The Truth-O-Meter Says:
Kasich

Ohio Director of Job Creation "Mark Kvamme just clawed back about $900,000 from companies that made promises and they didn't keep them."

John Kasich on Tuesday, March 8th, 2011 in his State of the State speech

Gov. John Kasich says the state "just clawed back about $900,000" in development aid

Gov. John Kasich can’t seem to stop talking about JobsOhio, his new private economic-development corporation that replaced part of the state Department of Development. He gives the department a lot of stage time when he’s promoting his budget plan.

And Kasich heaps praise on the JobsOhio architect and Silicon Valley venture capitalist Mark Kvamme (pronounced KWAH-me), who is working for $1 a year. Kasich refers to him as "The Great Kvamme" and introduces his presentations as "Kvamme Time." (Kasich moved Kvamme into a new position March 18 to avoid a legal challenge stemming from Kvamme’s out-of-state residency.)

In his State of the State speech on March 8, Kasich said "Mark Kvamme just clawed back about $900,000 from companies that made promises and they didn't keep them."

The governor’s claim about efforts to recoup money got PolitiFact Ohio’s attention, given that the state’s budget is tight as a drum. So we invested some time in his statement.

Kasich is referring to state’s efforts to recoup portions of aid packages the Department of Development gives companies that agree to locate, expand or remain in the Buckeye State.

The department, for example, just gave American Greetings a package of grants, loans and tax rebates worth a maximum $93.5 million over 15 years.

Like any deal, this one has strings. American Greetings promises to stay in Ohio and keep the equivalent of 1,750 full-time jobs at its headquarters. If the card maker falls short, the state can recoup a portion of its aid package.

"We're not going to give taxpayers' money to people who are not going to keep their promise," Kasich said during his speech. "We're going after the money. That's the way it ought to be."

When Kvamme started in January, he sent out what the department informally refers to as "clawback" notices to 11 companies that received state aid but haven’t lived up to their end of the deal.

Specifically, Kvamme is trying to recoup from these companies all or portions of "rapid outreach grants," which are used for infrastructure improvements, including water, sewer, road, and rail improvements on or near a company’s property. The state is after a total of $900,312.

Leedsworld Inc. of Warren, which makes promotional business products, received a $250,000 rapid outreach grant. But state is trying to clawback  $162,875 from the company, which fell short of its job creation goal by 65 percent. The company is out of business.

The state also wants back an entire rapid outreach grant worth $250,000 that went to Haden Prism, a paint shop in Toledo that worked with DaimlerChrysler. Haden Prism sought bankruptcy protection in federal court.

So, with this background in mind, let’s circle back to Kasich’s State of the State claim and evaluate it on the Truth-Meter.

Kasich said Kvamme "just clawed back about $900,000 from companies."

We think the average listener would get the impression that the state has recouped $900,000 and not understand that Ohio has only begun an effort to chase a refund. Kvamme’s actions started a specific process that began with the notices he sent in January to those 11 companies.

The distinction is important because not a penny of the $900,000 target is in hand and it’s difficult to predict how much the state might ever recover.

For example, Leedsworld went out of business in 2009 and Haden declared bankruptcy in 2006, making it challenge for the state to get money from either company.

At the moment, the Department of Development does not have a statistic to reflect its success rate in recovering money. Department spokewoman Bethany McCorkle said that because of the individual nature of each deal and company, the department can’t predict how much money it can recover or when.

In interviews, Kvamme has been more precise than Kasich on the clawbacks, specifying the state is just beginning to chase the money. He also makes the larger point that the new administration is trying to be more aggressive than past ones in recouping money.

But it was Kasich who delivered the State of the State address and the clawback claim.

His words -- "just clawed back about $900,000" -- do contain some element of truth.  And we’re assuming here that he’s referring to the specific process by which the state sends clawback notices to companies that have not lived up to their agreements.

But Kasich spoke in the past tense, as if it was a completed action. And he gave no hint that the process just underway with no guarantee of what can be recovered. Those details might have lessened the dramatic flair of his address, but are important for the listener to fully understand his statement.

On the Truth-O-Meter we rate his claim as Half True.

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About this statement:

Published: Wednesday, March 23rd, 2011 at 6:00 a.m.

Subjects: Government Efficiency, State Budget

Sources:

Interviews with Bethany McCorckle, Ohio Department of Development spokeswoman, March 17 and March 18, 2011.

Gov. John Kasich, State of the State address (transcript), March 8, 2011

Ohio Department of Development, annual progress report data

Written by: Mark Naymik
Researched by: Mark Naymik
Edited by: Robert Higgs

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