Business Journal Editorial: Promises Made, Promises Kept?

YOUNGSTOWN, Ohio — A 50% success rate is nothing to cheer about. 

According to the front-page story in the MidMay edition of The Business Journal, half of the 94 projects that received enterprise zone tax abatements from the city of Youngstown between 1991 and 2017 failed to meet their job creation promises. 

One in four, in fact, generated no net new jobs. 

This story is the first in a series of investigative reports resulting from painstaking research by The Business Journal’s Dan O’Brien in partnership with the nonprofit news organization ProPublica.

O’Brien and ProPublica examined hundreds of city documents related to these development deals, in which companies were offered incentives that included tax abatements, grants and free land. 

Devastated by the collapse of the steel industry in the 1970s and 1980s, Youngstown leaders were forced to aggressively pursue new businesses to replace the thousands of lost jobs and income tax revenue no longer coming into city coffers. 

National economic downturns over the decade heightened the competition from other states that offered their own incentive packages as well as warmer climes, access to advanced research centers and, in the case of right-to-work states, wage rates not driven by labor unions.    

To be sure, there have been success stories, such as the Toys R Us distribution center that operated here for a few decades, but closed a few years before the national toy retailer declared bankruptcy and shuttered its stores. Most significant is the much-heralded $1 billion-plus Vallourec pipe mill.

Altogether, however, regardless of the intentions – good or ill – of city officials who offered the incentives or the companies that benefited, the result was job creation far below what was promised. 

Equally disappointing is the price paid by those with no voice, Youngstown’s children, as tax abatements reduced revenue coming into the city school system. Given that the availability of a well-trained, well-educated workforce is a leading development incentive, that lost revenue handicapped efforts to develop the inner-city workforce. 

It’s true that a company choosing to locate elsewhere brings no investment here. 

It’s no less true that when businesses fall short on their part of the tax-break bargain, we all lose. 

There will be those who will decry these stories as they appear in the coming weeks. In a world in which bad news dominates headlines, they’ll ask why a publication dedicated to championing the region as a whole and the business community in particular is dredging up the past and drawing attention to business and local government failures.

Failing to expose costly economic development incentives and promises not kept does this community no favors, and risks repeating the mistakes of the past, a myopia this region can ill afford. 

Read these stories with an open mind and help move our region forward.    

Copyright 2024 The Business Journal, Youngstown, Ohio.