Welcome
Daily Tax Report: State

Ohio’s Top Cop Demands $60 Million Clawback of GM Incentives (1)

June 30, 2020, 6:12 PMUpdated: June 30, 2020, 7:41 PM

Ohio Attorney General Dave Yost is asking the state’s economic development office to make General Motors repay $60 million in tax incentives the company received to develop and run its Lordstown plant, which the company pulled out of last year.

Yost’s Tuesday brief urges the Ohio Tax Credit Authority to request for full refund of GM’s tax credit certificate for the Lordstown plant.

“Profit, it has long been said, is not a dirty word in Ohio. But a broken promise is,” Yost (R) said in his brief. “We want our money back, and the Ohio Tax Credit Authority has the authority to start that process.”

GM didn’t immediately respond to a request for comment Tuesday.

“I can’t think of a bigger clawback. To my knowledge it’s the biggest,"Greg LeRoy, executive director of GoodJobsFirst said in an interview. “It’s a rust-belt state that prides itself on manufacturing jobs coming down strict on one of the biggest manufacturers in the world. That speaks volumes about how the discussion on accountability has shifted, even in a recession.”

The Ohio Development Services Agency sent GM a letter in March saying the auto giant’s plant closure meant the company fell short of the obligations for its 75%, 15-year job retention tax credit. The firm was supposed to keep 3,700 full-time jobs at the plant under a deal struck in 2009, but the plant shuttered last year.

GM responded with a letter saying that changes in the car market—specifically a move away from small vehicles like the Cruze, manufactured at Lordstown—meant the firm couldn’t keep open the factory. It also said that the state seeking a clawback could harm further development in the area.

“We respectfully ask the Development to consider our belief that a repayment of the tax credits would be inconsistent with the spirit of economic development and our significant manufacturing presence in Ohio and the Mahoning Valley,” Troy Kennedy, a property tax manager for GM, said in the letter.

Ohio should be especially interested in getting this money back because it was a cash incentive paid to Enbridge based off of employees’ state income tax withholding, said LeRoy. “That is not GM’s money, that is the workers’ pay,” he said.

(Updates with analysis from Greg LeRoy of Good Jobs First.)

To contact the reporter on this story: Alex Ebert in Columbus, Ohio at aebert@bloomberglaw.com

To contact the editor responsible for this story: Jeff Harrington at jharrington@bloombergtax.com

To read more articles log in. To learn more about a subscription click here.