Issue 1 Implementation Bill Expected Next Week

Gongwer News Service - November 23, 2005

Gongwer News Service

Critics have already taken aim at two priority bills that have yet to be heard in committee but could see action by the end of this year’s legislative session. Among them is a measure, to be introduced as soon as next week, to implement components of the $2 billion bond package endorsed by voters Nov. 8.

A key criticism of Issue 1 during the campaign was that by expanding state bonding authority to research and development projects, policymakers were reversing decades of Ohio Constitution prohibitions against direct government ownership of private enterprises.

The critics included the Buckeye Institute for Public Policy Solutions, a free-market think tank based in Columbus, as well as Policy Matters Ohio, a non-profit research group in Cleveland that focuses on issues concerning low- and middle-income workers.

Although Issue 1 faced no organized opposition, the matter of government ownership raised concerns even among advocates of what was sold as a job-generating package, and promises to be a subject of debate as the Legislature deliberates the implementing measure.

The concerns arose in 2003 when the $500 million “Third Frontier” high-tech research component was placed on the ballot as a stand-alone proposal, with the aforementioned groups generating studies that warned of the implications. Prior to the issue’s rejection by voters, Governor Bob Taft promised the state would not exercise such an option and that the issue would be addressed later in an implementation bill. (See Gongwer Ohio Report, October 29, 2003)

Development Director and Lt. Governor Bruce Johnson, Mr. Taft’s point man on this year’s campaign, has reiterated that position, spokesman Bill Teets said, but it remains unclear how the issue will be dealt with in legislation if at all.

“It’s not the administration’s intention to own companies, but he doesn’t know if it will end up in the final implementation or not,” Mr. Teets said this week. “Even though we provide assistance (to companies with the bond funds), it doesn’t put us in a position of ownership.”

The ballot issue was written like it was to provide enough flexibility in the bond-issuing process, Mr. Teets said. “Our intention was not to open the floodgates to allow for state-owned companies.”

The subject of some last minute brokering in the General Assembly to gain minority Democrat votes for its ballot placement, the package’s implementation will also be scrutinized heavily in regards to hot-button issues involving prevailing wage and statewide access to the programs.

The administration wanted to have the bill processed by the end of the year, but legislative leaders had yet to receive the final language as if Wednesday. Nonetheless, the bill is expected to emerge next week, setting up the possibility of hearings in December.

The House previously canceled tentative sessions for the week of Dec. 6, but the Senate still has that week set for full sessions and both chambers still have the week of Dec. 13 slated for full sessions.

Issue 1 Debt: The Third Frontier bonds are to be issued over seven years with a maximum 20-year maturity period, according to the Legislative Service Commission’s Fiscal Note. Up to $100 million in debt may be issued in the first three years of the program, and as much as $50 million a year is allowed in the final four years.

Issue 1 also included $1.35 billion in bonds for local infrastructure and capital improvements to be issued over 10 years, effectively continuing a popular bond program that was slated to expire next year. The local project bond program still has $240 million in remaining debt authority, LSC said. The new issuances are expected to begin in December 2009 and continue through 2018. The new debt is capped at $120 million in the first five years and $150 million in the last five years.

The other component of Issue 1 entails $150 million in site and facility development bonds to be issued over a seven-year period for the Job Ready Sites program. Those bond issuances are capped at $30 million a year in the first three years and at $15 million in the final four years, according to LSC.

Under the constitutional amendment, the payments made to retire the Third Frontier and Job Ready Sites debt will not count against the state’s 5% indebtedness cap, which is based on the prior year’s spending of general revenue and lottery profits.

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