Ohio to Provide Ongoing Revenue for New Private Nonprofit Jobs Effort

The 2012-13 biennial budget signed into law last month by Gov. John Kasich authorizes the state to transfer the liquor distribution system to JobsOhio, a private nonprofit partnership created to assume the business-incentive and job-creating functions of the Ohio Department of Development. With the transfer, the state expects to generate $1.2 billion in a lump-sum payment, with $500 million deposited into the general fund in FY12 and $700 million used to pay off outstanding bonds supported by liquor profits, according to an analysis by the Ohio Legislative Service Commission.

Ohio is one of several states to enact legislation privatizing some or all economic development functions during the 2011 legislative sessions. Governors in Arizona, Iowa, Nevada, and Wisconsin signed similar bills this year eliminating their primary economic development agencies and replacing them with public-private partnerships intended to reduce state spending and improve the responsiveness of state efforts.

JobsOhio will work with six existing regional economic development organizations that have been asked to submit proposals for coordinating regional economic development strategies and activities, according to the governor's office. The group was seeded with $1 million for startup costs when the legislation was signed into law in February (see the Feb. 23, 2011 issue of the Digest).

Funding for the Ohio Department of Development is reduced by 4.3 percent in FY12 and 4.7 percent in FY13. The Thomas Edison Program will receive $14.8 million in FY12, down from $15.8 million last year. The program supports a statewide network of nonprofit organizations that provide technical and business assistance to key existing and emerging technology and advanced manufacturing industry sectors. Funding for this program and several other programs are zeroed out in FY13 and a new line item appropriation of $26.9 million for Economic Development Projects is included in the budget. The governor recommended $33 million in his proposed budget for the projects to be reallocated upon the completion of the evaluation of the department and its functions.

The budget also includes a tax cut for investment in Ohio companies. InvestOhio provides a 10 percent tax credit to individuals who invest up to $10 million in an Ohio small business, meaning one with less than $50 million in assets or $10 million in sales. The tax credit is applied if the investment is held for two years. A capital gains tax exemption championed by the governor was dropped, however, because of constitutional issues, reports Columbus Business First.

The Board of Regents will receive $2.2 billion in FY12 and $2.3 billion in FY13, down from $2.5 billion each of the last two years. The budget caps annual in-state tuition increases at 3.5 percent for universities and $200 for community and technical colleges. A new provision will allow an Ohio high school graduate to pay in-state tuition to attend a college or university regardless of residency prior to enrollment.

The enrolled version of the main budget bill, HB 153, is available at: http://www.legislature.state.oh.us/BillText129/129_HB_153_EN_N.html