Saturday, November 5, 2005
Issue 1 lets Ohio buy into
by James McNair - Enquirer staff writer
State and local governments and the
companies they regulate could become virtual business partners under a
provision of Issue 1.
Issue 1 calls for the authorization of $2 billion in bonds for public
works and research. One provision allows state and local direct
investments in private research and development ventures in Ohio.
The provision has drawn criticism for blurring the boundaries between the
public and private sectors and creating the potential for conflicts of
interest and scandals. State officials and promoters of Issue 1 have
focused on its contributions to jobs.
"A YES vote on Issue 1, the Jobs for Ohio bond issue, will help create and
keep more good jobs for Ohioans without raising taxes," says the Web site
www.jobsforohio.com. The site is
posted by Jobs for Ohio, a public/private group set up to promote passage
of Issue 1. The group lists former Sen. John Glenn as chairman. The
steering committee includes Lt. Gov. Bruce Johnson and state Rep. Tom
But Bill Schuck, who served 14 years in the Ohio House and was
term-limited in 2000, suggests that voters pay closer attention to the
direct investment provision. It would reverse a constitutional amendment
from 1851, when Ohio banned government investment in private companies
after taking a bath on failed canal ventures.
"Look at the way the language is drawn, and it's clear the barn door has
been thrown wide open for any government agency to invest in any private
venture," said Schuck, a Republican who lives in Columbus.
The direct investment provision comes under the part of Issue 1 that
authorizes the issuance of up to $500 million in bonds for research
projects and technology commercialization ventures in need of financial
backing. The Ohio Roundtable, a public policy think tank, fears it could
result in "pay-to-play" in the form of campaign donations for state
investment money. A Quaker social action group called the Northeast Ohio
American Friends Service Committee says government investments in
companies would politicize public policy decisions.
"For example, if a government agency's budget depends on corporate
dividends, how willing will it be to impose environmental controls on,
seek taxes from, or examine the labor practices of the company?" wrote
Greg Coleridge, AFSC's economic justice director, on the group's Weblog,
www.ohiodemocracy.org. "If the
state has a large investment in a company, would that deter the attorney
general from suing for antitrust violations, deceptive consumer sales or
other legal violations?"
Said Jon Honeck, a research analyst for Policy Matters Ohio, a
Cleveland-based think tank that is neutral on Issue 1: "There are
conflicts of interest that could occur. Are they going to show favoritism
to that corporation versus others in the same line of business? In light
of the recent scandals in the state, you need to tread carefully there."
State officials say the fears are unfounded. Johnson said Issue 1 is
essential to spur development of new products and create jobs. He said the
state already invests in companies through bond-financing programs. Owning
pieces of companies, he said, won't be necessary - or pursued.
State Rep. Bill Seitz, R-Green Township, acknowledged the concerns about
direct investment in the private sector.
"It's a valid concern," he said. "I don't want this (Issue 1) to be a
license for the state to make a bunch of risky stock investments, but I
don't think it commands it. We would be able to address the concerns
through implementing legislation if the issue passes."
Schuck said voters should not consider Issue 1 an either-or proposition.
He said the $1.35 billion public works portion of the question could be
offered again in 2006. He said the state has other means to stimulate
economic development without incurring debt or dropping the barrier to
public investment in companies.
"Issue 1 permits the state and local governments to invest in high-tech,
startup companies that have unproven products, like those that went
bankrupt in the dot-com bubble of the 1990s," Schuck wrote in a paper
posted on the AFSC blog.
Cincinnati Enquirer 11/05/2005
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