DeWine Looking for Deal on GM’s $60M Tax Issue

YOUNGSTOWN, Ohio – Gov. Mike DeWine said Tuesday that he was not aware of General Motors threatening to pull back investment in Ohio should the state mandate it repay more than $60 million in tax credits the automaker received for its Lordstown plant in 2009.

“General Motors has been a good partner with the state of Ohio, they have many plants here,” DeWine said at his regular briefing Tuesday.

However, the governor acknowledged that GM owes the state money because it violated its agreements when it shuttered the Lordstown plant in March of 2019, eliminating 1,600 jobs. Under the terms of two tax credit agreements, GM pledged to keep the plant open at least until 2040. Five years ago, the Lordstown plant employed more than 4,000.

Yet he suggested negotiations on whether the automaker should pay – or how much it should pay — are ongoing.

“While they do owe this money because they didn’t carry out the terms that they said they were going to do, we’re looking for an avenue whereby we could encourage more investment in Ohio and whereby reach an agreement with General Motors,” DeWine said.

The governor said he met with legislators from the Mahoning Valley who urged him to “work something out” with the automaker.

That’s because GM and venture partner LG Chem is in the process of building a $2.3 billion electric-vehicle battery manufacturing plant – Ultium Cells LLC—in Lordstown just northwest of GM’s former plant.

“One of the things they told us was to go back and see if we could work something out,” he said. “We’re doing that. We think it’s the right thing to do.”

The Ohio Tax Credit Authority on Monday scrubbed a vote on the tax matter from its agenda at the last minute, along with a potential tax credit deal for Ultium and the new plant.

Elected officials such as state Sen. Sean O’Brien, D- Bazetta, have said that while GM should owe something, the state should take into consideration its commitment to build the new, high-tech battery factory in Trumbull County.

DeWine said that should a deal not be reached, then the state has “plenty of time to go after them in regard to the money. But it would be best if we could work something out.”

Lt. Gov. Jon Husted added that his office is having regular conversations with GM related to the issue.

“We recognize our mutual obligations,” Husted said. “They have an obligation to the taxpayers of Ohio and we have an obligation to them as well.”

Still, Husted added that the state is looking to encourage GM’s successful efforts in Ohio. “That constructive dialogue is ongoing.”

In June, The Business Journal and ProPublica first reported that the state of Ohio placed GM on notice in March that it violated the terms of two tax-credit agreements worth $60.3 million when it closed its Lordstown manufacturing plant in 2019. In a letter to GM, the state’s Development Services Agency considered recommending to the tax credit authority that it seek 100% restitution from GM for violating the terms of incentives agreements.

GM has said that it shouldn’t repay those incentives, or at least a substantial portion of them, according to documents obtained by The Business Journal and ProPublica.

The automaker cited deteriorating market conditions in the small car segment as a major factor in closing the plant, which at the time produced the Chevrolet Cruze.

In addition, GM emphasized that the state should consider its $2.3 billion investment in building the new Ultium plant in Lordstown, its other operations in Ohio, and that it far exceeded its investment in the Lordstown plant while it was operating.

In late June, Ohio Attorney General filed an amicus brief before the tax authority demanding that it collect the entire amount from GM.

His brief emphasized that GM “had no valid excuse or argument” to deflect its responsibility to Ohio taxpayers.

In an interview with The Business Journal Monday, Ohio Attorney General Dave Yost said he was “disappointed” that the tax credit authority pulled the measures from the agenda at the last minute.

“It’s clear cut,” Yost said. “They took the tax credits then they took the jobs.”

Related coverage:

June 30, 2020: Yost Demands GM Repay $60M in Tax Credits for Lordstown Plant
June 15, 2020: Exclusive: Ohio Seeks $60M from GM for Closing Lordstown Plant
June 17, 2020: GM Should Pay Something for Closing Lordstown: Brown, Portman, Ryan Say
June 24, 2020: DeWine: Ohio ‘Not Actively Pursuing’ $60M Clawback from GM for Lordstown Closure

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