CHICAGO — Ohio’s House Committee on Economic Development yesterday held the first of three hearings on a measure that would allow the state to issue up to $1.5 billion of general obligation bonds to renew a popular jobs program.
The fate of the bond proposal has become a political battle in the legislature. Democrats, including Gov. Ted Strickland, want to put the renewal on the May ballot, while Republicans are saying they’re reluctant to have the state take on the new debt amid declining revenue.
Some observers also note that if approved in May, the renewal could give a boost to Strickland as he faces off in November with a Republican opponent, expected to be former U.S. Rep. John Kasich.
The Third Frontier jobs program, which invests state money in local technology companies, was first launched with a $1.6 billion bond issue in 2002. Proceeds from the original issue were intended to last 10 years, but the program is now expected to run out of money by 2011.
The proposed renewal would add another at least $1 billion to extend the program for 10 years. In addition to the bond proceeds, the program would be financed through other, yet-to-be determined revenues, proponents said.
Introduced by Reps. Jay Goyal, D-Mansfield, and Sandra Williams, D-Cleveland, HJR 12 would put the bond renewal on the May ballot as well as cap issuance at $200 million a year starting in 2012.
The lawmakers introduced the measure Monday and committee hearings were planned for yesterday, today, and next week, said Stephen Harris, Goyal’s legislative aide.
“They are trying to fast-track it,” Harris said. “Part of the reason is to make sure that the funding for those companies remains supported. They don’t want any time where the companies are not going to be receiving funding.”
The measure needs to pass the legislature by Feb. 3 to make it onto the May ballot. It is expected to pass the Democratic-controlled House but could hit obstacles in the Republican-controlled Senate.
In testimony before the House committee yesterday, Goyal said investing in high-tech sectors is crucial to the future of Ohio, and that the Third Frontier program has generated $6.6 billion in economic activity since 2003.
“While the actual cost [of renewing the program] will vary depending on a number of variables, the estimated interest will be approximately $300 million over the life of the bonds, with a maximum annual debt service payment of approximately $130 to $140 million,” Goyal said. “The cost of the program is small compared to the rewards in jobs and economic development produced, which is especially needed given the national economic situation.”
Senate President Bill Harris, R-Ashland, was quoted in recent press reports saying he supports the Third Frontier program but does not necessarily support putting it on the May ballot.
He told the Columbus Dispatch that Strickland and Democratic lawmakers must explain how the state can make the debt payments “at a time when we will be grappling with an estimated $7 billion shortfall and we have already 'refinanced’ debt payments to balance our current budget.”