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|Volume #72, Report #196 --Thursday, October 9, 2003|
|THIRD FRONTIER COULD BOOST JOBS BY 100,000 OVER 10 YEARS, OPEC SAYS; POLICY MATTERS STUDY UNDERSCORES POTENTIAL RISKS AND GAINS|
Governor Bob Taft's plan for boosting high-tech job creation in the state could pay off to the tune of nearly 100,000 new positions in the next decade, an Ohio Public Expenditure study has found. Also released Thursday was a report from Policy Matters Ohio that notes the related Nov. 4 ballot issue would remove some current constitutional barriers between public and private sector investments and thus opens the state up to some risks and gains.
OPEC President Rick Yocum said his group's study used "extremely conservative" assumptions in estimating the potential benefits of the plan, which combines some existing programs under the Third Frontier title and entails the use of capital bonds, tobacco settlement money, a $500 million bond issue set for the Nov. 4 ballot and other initiatives to improve the state's research and development potential.
The ballot issue alone could help spur the creation of some 30,000 new jobs, according to the OPEC study. Issue 1 would provide the state authority to offer $50 million in bonds annually over the next 10 years for building purposes, attracting top-level researchers and related initiatives.
"This is a very well-thought-out undertaking that has been endorsed by a very wide, no-partisan group of leaders in the political, business, educational and financial areas - a very unusual alignment," Mr. Yocum said, adding that OPEC is not taking a stand on the issue. He said the current level of support "raises the probability of success to a very high level."
The OPEC study, funded with a $30,000 grant from the Timken Foundation, employed data on 1,000 existing or past projects supplied by the Department of Development while assuming the highest cost per job created, Mr. Yocum said. The projections were compared to data collected in 10 other states and were run through a Columbus Area Chamber of Commerce computer model for verification. "Almost without exception, our estimates were lower," he said.
Issue 1 campaign manager Brian Hicks welcomed the report and commended OPEC for "undertaking a thorough economic analysis" of the issue. "This report and the findings of significant job creation without raising taxes provides valuable information to Ohio voters," he said in a news release.
The Policy Matters report suggests that state and local governments should be cautious in exercising the new investment opportunities the issue would provide if passed.
"Given the state's economic climate, and the perception that the state is falling behind, Ohioans may be ready to support this policy approach," Policy Matters research director Zach Schiller said in a news release. "On the other hand, such broad-based expansion comes with risks that must be weighed carefully."
The report found that the proposed amendment "removes long-standing constitutional barriers that prevent the public sector from becoming a stockholder in private businesses." Like OPEC, however, the group did not take a position on the issue.
Asked about the Policy Matters take on the issue, Governor Bob Taft said Thursday, "I think any local government taking advantage of that option would have to look very carefully at their policy. Obviously anything that they would do would have to be authorized by a city council or legislative body. We need, I think, all the tools we can possibly muster at the state and local level to keep Ohio competitive."
Mr. Taft said he didn't foresee the state making frequent direct investments in private companies to promote research and commercialization. "No. I think if that occurs it should be held to an absolute minimum," he said. "I think we need to work on making sure there are sufficient early stage venture capital funds that are viable around the state."
Issue 1, part of a $1.6 billion state initiative that supporters have said would help leverage another $6 billion in private and federal investments, had garnered a slew of endorsements before the first sign of a potentially organized opposition arose this week. The Ohio Farm Bureau announced its opposition based on the belief that the agricultural industry would not sufficiently benefit and that Ohio's business climate first needs help through the tax code and other areas. (See Ohio Report No. 194, Oct. 7, 2003) The group also noted that Issue 1 would cost the state $190 million in debt service costs over 20 years based on a 6.5% interest rate, according to the Office of Budget and Management.
Speaker Larry Householder (R-Glenford) looked incredulous when asked Wednesday about the Farm Bureau's take on the current economic climate in the state.
"Wow," Mr. Householder said. "I totally agree we need to improve the business environment. We work with that every day here in the House. We continue to work on things as far as taxes and tort reform and other issues like that, but that doesn't mean you throw the baby out with the bathwater. You don't quit working on trying to bring new business in just because you don't have the perfect scenario out there, you don't have the perfect environment. "I think they've got the wrong opinion on that."
The full Policy Matters report is available on the Web at www.policymattersohio.org .
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