When Governor Kasich pitched his Invest Ohio program last year, it had the feel of an infomercial. Kasich assured investors that if they held their investment in any of Ohio's estimated 900,000 small businesses for two years, they'd pay no tax on the gain.
"And that proposal will spur investment in the state of Ohio and take us to a new level if we're so fortunate as to get that enacted," the governor said to an applauding crowd. "You like that idea? Huh? The ability to reward major investment in the state of Ohio."
The reception is a little quieter, now. So far, only about 700 small businesses have applied for the program. Among them is Mitchell Brother's Ice Cream, which has six shops…including one in Strongsville that just opened several weeks ago.
That's where Mike Mitchell -- a co-owner of the business with his brother Pete -- spoke to us for this story. In regards to InvestOhio, the Mitchell brothers are both the small business and the investors. Mike Mitchell says they're probably going to put between $300,000 to $500,000 into their franchise, and are fired up over their expansion plans.
"We're opening new ice cream shops, we're opening a new ice cream kitchen, and we're hiring more employees," says Mitchell. "That was something we were eager to do before learning about the tax credit, and even more eager to do after we found out about the tax credit."
Mitchell says he expects the state to green-light his investment application, because overall the response to InvestOhio has – in Mitchell’s view –been very light, so far.
"And I was surprised by that. I expected all of the money that the legislature had allotted for this program to have been used up through applications very quickly once the application period began. I checked the website maybe a couple days ago, and only a quarter of the money allocated by the state has been applied for."
But Troy Patton, program administrator for InvestOhio under the Ohio Department of Development, is pleased.
"I think we've done quite well, in that we've allocated approximately $27.6-million."
Patton says given that the application period only opened up in early December, that the level of response they've seen is good. Patton says the registration process is still ongoing, and feedback he's gotten from business owners suggest that InvestOhio will keep drawing support and interest.
"That we've already allocated over 25-percent of our pool of funds in the first month I think indicates that we're on the right track, and we anticipate that the remaining bulk of credits will probably be used up probably in the coming year, and if not, maybe into early 2013."
But not everyone's on board with InvestOhio, including a sector that the program's largely aimed at benefiting. Ron Stake is executive director of the Ohio Small Business Association, which represents 700 small companies across the state.
"I'm very skeptical. I doubt there'll be 30,000 jobs generated through this program."
Stake says business, not government, creates jobs. He also questions just how practical it is for struggling business owners to put aside time to find backers.
"I doubt it. I mean, they're trying to survive today. This may benefit the high tech, the biomedical type operations but you know, for your average plumber, grocery store owner, or restaurant owner, I don't see very many of those folks participating."
More questions surround the InvestOhio program itself.
“If the goal was to create jobs, it would have been interesting to have put in some requirement that the investment actually create jobs,” says Sue Helper, an economist with Case Western Reserve University.
Helper’s correct. InvestOhio doesn’t require new jobs to be created. A small business can opt instead to use the money to buy new space, materials, and machinery…the last item being something that may actually reduce or replace workers, depending.
InvestOhio is still new, so its true potential may not be fully apparent for a couple of years. But Mike Mitchell of Mitchell Brothers Ice Cream already rates it a success.
"Because it allows us to lower our cost of investment, some of the money that does get invested we'll be able to recoup in the form of a tax credit. That's helpful in and of itself, I don't need to see any other proof."