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Ohio Budget Seeks Dedicated Funding for Jobs Program

March 23, 2011

Leasing the state's wholesale liquor distribution system to JobsOhio to provide a dedicated funding source of about $100 million annually for job creation is a key component to reforming Ohio's economic development efforts under Gov. John Kasich. The governor unveiled the plan last week as part of the 2012-13 biennial budget. The proposed budget also sets aside $33 million in the second year of the biennium to facilitate the transfer of economic development initiatives from the Ohio Department of Development (ODOD) to the newly established nonprofit corporation.

During the coming biennium, the state's liquor merchandizing program would be transitioned from the Department of Commerce to JobsOhio. Under the proposal, the agency would issue private bonds to pay the state at least $500 million for foregone liquor profits and use $700 million to pay off state bonds now backed by alcohol money, reports Bloomberg.com. The state expects about $100 million per year would be available for job creation efforts. In an interview with The Plain Dealer, Mark Kvamme, director of job creation in the governor's office, said the money would be used to help companies either startup or relocate to Ohio. Additionally, JobsOhio could be partial owners or investors in the businesses and thus gain equity in companies, Kvamme said. The bill authorizing the creation of JobsOhio enacted earlier this year, allocated $1 million for initial startup costs from ODOD's FY11appropriation.

With passage of the JobsOhio legislation, ODOD's current functions will be reviewed to determine what functions should be moved into the new entity, according to budget documents. Total funding recommended for ODOD is $1.3 billion in FY12 and $1.2 billion in FY13, a 5.4 percent increase from the FY11 estimate. A new line item appropriation of $33 million for Economic Development Projects is included for FY13. This funding would be reallocated upon the completion of the evaluation of the department and its functions.

For the Technology and Innovation division, the budget includes $276.8 million in FY12 and $246.7 million in FY13, up from $132.3 million in FY11 estimated funding. This program supports economic development through the research, development and commercialization of advanced systems, processes, and products. Funding for the Thomas Edison Program would be reduced by six percent in FY12 for a total $14.8 million. The reduction would be spread across program recipients and Edison Technology Centers. No funding is included for FY13, and budget documents note the appropriation level will be determined via future JobsOhio legislation. The Thomas Edison 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.

The Third Frontier program, a $2.3 billion statewide TBED initiative, would receive increased bond sale proceeds revenue during the biennium following a $700 million extension of the program approved last year by voters. Third Frontier Research and Development Projects would receive $183.85 million in FY12 and $133.85 million in FY13, up from $68.3 million in FY11 estimated funding. ODOD is tasked with helping to prioritize Third Frontier projects for faster returns in the coming year.

Total funding for the Board of Regents is $2.3 billion in FY12, down 10.5 percent from FY11 and $2.4 billion in FY13. State colleges and universities would receive nearly $2.5 billion total over the two years, and in return for that funding, the schools would be limited to 3.5 percent tuition increases, reports The Columbus Dispatch.

The budget recommends $16.25 million each year of the biennium for the Choose Ohio First Scholarship, down from $17.1 million in FY11. The scholarship provides fellowships to Ohio students majoring in science, technology, engineering, mathematics and medicine (STEMM) fields.

Restructuring Medicaid, reducing payments to localities and selling five state prisons are among the governor's recommendations for helping fill a projected $8 billion deficit. Executive budget documents are available at: http://obm.ohio.gov/

Ohiostate budget, public equity funds, r&d, commercialization, higher ed, stem