Ohio Seeks to Help Auto Industry

Dayton Daily News - December 30, 2005

Proposes break on electric rates for automakers, suppliers like GM, Delphi
By Laura A. Bischoff

Dayton Daily News

COLUMBUS | Automakers and parts suppliers such as General Motors and Delphi may get a break on their enormous electric bills next year in the hopes of lending a helping hand to the ailing industry in Ohio.

Senate President Bill Harris, R-Ashland, a former GM dealer, said Senate Republicans are preparing legislation to give a tax credit to auto industry members toward the kilowatt hour tax, which is paid on electricity use.

The kilowatt hour tax, started in 2001, brings in about $540 million a year to the state.

The largest electricity users about 170 hospitals, universities and manufacturers pay a special rate and account for about $54 million of the revenue generated by the tax, according to the state Department of Taxation.

The department estimated the proposed tax break would save large auto manufacturers and suppliers about $8 million a year.

Harris did not have details on which manufacturers would be eligible for the tax credit or whether any strings would be attached, such as a promise to retain jobs. One out of six jobs in Ohio are connected to the auto industry, he noted.

“When you’re using the amount of electricity that they use, it’s a huge amount of money,” Harris said.

Zach Schiller, research director for Policy Matters Ohio in Cleveland, was skeptical of the proposal.

“I think we should be careful in adding tax incentives. It’s not at all clear they have a major impact on employment and business. Everyone understands that our auto industry is troubled and we all want to do something to help that. However, we need to examine carefully what the benefits are going to be versus what the costs might be,” Schiller said.

Spokesmen for the Ohio Manufacturers Association and Delphi Corp. could not be reached.

In the Ohio House, legislation is pending to rework Ohio’s job retention tax credit by lowering the investment required of auto industry employers for up to a 75 percent tax break.

Supporters hope it will encourage Delphi and automakers to invest in their plants and keep jobs in Ohio.

It’s tailored to help auto and parts makers with more than 7,500 employees in Ohio, which includes only Delphi, Honda and the Big Three.

Policy Matters Ohio is lobbying against the bill, saying it would create expensive loopholes in the new commercial activities tax and give away 20 percent of the expected CAT revenue before the first penny is even collected.

The bill has the support of Gov. Bob Taft and House Speaker Jon Husted, R-Kettering.

In November, Taft released a plan to help the auto industry that includes tax incentives to retain jobs in Ohio, assistance for automakers with on-the-job training programs and streamlining environmental permits for automakers.

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