Omnicare in 1998 moved from downtown Cincinnati to nearby Covington, Kentucky, the town literally across the Ohio River from Cincinnati, after receiving $4 million in economic development incentives to make the move. After that economic development package expired (as in, Kentucky could no longer legally ask the company to repay the benefits it was given), Omnicare announced in 2011 that it was…. moving right back to downtown in Cincinnati after receiving $6 million in economic incentives from the State of Ohio under Governor Kasich. Because the commercial landlord that owned the space Omnicare moved to ALSO was receiving economic incentives, the new Ohio space for Omnicare cost the company “as close to free as you can get,” according to the landlord. So with near free rent and $6 million in massive tax credits, Omnicare moved back without so much as creating any actually new jobs to the region.
Kasich actually used the news of Omnicare to defend against the job losses caused when Chiquita closed its corporate headquarters in Cincinnati. And what did Omnicare have to promise Ohio gave $6 million in tax incentives?
[Omnicare’s CEO] agreed to move 484 jobs to Cincinnati. He also agreed to expand to 630 jobs in Cincinnati over 10 years.
Virtually all of the deal with Ohio gave millions in tax breaks to the company for doing nothing more but to change its workers commute time by putting the company on the same side of the river it had been back in 1998.
Never mind that the company had in 2006 agreed to pay the State of Michigan over $50 million to settle claims of Medicaid fraud. the largest such settlement in the state’s history. In 2010, just a year prior to Kasich’s big announcement, Omnicare also agreed to pay the following:
Omnicare agreed to pay $21.1 million to settle a whistleblower lawsuit, $11.6 million to Michigan and $9.5 million to Massachusetts. The states alleged Omnicare defrauded Medicaid programs by overcharging the agency for drugs.
But none of this didn’t stop Kasich from including the CEO of Omnicare along with CEOs of American Greetings and Bob Evans to make a three minute promotion video touting how awesome JobsOhio is:
What’s amazing about this 2011 video is that how poorly it’s stood the test of time. Despite the fact that American Greetings package actually allowed it to keep its incentives by cutting jobs to a certain point, the company had to back out of the deal shortly thereafter. American Greetings had actually laid off 2,100 of its Ohio workforce within the first year after Kasich and the GOP legislature passed legislation, specifically, to give it a tax break and its over $90 million package.
Bob Evans, you may recall, recently announced that it was selling its brand new corporate headquarters built with state tax assistance, so it could then lease it back… simply to boast its stock price to please its Swedish billionaire investor. To date, Kasich still has not definitively said whether Ohio can recoup the $8 million it spent in nothing more than a complicated real estate transaction to help a billionaire make more money.
So sure, American Greetings, Bob Evans, and Diebold turned out to be spectacular failures, but Kasich still has Omnicare right?
Yes, apparently all those tax incentives and below market rent did was not create an environment to create jobs, as Governor Kasich promised, but instead put the company in just the financial shape to be ripe from a corporate merger with CVS, who is now cutting Omnicare’s Ohio workforce by 40%. Including among the people potentially losing their jobs, the current CEO of Omnicare, who will be paid over $20 million under his contracted “golden parachute” if he loses his job due to the acquisition. All JobsOhio did was create the economic conditions for the Cincinnati/N. Kentucky region to lose 232 jobs. This is what Governor Kasich calls job creation.
Governor Kasich swears that JobsOhio operates under a trade secret ROI (“return on investment”) formula that JobsOhio uses to sniff out which company packages are good deals for taxpayers versus corporate welfare boondoogles where taxpayers are merely subsidizing investor’s wealth with little to no return on promised job creation.
It’s clear that JobsOhio secrecy does not exist to ensure its success, but to gloss over and hide its failures.