Hundreds of millions more in incentives offered to Intel

Ohio was already poised to offer Intel $1.9 billion to build a $20 billion semiconductor plant in Central Ohio. But a public policy group is calling out what it says are previously undisclosed tax breaks that would be worth hundreds of millions more — at least.

A slice of those tax breaks would cost funding sources for local governments and libraries.

The group, Policy Matters Ohio, had previously said that while the Intel project promises to be a boon to the Ohio economy, state officials need to build in sufficient protections for taxpayers in case it goes bust.

Adding to the need to scrutinize Intel incentives is the fact that Gov. Mike DeWine owns at least $1,000 of stock in the company, but he won’t disclose how much.

Many of the incentives are now before the legislature as part of the state’s $3.5 billion capital projects budget.

In its statement issued Wednesday, Policy Matters noted that “five new tax exemptions have been included in the bill that were not a part of the incentive package previously disclosed by the DeWine administration.”

According to a fiscal note by the Ohio Legislative Service Commission, they include:

• An exemption from the commercial activities tax for the sale of any capital equipment that costs at least $100 million per item
• A sales tax exemption for any equipment primarily used for research and development at the “megaproject”
• A sales tax exemption on construction materials
• A sales tax exemption “for certain items used in a manufacturing process at a semiconductor megaproject site”
• Job creation tax credits to Intel and its suppliers for up to 30 years

The amount of goods and services that would be eligible for the tax breaks is not clearly defined, so it’s hard to determine the exact cost to taxpayers of the breaks. But the fiscal note said it wouldn’t be cheap.

“Those provisions will decrease state revenues by hundreds of millions of dollars across several fiscal years, depending on the level of investments by the semiconductor business and its suppliers in Ohio,” it said.

It added that 96.68% of those losses would be absorbed by the state’s general revenue fund, while the rest would come from the local government and library funds, which flow back to local communities across the state.

“Funds deposited into the (local government) and (public library funds) are distributed to counties, municipalities, townships, and public libraries according to statutory formulas and decisions by county budget commissions,” the fiscal note said.

A DeWine spokesman couldn’t immediately be reached for comment about why the proposed tax breaks are only now being made public. But the Policy Matters statement said the public should have more time to consider them.

“These new exemptions can’t possibly be subject to sufficient scrutiny in a day’s time,” it said.

It added that while provisions had been proposed to claw back other Intel incentives if the company doesn’t live up to its commitments, “$391 million in other infrastructure funding the state is providing does not appear to be covered by the clawback protections in the pending legislation. The bill does not sufficiently protect Ohio residents if the project falters.”

As part of the statement, Policy Matters Research Director Zach Schiller said, “The General Assembly should ensure that the maximum benefit to Ohio flows from the Intel project and that there is clear accountability for the extraordinary incentives awarded to Intel and its suppliers. As currently constructed, the legislation does not accomplish those goals.”

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This story was republished from the Ohio Capital Journal under a Creative Commons license.