When JobsOhio was created in 2011, the state’s Republican leadership placed tens of millions from the state’s liquor franchise in the hands of a newly created “private” corporation. Even though the corporation was created by the state, its assets were placed outside the transparency required of the public money it once was.
This was done in the name of economic development. But critics feared it would open the door to insider trading and possible corruption.
Thirteen years and more than a billion dollars later, Ohio’s economic growth is fifth worst in the United States, and Capitol Square is still the most crowded corruption scandal and money laundering in the history of the state.
Against this backdrop, news emerges that JobsOhio has awarded more than $2 million in economic incentives to a company run by a man who is also the head of a regional entity created by JobsOhio.
The cozy arrangement was reported earlier this month by Youngstown Magazine 21WFMJThe station conducted an investigation that found that JobsOhio in April announced the creation of Lake to River in the Northeast region as “the seventh and final JobsOhio Network Partner,” JobsOhio President and CEO JP Nauseef said in a press release. Local businessman Chuck George has been named chairman of the Lake to River board.
The WFMJ investigation also found that JobsOhio is in the process of finalizing an incentive package that includes a $2 million loan to West Warren Development LLC to build a 98,000-square-foot building in the industrial park. Perhaps not coincidentally, George is one of West Warren Development’s three managing partners.
In other words, George is the chairman of the board of one of the “network partners” of an economic development agency that lends at least $2 million of what used to be public money to a private company he heads. Emailed questions to another company George runs went unanswered last week.
When former Gov. John Kasich endorsed the creation of JobsOhio in 2011, critics said he was using a distinction based more on legal jargon than reality to transfer a huge pool of public money to a “private, nonprofit economic development corporation” and thereby avoid the scrutiny that public money is subject to. Critics warned that the system would be open to abuse in the absence of such transparency.
And there were some cases of clear conflict.
In 2014, the Ohio Ethics Commission notified two Marathon Petroleum Corp. executives who also served on JobsOhio’s board of directors of a potential conflict because Marathon received benefits from JobsOhio.
There were other apparent conflicts as board members decided who would receive which incentives. Board members’ ties to corporations that benefited from JobsOhio’s largesse included Sherwin-Williams, Bob Evans, Procter & Gamble and Manta Media.
Asked about potential conflicts in giving incentives to a company owned by the man who chairs the JobsOhio board, communications director Ryan Squire responded in an email: “Charles George does not serve on the JobsOhio board; he is the chairman of the board of Lake to River Economic Development. Lake to River Economic Development is a separate entity from JobsOhio and is one of seven network partners.”
Citing this legal distinction, Squire argued that no conflict of interest could exist.
“JobsOhio’s board of directors, investment committee and independent review committee decide which projects will receive financial assistance,” he said. “JobsOhio does not waive that process. However, if a board member has a perceived or actual conflict of interest, the conflict is noted and the board member is barred from discussions or decisions regarding the project. There was no conflict involving a JobsOhio board member with respect to this project.”
Lake to River was announced under the JobsOhio logo in a press release that quoted DeWine and Nauseef. In response to additional questions, JobsOhio spokeswoman Angela Hall said DeWine encouraged Lake to River to form. So how separate the entity is from its creators remains an open question.
George, who is also the chairman of the Lake to River Board and a JobsOhio beneficiary, was politically motivated long before the industrial park project was even conceived. In May 2018, Kasich appointed him to the Youngstown State University Board of Trustees – one of plum meetings as part of the governor’s gift.
Asked about the genesis of the award for George’s company, Squire said another “network partner” — on whose board George also served — brought it to JobsOhio last year.
“Team NEO informed JobsOhio of this opportunity in March 2023,” Squire said. “At that time, Charles George was a member of Team NEO’s board. Team NEO is a separate entity from JobsOhio and is one of seven network partners.”
WFMJ reported that the timeline of George’s company’s formation and benefits also raises questions. Namely, would George and his partners have taken on the project even without the incentives?
In other words, are these incentives tantamount to handing out senior public money to an insider?
Timothy J. Bartik is an economist who studies economic development. Upjohn Institute for Employment Research in Kalamazoo, Michigan. In 2018, he published an article in which he reviewed 30 significant studies on the effectiveness of economic development incentives in the United States.
Bartik concluded that 75% of businesses would have made the decision to locate, expand, or stay even if the incentives had not been offered. If this is true, three-quarters of economic development incentives are wasted money.
The timeline of what George and his partners did to form West Warren Development and begin the industrial park project shows their plans predated the application for benefits.
As WFMJ reported, West Warren Development LLC, a company formed on March 17, 2022, bought the land for the industrial park on April 21, 2023, then applied for benefits a month later. That suggests George and his partners either didn’t think they needed the benefits — or they were confident their application would be approved.
Ohio is investing heavily in these types of economic development programs, and the benefits are questionable.
The state not only gave up over $1 billion in alcohol sales revenue to fund JobsOhio. The state also provides another $1 billion annually to fund LLC Tax Relief which largely favors the wealthiest.
Despite promises, 2022 study shows that LLC splitting is effective few jobs. On the macroeconomic level, the Federal Reserve Bank of Cleveland reported earlier this year that economic growth in Ohio was fifth from the end.
In addition, taxpayers currently spend almost $1 billion a year on vouchers for private schools which are mainly used by families who could already afford to send their children to private schools.
Meanwhile, a program that provides a fundamental economic and developmental benefit to humanity — nutrition for disadvantaged school children — is going down the drain. The Columbus Dispatch Last week it was reported that 136,000 school-age children in Ohio are hungry but do not qualify for free or reduced-price lunches.
The state is grappling with what to do about it after a pandemic-era program that provided free lunches to all children expired. DeWine, who positions himself as an advocate for children and education, said state leaders will figure it out.
But then he made a perhaps telling statement about his financial priorities.
“My question is, should taxpayers pay for this?” he asked.
