Yesterday, the Illinois media reported about a leaked internal memo from Sears’ CEO informing the employees of the company’s intent to stay in Illinois after the legislature passed a new set of package with a price tag north of $200 million, nearly doubling the initial offer Illinois made which was still greater than $100 million. In response to news reports that Governor Kasich was offering something in the neighborhood of $400 million in incentives, the Illinois legislature met to approve an even larger package.
That led Sears to declare that if the package was approved, they’d stay.
So, Illinois gets to keep Sears at just a little more than half the cost Kasich will willing to have Ohio taxpayers’ pay to lure it to Ohio. Naturally, John Kasich uses this moment to declare victory, even in defeat:
“To have one of America’s major retailers consider relocating to Ohio is a testament to how far we’ve come in a short amount of time — we are beginning to get back on track,” the governor said in a prepared statement. [Source: Cleveland Plain Dealer, "Sears headquarters isn't coming to Ohio and maybe never was" (Dec. 15, 2011)]
Yes, clearly Ohio has a historical problem attracking major retailers to be in Ohio before Kasich came along. Just ask The Limited, Victoria’s Secret, Federated Department Stores (Macy’s/Bloomingdales), Big Lots… all located in Ohio.
But as the title of today’s Cleveland Plain Dealer reveals, Sears likely never had any real intention to move in the first place and was just looking for a suitor to panic Illinois into making a better offer. First, look at what was motivating Sears into looking into relocation in the first place: their last economic development deal to keep them in the State was about to expire. And it’s only common sense that you’re not going to get the best offer if you only have one bidder.
So John Kasich played a bit role in helping Sears, a company that is bleeding jobs and money, milk Illinois taxpayers for twice as much as the State was already willing to be milked. That’s all.
That’s not just our opinion:
Some economic development experts speculated that Sears never intended to leave Greater Chicago but was simply pressuring Illinois for a new deal as an existing series of tax breaks came to an end. At the eleventh hour, Illinois lawmakers approved a new, 15-year incentive package worth an estimated $275 million.
“I think Sears should give 10 percent to Ohio as a thank you gift,” said Edward Hill, an economics professor at Cleveland State University.
Hill said Ohio mounted a credible poaching threat and Illinois politicians had to act.
“Columbus was at least plausible. Illinois’ tax environment has deteriorated greatly,” said Hill, adding that Sears, the parent company of Kmart and Land’s End, is struggling financially.
“It’s clear they were after financing,” he said. “It was a shakedown for money.” (emphasis added.)
And that’s coming from the same economics professor who tried to defend Kasich’s economic record publicly during the three straight months when the unemployment rate in Ohio went up shortly after 14 straight months of decline.
What Sears did is what the Canton Repository documented was the case with Diebold. And what there also seems to be strong indications was also occuring with American Greetings. Heck, we’d throw Bob Evans in the mix, but they didn’t even have to seek an offer from another State to get an outrageous infusion of corporate welfare. Yet, these are the “successes” that Kasich and his supporters cite as Kasich’s awesome record.
Now, even when faced with a public defeat in which Ohio was, by far, the biggest bidder, Kasich preens like just being runner-up in this corporate welfare patsy contest is a moral victory? Does Kasich not realize that only the corporations who play this game can win?
No related stories.