State aid to Intel lacks safeguards
Posted June 01, 2022 in Press Releases
Legislators should add measures to protect Ohioans
Today, the Ohio House Finance Committee is expected to pass the state capital budget and send it on to the House, where it could be approved immediately. Policy Matters Ohio released the following statement today by Research Director Zach Schiller on the incentives proposed for Intel and its suppliers in the legislation, House Bill 687:
“The General Assembly should ensure that the maximum benefit to Ohio flows from the Intel project and that there is clear accountability for the extraordinary incentives awarded to Intel and its suppliers. As currently constructed, the legislation does not accomplish those goals.
“The bill does not require that Intel hire Ohio residents to fill most of the positions it will create, as it should when the state is providing $2 billion in cash, infrastructure, and tax credits and exemptions. Policy Matters previously proposed that Intel hire Ohio residents for at least 80% of its workforce.
“House Bill 687 would allow the state to claw back the $600 million in cash it is giving to Intel and $300 million for a water reclamation facility if the company fails to meet commitments in a grant agreement with the state. However, as yet no agreement with the company has been made public, so details of an agreement remain unknown. Moreover, another $391 million in other infrastructure funding the state is providing does not appear to be covered by the clawback protections in the pending legislation. The bill does not sufficiently protect Ohio residents if the project falters.
“In addition, five new tax exemptions have been included in the bill that were not a part of the incentive package previously disclosed by the DeWine administration. The Legislative Service Commission estimated in a fiscal note that these exemptions ‘will decrease state revenues by hundreds of millions of dollars across several fiscal years, depending on the level of investments by the semiconductor business and its suppliers in Ohio.’ Any Ohio-based supplier will get a pass from paying the Commercial Activity Tax on items sold to the Intel project. These new exemptions can’t possibly be subject to sufficient scrutiny in a day’s time.
“The bill also lacks language to ensure community input is sought on the substantial impacts of this giant project, which is likely to affect housing, transportation, schools and the environment. The General Assembly needs to fix this bill so that Ohio makes the most of this huge investment and protects our interests ahead of Intel’s.”