Tuesday, June 1, 2010

Is Strickland abusing tax dollars to gain an electoral edge?

There's no question that Ted Strickland promised to Turnaround Ohio. By the name of his campaign pledge alone, he claimed to have the ability to affect Ohio's economy.

The result? An unemployment rate more than double what it was when Strickland was inaugurated.

Clearly, from a political perspective, Strickland needs good news on the job front. He needs ribbon cutting ceremonies and tours of newly opened businesses to help create the perception that the last 3 and a half years were a mirage and Ohio is running at peak efficiency.

But at what cost? Is Strickland abusing his power as Governor to overpay businesses to come to Ohio?

See this recent announcement about Coda Automotive:
Columbus, Ohio will be the site for a new battery plant for Coda Automotive, according to the Columbus Dispatch. The project will add 1,000 jobs to the area.


“Their incentive package was just clearly the best, and it penciled it out for us,” said Coda Spokesperson K. Forrest Beanum. “When you’re a start-up, it’s all about the finances.”

Ohio Governor Ted Strickland estimated the total incentives offered to Coda at approximately $100 million. Central Ohio leaders also included a pledge to buy 30 vehicles for local executives as part of their package to lure Coda to the region.

The company is now waiting on a federal loan from the U.S. Department of Energy that would fund most of the plant’s costs.
Do some quick math and that comes out to over $100,000 in taxpayer dollars spent per job.

Hell, if we spent that much to get back every job lost under Strickland, we could give every man, woman, and child in the state nearly $4,000 each!

So the question must be asked, is $100k per job the going rate for good publicity in a campaign year?

Now, I know the Governor's office would just respond to this post with some intellectually dishonest talking point asking whether the GOP wants jobs coming to Ohio or not - whether we're willing to do what it takes to get jobs to the state.

Of course we do, but in a cost-effective and fair way - in a way that provides incentives for all kinds of businesses to come do business in Ohio.

Strickland's act of desperation is great news for 1,000 lucky Ohioans, but it's awful news for the taxpayers.

UPDATE: A commenter brought up the incredibly good point that a start-up company isn't exactly the ideal investment when you've got $100 million to burn.

It turns out an electric car company makes it even more so.

One such company, Tesla Motors, which counts Google among its investors, is making headlines for all the cash they've burned through without producing one car.

Meanwhile, Coda Automotive is bragging about former Bush Secretary of Treasury Henry Paulson among its board members and hopes people will buy a car for $45,000 that has a range of 90-120 miles.

Anyone else getting the feeling we're throwing $100,000,000 down the toilet?


  1. A couple of flaws in the scheme. First of all if you run some quick numbers it will be virtually impossible for them to employ 1000 based on the volume they speak of. That's not Ted's fault as businesses often inflate these numbers in order to get more aid. Less than half that is more likely if they are wildly successful, which is unlikely. Remember they have been turned down for fed loan money previously.

    The big issue though is that, as the story says, this is a start up. Ohio has never given any thing near this kind of money to a start up because, well, most start ups fail and are a poor use of taxpayer dollars and a bad public policy decision. Go to ODOD and tell them you're starting a company and ask for funds and you'll get that answer.

  2. That's still at a less costly job per $ ratio than Kasich's tax cut plan.

  3. Its a battery factory not a car factory. The batteries will have applications beyond the car. And 1000 jobs is the initial number. Think big brosef.

  4. Incorrect, Anonymous.

    It's an automotive company. But the factory they are planning to build in Ohio is for their batteries.

    According to the Dispatch, other components of the vehicle will be built in California and China.

  5. Modern Esquire said...
    That's still at a less costly job per $ ratio than Kasich's tax cut plan.

    June 1, 2010 2:38 PM

    As long as it is not related to Kasich, it's acceptable?


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