do think that, if you’re in the Columbus area, just because you’re so much more aware of what’s happening, you are by nature more in tune with those sorts of things.”
Region’s straddling states limits eligible businesses
Southwest Ohio’s closeness to Kentucky and Indiana also might play a role in the region’s performance, because Greater Cincinnati’s economy covers parts of three states. All businesses within a mile of downtown Columbus, for example, are eligible for tax credits and show up in Franklin County’s numbers. A mile south of downtown Cincinnati, businesses aren’t eligible because they’re in another state.
Another possibility is that Franklin County’s growth and local economy make it more attractive to businesses and, therefore, more likely to get tax-credit deals. Franklin County’s population grew 9 percent between 2000 and 2010, while Hamilton County’s shrank 5 percent. Further, because of its central location, McGraw said, Columbus is a logistics and distribution center that attracts large numbers of lower-paying jobs.
Cincinnati and Cleveland, on the other hand, tend to rely more heavily on manufacturing and other industries. McGraw said that could partly explain why Franklin County got more deals and more promised jobs, but also why the average salary of those jobs was lower in Franklin ($46,000) than in Hamilton County ($60,000).
Still, Franklin County consistently gets more deals and more promised jobs than anywhere else, from a lithium ion battery plant with 1,000 jobs to new bank and medical centers with hundreds of jobs. Since 2010, Franklin County has eight of Ohio’s top 20 tax-credit projects.
Hamilton County has none.
Local input sought less: ‘We’re not involved at all’
For some, the tax-credit numbers reinforce a belief that Southwest Ohio’s economic development efforts are lagging. Part of the problem, they say, is fragmentation among local governments, private groups and the Cincinnati USA Partnership for Economic Development, which all work toward the same goal, but not always in concert.
“I wouldn’t just blame state government,” Hartmann said. “I’d blame ourselves, as well. If we get more united in economic development here, we might be more successful.”
Some of the discontent relates to changes in the way the Cincinnati USA Partnership operates since JobsOhio, the state’s private job-creation agency, essentially made it a branch office. The goal was to improve coordination and efficiency, but some say it made the partnership less responsive to local needs.
Andy Kuchta, Clermont County’s economic development director, said local leaders aren’t as involved in the pursuit and vetting of potential tax-credit projects as they once were because JobsOhio now sets the criteria and makes the decisions.
“We used to have a rule of thumb, some guidelines, but we’ve been told they have their own indicators now,” Kuchta said of JobsOhio. “These days, any more, we’re not involved at all.”
Others say they’re fine with the new arrangement. Michele Blair, Mason’s economic development director, said her community goes to JobsOhio only when she knows tax credits are needed to seal the deal, as when Festo U.S. picked Mason as the site of its new plant. If that means Mason gets fewer tax-credit deals than some other communities, city officials don’t mind. “You try to use taxpayer money conservatively,” Blair said.
Leaders at JobsOhio and the Cincinnati USA Partnership say coordination is improving and that job-creation tax credits are not necessarily the best way to gauge their economic development work. “Some of the largest job gains across the region over the last few years have happened without incentives,” said Matt Davis, interim executive director of the Cincinnati USA Partnership.
Cincinnati Children’s Hospital Medical Center, for example, has added thousands of jobs in the past 10 years without any job-creation tax credits.
JobsOhio officials, however, acknowledge that the strength of local development efforts influences their ability to land tax-credit projects.
When asked about the disparity between Franklin County and Southwest Ohio, JobsOhio President John Minor said his team relies on local governments and businesses to bring potential projects to its attention.
“We see some at our doorstep more than others,” Minor said. “They’re more focused on that.”
Top 10 local projects
These are the largest projects to win job-creation tax credits in Southwest Ohio since 2010, based on the number of jobs companies promised to create:
|Company||County||Jobs||Avg. salary||Credit value|
|MINTH North America Inc.||Warren||418||$30,100||n/a*|
|Omnicare Inc.||Hamilton||343||$74,600||$6 million|
|Festo U.S.||Warren||250||$41,200||2.3 million|
|Paycor Inc.||Hamilton||150||$69,300||$1.7 million|
|Southern Air Inc.||Hamilton||150||$54,700||$1.3 million|
|E.W. Scripps Co.||Hamilton||142||$79,600||$2.7 million|
*-not availableSource: Enquirer analysis of records from the Ohio Development Services Agency