State officials in Ohio say General Motors violated the terms of two state economic development agreements when it closed Lordstown Assembly last year – and it now it wants the automaker to repay $60 million in public subsidies it was previously granted.
Investigative journal ProPublica recently dug up Ohio state records that show GM had pledged to maintain operations at the Lordstown Assembly plant until at least 2027 in exchange for “tens of millions of dollars,” worth of tax breaks. After GM closed the facility and sold it to Lordstown Motors, Ohio’s Development Services Agency sent GM a memo saying that it intended to recommend the state’s tax authority terminate the previously agreed upon incentive program and request a full refund from the automaker. ProPublica also reports that GM has not disclosed the potential liability to shareholders in financial filings.
Ohio spokesman Todd Walker said this week that the state intends to discuss the matter of the GM tax incentive program at the tax authority’s next assembly on July 27th. ProPublica’s report indicates that GM has a provision on the books that would allow state regulators to consider both market conditions and whether or not the company maintains a presence in the state when deliberating over the termination of an agreement. GM no longer operates a vehicle assembly plant in the state, but it is currently building a $2.3 billion lithium-ion battery plant in partnership with LG Chem in the Lordstown area. It also operates a parts distribution center in Cincinnati and is building a new $175 million engine components plant in Brookville, Ohio.
In a statement released this week, GM spokesman Dan Flores said the company is “respectfully asking the state to consider our belief that a repayment of the tax credits would be inconsistent with our significant manufacturing presence in Ohio and the Mahoning Valley.” Troy D. Kennedy, a property tax manager for GM, also asked the state to consider the current economic situation when making its decision.
“Cash preservation is critically important to General Motors to support a vigorous emergence from the economic and global health crisis,” Kennedy said in a letter to the Ohio Development Services Agency, as cited by ProPublica. “We respectfully request your assistance to help us drive towards a full recovery by choosing not to require repayment of all, or a significant portion of, the tax credits.”
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Comments
Good for the State of Ohio. All these major companies like dining off the public gravy train! The best thing would be that these states quit competing for facilities, let the companies pay all the taxes and quit having the public saddling part of these costs.
I’m aware of a situation where a state put in a rather expensive road system around a facility, and a couple years later the firm left. Of course the taxpayers were left holding the bag. The only thing worse is building sport facilities with public money!
you ain’t see nothing yet. tesla is currently negociating with texas.
texas is going to grab their ankles and set a new standard for state corporate welfare.
GM never learns, they sold the failed california factory to Tesla and look at the success it is now. Lordstown is just another fine GM self inflicted disaster.
The same with the virtually Closed down Oshawa Assembly Plant ,Where GM shot themselves in the foot with many Canadian buyer opting for Kia , Hyundai, ,Toyota ,Honda, and Mitsubishi sedans and CUV’s Especially after loaning them 10 billion to stay a float in 2008-9 ,just no respect as a founding plant of the GM organization or loyalty to a great management ,staff and hourly workers that earned them billions that were transferred to the US. to increase the North American profits over decades !
Guys, tax breaks are given to draw or keep manufacturing, OK? So this agreement was for breaks and from what it says everyone agrees to keep production until 2027. Since GM clearly has a couple “outs”, I seriously doubt Ohio will pursue this but it IS an election year so there will be posturing. There is ZERO Corporate Welfare in this process, its about luring JOBS to the elected officials area…
Taxes are never collected on plants that don’t materialize, such the BS from AOC concerning Amazon in her NYC district. Talk about an absolute idiot, the citizens are just as stupid if they don’t oust that ideologue. If there is no plant there is no taxes and zero jobs. Except when a plant is built construction takes place, the newly employed people pay income taxes, the jobs spur businesses, restaurants, gas stations, stores, etc… so the economy may not get R/E taxes or income taxes from THAT business, but areas gain ton’s of money IF they get the plant. That’s why they all compete so aggressively to get these incredible job opportunities as the long term gains is tremendous vs some income taxes or R/E taxes, etc…
Look at Greenville-Spartanburg with BMW, Mercedes in Alabama, Kia and Hyundai in Georgia/Alabama, the growth of these areas have been simply unbelievable. Those areas were largely farmland and former textile zones.
GM is in a difficult position as any plant they build or keep has UAW wages/benefits so they dumped Lordstown but are building a new state of the art plant and you better believe it’ll be automated to the max. Wages/Benefits are expenses and everyone has to keep them low…
Sad how The state of Ohio has to sue GM to honor their contracts. I wonder what GM would do if a customer or vendor decided they weren’t going to pay GM.
Wouldn’t it be nice to buy a new vette and then decide not to pay and still keep the vette?
That is basically what GM is doing.
Sad that corporations can get away with this behavior.