CHICAGO -Amid Republican criticism, Ohio Gov. Ted Strickland yesterday announced a compromise jobs-creation program that relies on just $850 million of new borrowing - half of what the Democratic governor originally proposed in February.

Strickland joined yesterday with state Republican leaders to announce a $1.57 billion compromise plan that would invest in many of the same projects but would be financed largely with a mix of state revenue and some borrowing. His original plan totaled $1.7 billion, of which $1.5 billion would come from bonds.

"We believe that this compromise that we've reached will result in significant resources being available quickly, as well as over multiple years," Strickland said in announcing the new plan at a press conference with Republican House Speaker Jon Husted and Republican Senate President Bill Harris.

Lawmakers said they planned to move forward expeditiously on the proposal, and would craft and debate the legislation before summer break.

Strickland's original plan, introduced in February amid an economic slump that could leave a deficit of up to $1.9 billion in the current budget, would have required voter approval to borrow roughly $1.5 billion to invest in a series of infrastructure projects as well as several industries across the state. Republicans quickly began criticizing the governor's plan, saying it would mortgage the state with debt ballooning to $3 billion with interest over the years.

The plan introduced yesterday largely bypasses voter approval - with the exception of a $400 million bond issue - and would instead rely on previously authorized borrowing as well as existing and future state revenues to finance the plan.

"If it had gone to the ballot, there was a chance it wouldn't pass and we would have nothing," Husted said. "And by the time we issued the bonds and got the money out the door, it would be at least a year from now. With timely action by legislators a lot of this money can be spent a year earlier."

The current plan includes going to the voters in November with a $400 million bond issue - $200 million of revenue bonds backed by liquor profits, and $200 million of general obligation bonds. The state has a monopoly on liquor sales in Ohio.

The state would also sell about $300 million of previously authorized bonds for various public works projects across the state, according to Strickland spokesman Amanda Wurst.

In addition, the state plans to issue an additional $200 million of revenue bonds through the Ohio Department of Transportation that would be backed by Ohio Turnpike tolls. Another $66 million of GOs would be issued through the Ohio Air Quality Development Authority.

In non-bond funding, the state would take $230 million out of the Ohio Tobacco Prevention Foundation fund, a move that would essentially empty out that fund, which currently has about $270 million in reserve. In defending that move, Strickland pointed to the recent statewide smoking ban and other measures that make the anti-tobacco campaign less necessary.

Finally, the state plans to invest an additional $370 million that would be appropriated in future budgets, largely from the state's general fund, as well as liquor profits and other revenues.

The plan covers a five-year period and calls for two pieces of legislation to move forward, including a joint resolution to put the bond issue on the ballot and another bill to implement the spending plan.

Strickland estimated the plan would create 57,000 new jobs, many in the biomedical and renewable energy industries.

The plan would invest $400 million in local infrastructure projects, including roads, bridges, sewers, and water systems.

One of the biggest changes in the new plan is the proposal to spend $250 million aimed at keeping college graduates in the state by connecting them with internships and other jobs while they are still going to school.

The state also would invest $400 million in the Clean Ohio fund to finance a range of projects, such as preservation of farmland and redevelopment downtown areas, and another $120 million in its popular Historic Preservation Tax Credit program that restores historically significant buildings to expand a town's tax base.

The spending plan is separate from Strickland's capital plan, which he expects to introduce in late spring.

 

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.