It included a 'new approach' to Economic Development, with three keys steps to the reform:
- Create JobsOhio - a private not-for-profit organization
- Provide sustainable funding through Ohio's Liquor Enterprise
- Equip JobsOhio with the best talent & tools
Item 2 is very interesting. Let's take a deeper look at how this will work.
The reasoning behind this decision is to provide JobsOhio with an on-going funding stream which is NOT connected to the state's general revenue fund and it will enable private funds to be invested into private companies instead of using public dollars, which has proven to be problematic at times.
The Department of Commerce will continue to operate the system, but JobsOhio will acquire the wholesale merchandising component of the business; permitting and regulation will remain with the Department of Commerce.
In exchange for the Ohio's Liquor Enterprise for 20 to 25 years, JobsOhio will pay the state a lump-sum payment and an annuity payment (price for both has yet to be determined). JobsOhio will provide an upfront payment of approximately $1.2 billion; $500 million to the General Revenue Fund and approximately $700 million to prepay the current outstanding liquor profit bonds in their entirety. JobsOhio will be able to do this by issuing revenue bonds backed by the liquor profit revenues. The management of the JobsOhio Liquor Enterprise will be contracted out with the Department of Commerce to manage the day-to-day operation.
Facilities Establishment Fund
Kasich's budget also transfers the Facilities Establishment Fund to JobsOhio. This is a fund held by the Treasurer of the State on behalf of the Ohio Department of Development, which was, interestingly enough, originally funded by liquor profit bonds beginning in 1982. It is currently a self-sustaining revolving loan fund and encompasses programs like 166 Direct Loans, the R & D Loans and the Innovation Ohio loans.
Ohio needs an economic development overhaul. Maybe this is the way to do it.