Thursday, October 20, 2005
Analysis Says Issue 1 Would Allow State Investment in Private Business
Gongwer News Service (excerpt)
Issue 1 Analysis: Separately, an analysis from a non-partisan research group concluded Thursday the Third Frontier component of Issue 1 would overturn 150 years of constitutional prohibitions against state investment in private corporations.
Issue 1 would allow the state to borrow $2
billion over 10 years, including $500 million to finance high technology
research, development and commercialization projects. Another $150 million
would be used for private site development. The rest of the money, $1.35
billion, would be used for local public works projects.
"Although public attention has focused on
the amount of the state bond issuance, a much closer relationship between
the public and private sectors will be the enduring legacy of the
Policy Matters Ohio analysis said.
"The amendment permits the state, state
universities, and local governments to become stockholders in private
companies and to share in any resulting financial gains, overturning
constitutional prohibitions that have been in place for over 150 years,"
the report said. "The issuance of general obligation bonds to provide
direct aid to industry is a departure from the historical use of public
sector bonding authority."
Jon Honeck, the research analyst who wrote
the analysis, said legislators improved the amendment as compared to a
stand-alone Third Frontier proposal that voters narrowly defeated in the
November 2003 election.
"The amendment contains improved language
that shows a heightened concern by the legislature for the accountability
of public funds and the equitable distribution of program benefits,"
Mr. Honeck said in a news release. "But it's up to the legislature to give
these provisions real teeth if the amendment passes."
Policy Matters Ohio recommended that if
Issue 1 is approved, the implementing legislation should ensure the
accountability of public money used for Third Frontier projects by all
levels of government, universities, other non-profits, and the private
Among other conclusions in the group's
--Debt service for $500 million in state
obligations for the Third Frontier portion of Issue 1 will be $687 million
over 17 years, based on an Office of Budget and Management estimate.
Interest payments of $187 million comprise over one-fourth of the total.
--The amendment requires the General
Assembly to restrict or limit use of eminent domain to take property for
ultimate use by private business.
--Debt service for money the state borrows is not counted toward a 5% constitutional debt limit. "Although the state is unlikely to default on its debt, the state's commitment to make debt service payments may come at the expense of social services, education, and other discretionary programs during a financial crisis," the report said.
Gongwer News Service 10/20/2005 Volume #74, Report #206
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