Nearly two in three companies that received millions in tax credits in exchange for a promise to create new jobs in Ohio failed to follow through on their end of the deal, according to a new state audit.
Of 60 companies that closed out an economic development loan or tax credit in 2024, 39 fell short of their promised jobs numbers. And in nearly half those cases, the state has failed to claw back money from those companies or take other corrective action, according to a new report released Thursday by Ohio Auditor Keith Faber’s office.
Take Truepill Inc., an online pharmacy, which won a state job creation tax credit in 2021. The company was eligible to receive as a credit the value of 1.483% of a new $6.2 million in payroll spread over 120 new jobs in Hamilton County.
But the company has created no new jobs and no new payroll, according to the state audit.
Since the state awarded Truepill the credit, the company was acquired by LetsGetChecked, with the merged company later rebranded as Fuze Health. However, Forrest Gitlin, a company spokesman, said the company has added more than 80 jobs in the Cincinnati area and plans to continue with a new facility next year.
“We are reaching out to the state to ensure our recent hirings and expansions are reflected in its data,” he said.
Other companies fared similarly poorly, at least according to the audit.
Surati, a Canadian company that makes Indian snack foods, won a 1.063% credit in 2021 for generating 108 full-time jobs in Springfield, Ohio with $3.4 million in payroll. None of those jobs materialized, per the audit. The company didn’t respond to an inquiry.
“These agreements are meant to encourage job growth and community prosperity,” Faber said in a statement. “If we’re not going to hold companies accountable for their job and payroll commitments, then these agreements are only depriving Ohioans of financial resources that could be used elsewhere.”
No new jobs, no tax credit, Commerce spokesman says
The shortfalls raise the question of whether the state is providing millions in tax breaks in exchange for jobs that never materialize. The tax credits are expected to cost the state of Ohio $117 million in lost tax revenue in fiscal year 2025.
Mason Waldvogel, a spokesman for the Department of Development, emphasized that the credit is “performance based.” This means a company needs to create a new job – and demonstrate as much to the state – to receive the credit as a percentage of that added payroll.
In other words, it’s based on real data, not the estimates. If a company produces zero jobs, it gets $0 as a tax credit.
However, he said he can’t speak to what happens in the “hypothetical” situation that a company produces only some but not all of the jobs it promised.
He said the department has, in the past few months, gone about modifying or rescinding several tax credit agreements noted as being noncompliant in the audit.
“Under this Administration, the Ohio Department of Development has proven it takes its stewardship of taxpayer funding seriously – including holding companies accountable for the agreements they make and taking the appropriate action when necessary,” he said.
A spokesman for Ohio Attorney General Dave Yost said the office is currently reviewing the audit.
More problems, failed promises
Despite the widespread lack of compliance, the state’s enforcement against the companies is thin. Auditors analyzed a sampling of 92 job creation tax credits. In about 40% of the cases where jobs fell short of rosy predictions, the auditors found the department took either insufficient corrective action or none at all.
Since 2021, companies small and large (Macy’s, Hims Health and Wellness, Dollar Tree are all faulted) failed to meet the jobs and payroll numbers they promised to the state and avoided any recoupment.
In some cases, the shortfalls were more modest. For instance, Carvana, an online car dealership, has claimed the credits as it has built inspection and reconditioning centers (and a “car vending machine”) around the state. The company produced 60% and 47% of the number of jobs promised for two such credits that ended in 2024, and 108% and 78% of the payroll, respectively, in exchange for those credits. The company declined to comment on the audit’s findings.
Barbaricum, a private defense contractor, produced only 4% of the 80 jobs it promised in 2021 in exchange for a credit. The company asked for a copy of the audit but didn’t respond to inquiries.
Some companies that won the credits have all but disappeared. OMEC Smart Card Inc., of China, won a job creation tax credit for a plant for smart cards and key fobs. Only 2% of the promised jobs ever came of it, per the audit, and the company’s website consists only of a PowerPoint claiming a Strongsville location is “under renovation (eta Feb. 2024).”
In many cases for both economic development loans and tax credits, the auditors found Department of Development officials failed to obtain enough information to determine whether the companies lived up to their job creation promises.
Signal Ohio reached out Thursday to eight companies mentioned by name in the audit. None agreed to comment on the record.
A 2021 law change requires the state auditor’s office, which primarily performs accounting reviews of local governments, to review whether state economic incentives were resulting in the intended jobs. Lawmakers tasked Faber’s office with reviewing the companies’ records submitted to the Department of Development each year.