When JobsOhio was established in 2011, Ohio’s Republican leadership transferred tens of millions from the state liquor franchise to a newly created “private” corporation. Despite being state-initiated, the corporation’s assets were shielded from the transparency normally applied to public funds.
This move was presented as a strategy for economic development. However, critics warned that it could lead to insider dealings and potential corruption.
Now, thirteen years and over $1 billion later, Ohio’s economic growth ranks fifth-worst in the nation, and the state remains embroiled in its largest bribery and money-laundering scandal.
In this context, JobsOhio is poised to provide more than $2 million in economic incentives to a company led by an individual who also oversees a regional entity established by JobsOhio.
The cozy arrangement was reported earlier this month by Youngstown’s 21WFMJ. The station undertook an investigation that showed JobsOhio in April announced the formation of Lake to River in the northeast region as its “seventh and final JobsOhio network partner,” JobsOhio President and CEO J.P. Nauseef said in a press release. Area businessman Chuck George was named board president of Lake to River.
The WFMJ investigation revealed that JobsOhio is nearing completion of an incentive package that includes a $2 million loan to West Warren Development LLC for the construction of a 98,000 square-foot building in an industrial park. Notably, Chuck George is one of the three managing partners of West Warren Development.
In essence, George, who serves as board president of one of JobsOhio’s “network partners,” is receiving a $2 million loan from an economic development agency for a private business he manages. Questions sent to another business run by George went unanswered last week.
When former Governor John Kasich promoted the creation of JobsOhio in 2011, critics argued that the legal distinction used to set up a “private nonprofit economic development corporation” was more about evading scrutiny than about genuine reform. They warned that the lack of transparency could lead to misuse and abuse.
Several conflicts of interest have surfaced. In 2014, the Ohio Ethics Commission alerted two Marathon Petroleum Corp. executives on the JobsOhio board about potential conflicts due to Marathon receiving benefits from JobsOhio.
Additional conflicts have arisen as board members made decisions on incentives. Members with ties to benefiting corporations, such as Sherwin-Williams, Bob Evans, Procter & Gamble, and Manta Media, have also been involved in deciding who gets what incentives.
When questioned about the potential conflict of interest in awarding incentives to a business owned by someone who also leads a JobsOhio board, Communications Director Ryan Squire responded via email, “Charles George is not on a JobsOhio board; he is the President of the Lake to River Economic Development Board of Directors. Lake to River Economic Development is a separate entity from JobsOhio and is one of seven network partners.”
Relying on that legal distinction, Squire asserted that there was no conflict of interest.
“JobsOhio’s board of directors, investment committee, and an independent review committee decide which projects receive financial assistance,” he said. “JobsOhio does not deviate from that process. However, if a board member has a perceived or actual conflict of interest, the conflict is noted, and the board member is not allowed to participate in conversations or decisions about the project. Regarding this project, there was no conflict concerning a JobsOhio board member.”
The announcement of Lake to River was made under the JobsOhio logo, with press releases quoting both DeWine and Nauseef. In response to follow-up inquiries, JobsOhio spokeswoman Angela Hall confirmed that DeWine supported the creation of Lake to River, raising questions about how distinct the entity truly is from its founders.
George, who serves as both the president of the Lake to River Board and a beneficiary of JobsOhio incentives, was politically connected well before the industrial park project. In May 2018, Kasich appointed him to the Youngstown State University Board of Trustees, a prestigious appointment.
Regarding the origins of the award to George’s company, Squire noted that another “network partner” — on whose board George also served — presented the project to JobsOhio last year.
“Team NEO alerted JobsOhio to this opportunity in March of 2023,” Squire said. “At the time, Charles George was a member of Team NEO’s board of directors. Team NEO is a separate entity from JobsOhio and is one of seven network partners.”
WFMJ’s report raises concerns about the timeline of George’s company and the awarding of benefits. Specifically, it questions whether George and his partners would have pursued the project without the incentives, suggesting that the benefits might be a giveaway of former public funds to an insider.
Timothy J. Bartik, an economist with the Upjohn Institute for Employment Research in Kalamazoo, Mich., reviewed 30 studies on the effectiveness of economic development incentives in the U.S. In his 2018 paper, Bartik found that 75% of businesses would have made their location, expansion, or retention decisions regardless of the incentives. If this holds true, it implies that a significant portion of economic development incentives may be ineffective and wasted.
The timeline for George and his partners’ creation of West Warren Development and the industrial park project indicates that their plans were in place before they applied for benefits. According to WFMJ, West Warren Development LLC was formed on March 17, 2022, acquired land for the industrial park on April 21, 2023, and applied for incentives a month later. This raises the possibility that George and his partners either did not require the incentives or were confident in receiving them.
Ohio’s investment in economic development schemes has shown questionable results. The state has sacrificed over $1 billion in liquor revenue to fund JobsOhio and is also forgoing another $1 billion annually due to an LLC tax break benefiting the wealthiest individuals.
Despite promises, a 2022 study found that the LLC tax break has resulted in few new jobs. Additionally, the Federal Reserve Bank of Cleveland reported earlier this year that Ohio’s economic growth ranks fifth from last in the nation.
Furthermore, taxpayers are spending nearly $1 billion annually on private school vouchers that largely benefit families who can afford private education. In contrast, a vital program providing nutritional support to disadvantaged school children remains underfunded. The Columbus Dispatch reported last week that 136,000 Ohio school children are hungry but do not qualify for free or reduced lunches.
With the pandemic-era program that provided free lunches to all children having ended, the state is struggling to address the issue. Although DeWine has positioned himself as an advocate for children and education, he remarked, “My question is, should taxpayers pay for it?”
