One would normally think that a state’s official economic development agency was nestled into a state department to best coordinate with elected officials. One would be mistaken in Ohio’s case.
Former Gov. John Kasich bequeathed as part of his legacy the privatization of Ohio’s economic development efforts in the form of JobsOhio in 2011. That agency would have citizens believe they are totally private and not subject to pesky reviews of their books.
But a few politicians — like State Rep. Jay Edwards (R-Nelsonville) and Attorney General Dave Yost — have challenged that assumption.
One question an average citizen may ask is: What is JobsOhio if they are not a state agency?
When he first ran for governor, Kasich voiced his opinion on the Ohio Department of Development, Politifact said. That was to say — partially tear up the department and create a private corporate board to speed things up because government worked too slowly.
The Ohio House of Representatives introduced a bill to make Kasich’s dream become a reality. Although the governor initially thought he would serve as the board’s chairman, that didn’t happen.
The Ohio Attorney General’s Office’s Ohio Economic Development Manual 2017 describes JobsOhio’s mission:
JobsOhio is a nonprofit corporation created by statute to promote economic development, job creation, job retention, job training, and the attraction of business to Ohio. JobsOhio’s economic development efforts focus on developing jobs in a range of industry sectors that produce high-wage jobs. These sectors include advanced manufacturing, aerospace and aviation, automotive, information technology, financial services, and food processing. JobsOhio is an important force for economic development across Ohio and, by law and contract, now undertakes many of the former Department of Development’s obligations (now called the Ohio Development Services Agency).
JobsOhio’s website describes itself as a private entity: “JobsOhio is a private nonprofit corporation designed to drive job creation and new capital investment in Ohio through business attraction, retention and expansion efforts.”
Our strategies and programs are designed to improve the lives of Ohioans and strengthen the communities where they live. Here’s how:
Nine industry targets with five cross sector strategies: JobsOhio focuses on nine industries and five cross sector strategies that help to diversify Ohio’s economy. These industries and strategies leverage Ohio’s strengths and offer significant future investment and job growth. JobsOhio sector teams partner closely with industry leaders to attract new investment opportunities to the state.
A Partner in Business: JobsOhio takes a client-focused approach to projects by listening to companies and addressing their business needs. By partnering with company executives, JobsOhio builds long-term relationships that are unique to JobsOhio’s economic development model.
Improving Communities: In addition to company relationships, JobsOhio values its relationship with local economic development partners across the state. JobsOhio has made investments in communities to revitalize sites, authenticate sites for immediate development, and address workforce challenges.
Return on Investment for Ohio: JobsOhio makes investment decisions that support a company’s unique project needs while also balancing the return on investment benefits to the state. Along with making smart investments, JobsOhio remains highly transparent and holds companies accountable to deliver their metric commitments through their evaluation periods.
Direct and Indirect Results: The impact of JobsOhio on projects extends beyond the reported results. The jobs, payroll and capital investment metrics represent results tied directly to projects. Those metrics do not reflect the projects’ indirect impacts, including construction jobs, supply chain activities and other economic benefits from the investment.
The website also lists a basic timeline:
- February 2011: House Bill 1 creates JobsOhio.
- June 2011: House Bill 153 authorizes transfer of liquor enterprise to JobsOhio.
- July 2011: First JobsOhio board of directors meeting.
- February 2013: JobsOhio purchases liquor enterprise from the state.
- September 2017: JobsOhio named #3 best economic development organization.
JobsOhio says that in 2018, they were responsible for 266 projects with $9.6 billion in capital investments and 27,071 new jobs.
But how does JobsOhio fund its operations to do all this wheeling and dealing?
It’s simple: Every time you imbibe alcohol you fill the organization’s coffers.
JobsOhio is funded partly by the state’s liquor tax, which is now in the JobsOhio Beverage System, the Cleveland Scene said. JobsOhio in a 2018 report said the beverage system created almost $1.2 billion in sales for operating expenses; most of that maintains the beverage system, but about $1.2 million is for economic development and overhead.
The Ohio Department of Commerce says its Division of Liquor Control manages wholesale and retail operations with the goal of increasing profits.
This is a monopoly.
Profits from spirits provide dedicated funding for Ohio’s economic development efforts. The Division, on behalf of the non-profit JobsOhio, is the sole purchaser and distributor of spirituous liquor (intoxicating liquor containing more than 21% alcohol by volume) in Ohio. The Division selects and prices the products, and supplies them to “authorized agents” at no charge. Authorized agents are private businesses which own and operate retail outlets selling other goods and services to the public, such as beer, wine and low proof spirituous liquor, bread, milk, and other grocery items. The agents contract to sell the spirituous liquor products for commission based on sales. There are currently about 450 liquor agencies throughout the state.
The Attorney General’s manual says JobsOhio is under the control of directors appointed by the governor and is exempted from the definition of a public entity by state laws.
Today, JobsOhio is wholly funded by proceeds from the spirituous liquor enterprise formerly owned by the State. This enterprise, per authorizing law, was purchased from the State by JobsOhio, through its nonprofit affiliate the JobsOhio Beverage System, as an exclusive franchise in 2013.
Under the service agreement with ODSA, JobsOhio is the “forward face” for economic development. This means it is responsible for meeting with companies, structuring deals, conducting due diligence, handling applications for assistance, and recommending the incentives to be awarded by ODSA for various projects (although awards can also come from local and regional entities as well). JobsOhio negotiates the incentives with companies to either retain them in Ohio or attract them to Ohio, but all taxpayer-funded awards at the state level are approved by ODSA. JobsOhio also has its own funds (from the liquor franchise) that can be awarded to companies. However, sometimes only local or regional funds, or other non- monetary assistance, will be put into a project.
That’s a lot of money and power for an entity described as nonprofit.
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Image “Downtown Columbus” by JobsOhio.