$2.4 billion...for what?
Posted February 16, 2023 in Press Releases
DeWine budget proposal transfers huge sum with little accountability
Governor Mike DeWine’s budget proposal would transfer $2.4 billion into a fund that could be used for a vague set of economic development objectives, with no specific parameters limiting how the money could be used.
“The bill has no requirements that corporations benefiting from the state’s largesse will create good jobs with living wages and benefits,” said Zach Schiller, research director of Policy Matters Ohio. “If companies make promises of jobs and investment — for which no standards are laid out in the bill — there is no language requiring them to repay the state if they don’t meet such promises.”
There is also very little if any opportunity for the public to weigh in on the “loans, grants or other incentives” that the fund will be used for. Only the state Controlling Board would have to approve such expenditures — and the bill would remove a limit on how much the board can spend. Hundreds of millions of dollars could be awarded to a corporation with no more than a meeting of this seven-member board.
This isn’t what Governor DeWine told us in his State of the State speech, where he said this money would be used “to prepare infrastructure of large economic development sites in every single part of Ohio.” While some of it no doubt will be used for that purpose, the language in the bill also covers “efforts to attract new business, workforce and residents to the state,” as well as “efforts to expand an advance business, workforce, and community and economic development opportunities across the state.”
The governor portrayed the fund as something that would benefit all Ohioans, who each would be commuting distance from at least one of these developed sites. “While we have had so many successes and everyone is excited about Intel, I have heard a lot of people outside Central Ohio who ask, 'What about us?,'” DeWine said.
But the proposed bill says nothing about that when it comes to the $2.4 billion. It says only that, to the degree it also may tap an oil and gas well fund, the money will be used in regions that produce oil and gas. Nor is there anything compelling any reporting by corporations on what they deliver in exchange for loans, grants or other financial assistance, as existing economic development programs require.
Studies have shown that financial incentives are not a key factor in the vast majority of corporate decisions on where to invest. Yet Ohio is doubling down on this strategy by putting $2.4 billion in a fund with no oversight other than Controlling Board approval. Most of these funds could be better used making broadband more accessible, reducing exposure to toxic lead in houses and water lines, and supporting education of Ohio’s children, to cite just some of the state’s many needs.
The money transferred into the All Ohio Future Fund, as it has been dubbed, “will be held in the fund until specific projects are approved,” according to the Office of Budget and Management. The budget bill only appropriates $40 million from this new fund in the upcoming biennium, so the vast bulk still will have to be authorized.
House Bill 2, introduced yesterday, also looks to “direct state funds to projects across the state for the purpose of economic growth and community development.” When the sponsors add details, they should be sure to include guardrails described above that are missing in the governor’s budget bill.
“The governor’s proposal amounts to a kind of slush fund,” said Schiller. “Putting some state resources into developing sites that could support business is a reasonable idea. But using that as a cover for what could be a set of new unrestricted corporate giveaways is not.”