When JobsOhio was formed in 2011, the state’s Republican leadership placed tens of millions from the state liquor franchise in the hands of a newly formed “private” corporation. Even though the corporation was formed by the state, its assets were placed beyond the transparency required of the public money it previously had been.

It was done in the name of economic development. But critics feared that it would open the door to insider dealing and possible corruption. 

Thirteen years and more than $1 billion on, Ohio’s economic growth is the fifth-worst in the United States, and Capitol Square continues to be rocked by the biggest bribery and money-laundering scandal in state history.

Against that backdrop comes news that JobsOhio is granting more than $2 million in economic incentives to a company run by a man who also heads up a regional entity created 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 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 develop a 98,000 square-foot building in an industrial park. Perhaps not coincidentally, George is one of three managing partners of West Warren Development.

In other words, George is board president of one of the “network partners” of an economic development agency that is lending at least $2 million in what used to be public dollars to a private business he heads. Emailed questions to another business George runs went unanswered last week.

When former Gov. John Kasich championed the formation of JobsOhio in 2011, critics said he was using a distinction grounded more in legalese than reality to move a huge pot of public dollars to a “private nonprofit economic development corporation” and thus escape the scrutiny to which public dollars are subject. In the absence of that transparency, critics warned, the system would be ripe for abuse.

And there were several instances of apparent conflict.

In 2014, the Ohio Ethics Commission notified two Marathon Petroleum Corp. executives who also sat on the JobsOhio board that they had potential conflicts because Marathon was receiving benefits from JobsOhio.

There were other apparent conflicts as board members decided who would get what incentives. Board members’ ties to corporations enjoying JobsOhio largesse have included Sherwin-Williams, Bob Evans, Procter & Gamble and Manta Media.

Asked about the potential for conflict in awarding incentives to a business owned by a man who heads up a JobsOhio board, Communications Director Ryan Squire said in an 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 claimed there could be 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 creation of Lake to River was announced under the JobsOhio logo in a press release that quoted DeWine and Nauseef. And in response to follow-up questions, JobsOhio spokeswoman Angela Hall said that DeWine encouraged the creation of Lake to River. So how separate that entity really is from its creators is open to question.

George, simultaneously the president of the Lake to River Board and JobsOhio beneficiary, was politically wired long before the industrial park project came along. In May 2018, Kasich appointed him to the Youngstown State University Board of Trustees — one of the plum appointments within a governor’s gift.

Asked about the origins of the award to George’s company, Squire said another “network partner” — on whose board George also happened to sit — brought it 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 reported that the timeline over which George’s company was formed and the benefits were awarded also raises questions. Namely, would George and his partners have undertaken the project even without the incentives?

In other words, do the incentives amount to a giveaway of erstwhile public money to an insider?

Timothy J. Bartik is an economist who studies economic development for the Upjohn Institute for Employment Research in Kalamazoo, Mich. In 2018, he published a paper reviewing 30 relevant studies of the efficacy of economic development incentives in the United States.

Bartik concluded that 75% of businesses would have made the decisions they did to locate, expand or stay even if it weren’t for the incentives they were offered. If that’s true, three-quarters of economic-development incentives amount to wasted money.

The timeline over which George and his partners created West Warren Development and started the industrial park project shows their plans predated the application for benefits. 

As WFMJ reported, West Warren Development LLC formed on March 17, 2022, bought land for an industrial park on April 21, 2023 and then applied for benefits a month later. That suggests that George and his partners either didn’t think they needed the benefits — or that they were confident their application would be received favorably.

Ohio is heavily invested in such economic development schemes, and their benefits have been dubious. 

Not only has the state foregone more than $1 billion in liquor revenue to fund JobsOhio. The state also is passing up another $1 billion a year to fund an LLC tax break that heavily favors the wealthiest.

Contrary to promises, a 2022 study indicated that the LLC break is producing few jobs. And on a macroeconomic level, the Federal Reserve Bank of Cleveland earlier this year reported that Ohio’s economic growth was fifth from last.

In addition, taxpayers are now spending almost $1 billion a year on private school vouchers that mostly benefit families who already could afford to send their kids to private schools.

Meanwhile, a program that provides fundamental economic and human-development benefits — nutrition for disadvantaged school children — is going begging. The Columbus Dispatch last week reported that 136,000 Ohio school children are hungry, but don’t qualify for free or reduced 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 has positioned himself as an advocate of children and education, said state leaders would figure it out. 

But then he made a perhaps-revealing statement about his financial priorities.

“My question is, should taxpayers pay for it?” he asked.

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This story is provided by Ohio Capital Journal, a part of States Newsroom, a national 501 (c)(3) nonprofit. See the original story here.