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Published: Friday, 7/15/2011

A test of faith

Gov. John Kasich has named eight of the nine members of the board that will oversee his new, largely private economic development initiative, JobsOhio. No surprise: Seven are business and education heavyweights with ties to the governor; the eighth is a Kasich ally who actually will run the program.

Yet to be determined is whether the new effort is a leap of faith or a plunge from a precipice.

Mr. Kasich says he created the agency to give state government more freedom to seek private capital and to use private and public funds in new ways — such as direct investment in startup businesses. JobsOhio will function much as a private venture capitalist does.

It will offer financial incentives, including seed money, to businesses that come to Ohio in return for stakes in those companies. Profits from the stakes would come back to the state.

Because public money is involved, there are valid concerns about JobsOhio’s accountability. The governor generally responds to these questions with vague “trust me” assurances.

JobsOhio also will seek private investment, which raises questions about whom the group will answer to: taxpayers or private investors. Because Jobs-Ohio will have a dedicated funding stream — profits from state liquor sales — it will be less accountable to the General Assembly than agencies that must go back to lawmakers for money every year.

Leasing liquor profits to JobsOhio will yield a one-time, $500 million bonus for the state’s general fund. But it will subtract annual profits from state coffers for the duration of the lease — perhaps as long as 25 years. This year, liquor sales contributed $136 million to the state budget. How will that money be replaced?

JobsOhio is exempt from important state regulations that govern public transparency. It will be allowed to play by its own rules in areas such as open meetings, open records, ethics, conflicts of interest, lobbying, legislative oversight, financial disclosure, gifts and outside income, contracting, and collective bargaining. Mr. Kasich again assures Ohioans they have nothing to worry about.

The state inspector general will have only limited ability to monitor JobsOhio’s activities. The auditor general won’t be required to review its finances. Contracts and employee salaries and bonuses will be disclosed only in annual reports.

Governor Kasich says the agency needs the freedom to work “at the speed of business.” Gary Heminger, chief executive officer of Marathon Petroleum Corp. and the only member of the board from this part of the state, said: “You can trust that I’ll certainly look after northwest Ohio.”

But the real work of JobsOhio will be done by venture capitalist Mark Kvamme and his staff, away from public scrutiny. Ohioans are asked to accept on faith that the agency will focus on attracting good-paying jobs with good benefits, not on maximizing return on investment.

Mr. Kasich is correct: Ohio must be able to act quickly and efficiently to recruit businesses. But giving up transparency and public accountability to such a degree in return for promises of job creation is a lot to ask on faith alone.

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