(COLUMBUS, Ohio) – Ohio Attorney General Dave Yost today unequivocally stated – in a brief to the Ohio Tax Credit Authority – that General Motors (GM) should have to pay back every last penny of the $60 million the company took in state tax credits after breaking its promise to the state and the Mahoning Valley.
In January 2009, GM began to receive significant tax credits from the state of Ohio for Lordstown operations. GM made the promise that the company would maintain operations at its Lordstown plant through 2028 and retain 3,700 jobs through 2040. GM made those promises – under contract – in exchange for $60 million in tax credit certificates from Ohio. GM got its tax credits, but it did not fulfill its side of the contract, and closed the Lordstown plant in 2019.
“Accountability is the key to good business and we’re holding GM accountable for not living up to its end of the contract,” Yost said. “We demand the money that is rightfully owed to Ohio – no more, no less.”
GM is the 12th largest company in the U.S. In 2019, the auto manufacturer made a $6.732 billion profit on over $137 billion in gross revenues. At the time of the Lordstown plant closing, GM said its decision to close the assembly facility would save the company $6 billion.
“It is important to note that repaying the tax credits will be at a cost to GM of one percent of its 2019 savings from closing the facility,” the brief reads. “This small charge is [minimal] to GM and could never be construed as punitive.”
A 2019 study by the Center for Economic Development at Cleveland State University estimated that GM’s closure of the Lordstown facility ultimately caused the loss of nearly 8,000 jobs and more than $8 billion in economic activity in the regional economy.
GM’s closure had even more significant, lasting impacts. The local school district relied on the Lordstown facility for about $800,000 in property taxes per year – reflecting 10% of its overall budget.
On behalf of the people of Ohio, Yost is urging the Tax Credit Authority to demand repayment in full. “Promises were meant to be kept, it’s what we were taught as children and it’s something adults and companies should honor,” Yost said.
The brief states, “This case will be watched closely. Should the Authority accept GM’s argument that its unilateral business decision relieves it of its obligations, it will have no legitimate basis to claw back any other incentive, ever. GM will have carte blanche to walk away from its other Ohio tax-incentivized operations. And so will every other business. The State’s agreements to retain and create jobs will be mere fiction, excused by the slightest inconvenience. Ohio may as well simply give the money away.”
The bottom line is that GM didn’t do what it promised and for that reason it needs to repay the incentives it received, Yost added. Should GM refuse to honor a demand by the tax authority, he said he is prepared to enforce the matter in court.
