Legal challenge to JobsOhio kept alive

Ohio high court to consider group's standing to dispute entity's creation

1/23/2013

COLUMBUS — A potential roadblock to the transfer of Ohio’s liquor business to serve as the lifeblood of the state’s new private economic development entity remains in place after the Ohio Supreme Court today kept a legal challenge alive.

Without comment, the high court agreed to consider whether two current and former lawmakers and a liberal advocacy group have legal standing to challenge the constitutionality of the new non-profit JobsOhio, Inc. as well as the plan to transfer the state’s wholesale liquor enterprise to help finance the entity’s efforts.

The 10th District Court of Appeals in Columbus decided last year that former Rep. Dennis Murray (D., Sandusky), current Sen. Mike Skindell (D., Lakewood), and Progress Ohio did not have standing to sue. That procedural ruling had the effect of insulating JobsOhio from any challenge as to its constitutionality because the law creating it required any such challenge be heard within the 90 days between Gov. John Kasich’s signature and the law’s effective date.

“Further, it creates a model by which the other two branches can coordinate their efforts to strip this Court of its authority to determine the validity of any law,” reads the request for the Supreme Court to hear the appeal.

JobsOhio, one of the first priorities of the Kasich administration in 2011, was created as a private non-profit corporation to assume some of the job-creation duties of the former Department of Economic Development. It was given $1 million in state seed money and has been largely operating since on private sector donations.

But the real lifeblood of its efforts was to be financed by assuming the state’s lucrative liquor monopoly for 25 years in exchange for an upfront sum of $1.4 billion, $500 million of which would go into the state budget after other obligations guaranteed by the liquor profits were met.

The deal also calls for JobsOhio to pay the state 75 percent of any additional profits earned if liquor sales improve by more than 3 percent a year.

JobsOhio would operate on future liquor profits while the state Department of Commerce would continue to operate the liquor business.

JobsOhio has prepared to issue bonds to consummate the deal despite the pending legal challenge. Two Wall Street credit rating agencies — Standard & Poor’s and Moody’s — recently expressed confidence by giving the bonds high ratings.

Last year, JobsOhio tried to clear the legal fog around the deal by trying to take a separate case directly to the Supreme Court to settle the disputes once and for all. The court, however, refused to take the case, saying the dispute could not circumvent the lower-court process.

Today’s ruling keeps that lower-court process alive. If the Supreme Court should decide the challengers have legal standing to sue, it would send the case back to the lower courts for more proceedings.

The latest ruling came down while Mr. Kasich is in Switzerland preparing to deliver a speech before the World Economic Forum. JobsOhio paid his way.