States Retract Their Incentives to Businesses

States want money back from businesses that got tax breaks or cash to open shop locally but didn’t create enough jobs to satisfy politicians, the Wall Street Journal reports. In Ohio, for example, Republican Gov. John Kasich has signed off on several “clawback” orders demanding repayment of development grants and other incentives to companies that haven’t met hiring goals.

Cash-strapped states insist they need the money because revenues have not yet recovered from the economic recession. Businesses say the recession is what slowed their expansion plans in the first place and made hiring more workers impossible.

“For crying out loud we’re doing out darndest,” said Chris Fairchild of YUSA Corp., an Ohio-based auto parts supplier that just received a $15,915 clawback bill from the state. “While other local businesses have gone bankrupt or gone to Mexico or other states, we’re right here. You’d think there would be a little respect for that.”

In New York, the amount spent each year to lure and keep businesses has tripled to $1.55 billion in the last decade, while the number of manufacturing jobs in the state has fallen by a third. Democratic Gov. Mario Cuomo used his budget address to call for reform of economic development spending.