Part 3 of my series on John Kasich's Raid on Ohio was devoted to both a critique and predictions concerning Mr. Kasich's State of the State speech last week.
A large part of the speech was devoted to Ohio's competitiveness as a place to do business, and of course Kasich sang the Republican mantra that Ohio's taxes are too high, and business won't invest here because of the taxes. He made the comment that Ohio ". . . We're one of the highest taxed states in America, and we're not competetivie. . . ." Source, Page 3
After the fold, I invite you to examine how Republicans choose to compete, and to examine just how local that competition gets, and just how we can examine a single move of a single business and see how a business will play off one taxing jurisdiction against another in the competition for jobs and industrial/commerical facilities. In effect, I can build a case that corporate America, no matter the size has a sense of entititlement that knows no bounds, and that they are perfectly willing to squeeze American taxpayers for concession after concession, when they can afford to make that investment without concessions.
I will start with an excerpt from Governor Kasich's erratic and disjointed speech:
To my friends here, we cannot tax our way to prosperity. We're one of the highest taxed states in America, and we're not competitive. You get these calls from -- from companies saying we're thinking about going, we can't make a profit here, we can't make the numbers work. Well, Ohio has been under siege and not just from India and China. And, oh, yes, we live in a global world, and they're looking every day to take our simple products and move them overseas. And I want all of you to know that I have told one Chinese delegation after another that we don't like the fact that you manipulate your currency, we do not like the fact that you don't play on a level playing field when you trade with us, and it will stop. And we will be a strong voice in Ohio to make sure we get our fair share, India and China – (Applause)
-- they have us under.
But, you know, we're also under siege from Indiana, Kentucky, Georgia. Those from Dayton, NCR, gone. An empty building. We're under siege from North Carolina, from Florida, from Texas. They all come inside the boundaries of Ohio and they try to lure away our best and brightest. They take our jobs, sometimes they take our job creators out of our beloved Buckeye State. We're not going to let that continue. We cannot afford to let that continue. But I must also tell my colleagues here today that
while I believe we can't tax our way to prosperity, we can't cut our way there either.
For an example of how Mr. Kaisch and his JobsOhio privatized Department of Development will help Ohio compete, I would direct your attention to a front page article from the Friday, March 11, 2011 Columbus Dispatch:
Hard-boiled choice
Bob Evans to move headquarters to New AlbanySource: Link will expire on March 18, 2011, after that, pay archive
Despite a bounty of incentives offered by Columbus, the restaurant and food-manufacturing company announced yesterday that it is leaving the South Side, a decision that left Mayor Michael B. Coleman decidedly down on the farm. Gov. John Kasich, on the other hand, hailed the decision, content that the food company at least has chosen to stay in Ohio.
Emphasis mine
But wait, there's more:
The company felt it had four choices, Davis said during a news conference at company headquarters yesterday: renovate its current offices and remain on the South Side; move the headquarters to an existing building; build a headquarters from scratch; or move the company out of Ohio and build on land it owns near Dallas.
Before the news conference, Williamson said the city had worked with the company to try to keep it from moving away and that Bob Evans officials had told Coleman that the company "had no intention of leaving the state of Ohio."
Emphasis mine
So. Mr. Kasich made a claim that was refuted by Dan Williamson, a spokesman for Columbus mayor Mike Coleman. So, if the company expressed no desire to leave Ohio, Mr. Kasich is taking credit for keeping a company HQ inside Ohio, when the company had previously expressed that it intended to stay in Ohio. So who's lying here? Who is trying to take credit for something that was not going to happen, and to imply that it might happen.
Bob Evans needed a new headquarters. It had outgrown an older facility in the South End of Columbus, an economically distressed area, and in fact the Dispatch article identified it as an economically depressed area. No doubt that the South End could have used those 350 high paying jobs and the economic activity it generated.
The players in this move scenario were the City of Columbus, the City of New Albany, Ohio, a very wealthy suburban area which has had enormous growth fueled by Mr. Leslie Wexner, the founder and mogul of the Limited Stores, and current owner of Victoria's Secret, and the deveoper of Easton, and a massive private real estate development in the New Albany area. This is not to denigrate Mr. Wexner, but just to point out that his companies have been a massive generator of new economic activity in the Northeast quadrant of the metro Columbus area. The city of New Albany has grown by leaps and bounds as a result of the massive investment by the Wexner intersts, and the East side of Columbus, the suburbs of Gahanna, New Albany, and Reynoldsburg have all benefited greatly by all of this development activity. The Ohio counties of Franklin (most of Columbus), Licking (part of New Albany) Delaware (which has a large commercial development called Polaris, which through a quirk of Ohio law, lies in Columbus). The final actor in all of this is JobsOhio, the privatized Ohio Department of Development. Upper Arlington, another Columbus suburb was also a bit player in the relocation drama, but apparently was not seriously considered. My personal knowledge of these kind of development fights in central Ohio is that there were probably several other municipalities and counties involved as well, but not mentioned in the story.
So we have three counties, three cities and JobsOhio all involved in the Bob Evans relocation drama. I would suggest that since a move out of state was not being seriously contemplated, JobsOhio had no business being involved in this relocation discussion. It appears that JobsOhio's role here was to work the cities and counties involved for additional tax concessions for a corporate entity that has $1.75 billion in sales last year.
Fair use prohibits me from quoting more of the article, but in a nutshell, Columbus offered an incentive package of $14 million to Bob Evans to move to a new location in Polaris Centers for Commerce. Upper Arlington mayor Frank Ciatola indicated that it could not compete with offers from New Albany and the Ohio development officials.
So now we have the Ohio development officials joining forces with New Albany, and apparently Licking County, against Columbus and Upper Arlington and most likely other suburban entities. My question is why would JobsOhio inject itself into a local relocation matter working with one local government entity against other local entities, all the while seekind more tax incentives in our financially strapped state and local governments? School districts are impacted as well.
To summarize here is what Bob Evans got from the taxpayers of Licking County and New Albany. A package that saved $8.9 million over Columbus' offer of $14 million. Some simple arithmetic would put the value at 23.9 million which ultimately comes from the pockets of the taxpayers of those local governments. That is a transfer payment of local taxpayers taxes from their pockets to the pockets of a corporation that had $1.75 billion in sales last year. This corporation got an $8.29 milion property tax abatement over 15 years. Bear in mind that in Ohio most property taxes go to school districts, so the long term effect is that 529 workers and their families will over time move to New Albany or to a school district near New Albany, and the company won't have to pay $8.29 million in property taxes to educate their children, leaving other parents to pay the bill. Also, the company gets an $826,000 reduction in income taxes, which pay for fire and police protection and other municipal services, sticking local taxpayers with that bill as well.
But wait, there's more. Bob Evans, a company with $1.75 Billion in sales also gets a loan program which gives them an interest free $1 million loan for 10 years. Who do you think will pay the interest on that $1,000,000.00 loan for 10 years. The taxpayers of New Albany and Licking County, of course. And . . ., the state is chipping in a $3 million R & D loan, a job-creation tax credit of $2.4 million, $750,000 in roadwork development, a $250,000 rapid-outreach grant, and a workforce guarantee of $250,000. All of this according to Bethany McCorkle, a Department of Development spokesperson.
In a nutshell, this is how Republicans spell development. The give multi billion dollar corporations millions of our tax dollars, even when an analysis of the situation would not indicate that such mass incentives should be given, even when the companies involved could quite easily pay for the relocation or improvements themselves, and like all tax policy, it involves a redistrubition of income from, in this case taxpayers to corporations who could afford the investment themselves, but, because they have a massive entitlement menatality, and because they know that they can pit neighbor against neighbor and steal money from them, because they can, they will. And Republicans, who will always say that they are looking out for the taxpayer, have no compunction about taking from taxpayers and giving to their corporate sponsors.
I have no idea if or how much Bob Evans Corporation contributes to Republican or Democratic candidates, but it would make for an interesting FEC or Ohio Secretary of State election contribution database. Corporate entities who have a relocation decision will play state vs state, city vs city or even nation vs nation when choosing a site for an industrial or commercial investment. Maybe it is time for our governments to quit being Robin Hood for corporations.
I invite your comments.