COLUMBUS - Is it the biggest investment in job-creation in the history of Ohio or an ill-advised $2 billion charge on the state's credit card for which taxpayers would pay roughly $1 billion in interest over the next three decades?
It depends on who you talk to and which aspect of Issue 1, a three-pronged borrowing package for scientific research, local roads and waterlines, and economic development infrastructure improvements is being debated.
"We've talked to folks who evaluate the state from a bond perspective," said Lt. Gov. Bruce Johnson, who doubles as Ohio's development director. "They like the fact that this invests in the economy, and that we expect a reasonable return in job creation and infrastructure support.
"As a percentage of the state general revenue fund, we wouldn't expect [debt service] to go to 5.2 percent," he said. "This is not anywhere near the state of Ohio getting too much indebtedness overall as a percentage of its budget."
If approved by voters on Nov. 8, Ohio would stagger the borrowing of $2 billion over the course of 20 years and pay the debt off over the course of 30 using general tax revenue. Backers insist no tax increase will be necessary to meet the obligation.
Of the $2 billion, $1.35 billion represents a renewal and expansion of a popular 10-year-old bond issue for roads, bridges, waterlines, sewers, and other local public works projects.
The second component would inject $500 million into Gov. Bob Taft's existing Third Frontier program, which invests in high-tech and medical research and any product development that might follows.
The remaining $150 million would be earmarked for site improvements associated with local "shovel-ready" industrial and commercial sites.
A University of Akron poll showed the bond issue is the most popular of five constitutional amendments on the ballot with 66.6 percent of likely voters supporting it.
The only controversial component has been Third Frontier. A similar bond issue was narrowly rejected by voters two years ago when it appeared alone on the ballot.
This time supporters have linked it with the highly popular public works bond issue, a move that has frustrated some conservatives who characterize Third Frontier as "corporate welfare" and have tried without success to write into law a prohibition against using Third Frontier to finance any research involving embryonic stem cells.
But opponents from various factions have not joined forces in any organized effort to thwart what could be a massive advertising blitz to urge voters to support the bond issue. The Jobs for Ohio campaign has raised more than $2.4 million in mostly corporate cash as of Oct. 19.
"Third Frontier is a boondoggle," said Douglas Oliver, an engineer, attorney, and an associate professor in engineering in the University of Toledo's Mechanical, Industrial, and Manufacturing Engineering department. His position puts him at odds with UT President Dan Johnson, a Third Frontier supporter.
"The people pushing for it stand to gain from it," said Mr. Oliver. "Universities and high-tech companies stand to gain from grants. It's corporate welfare essentially.
"Researchers get research money," he said. "Politicians get to give away taxpayers' money. Taft gets accolades for passing out the pork, but who ends up paying for it? It'll be a Governor Strickland, Governor Blackwell, or whoever the next person in that office is."
He said the state is ill-suited to act as a venture capitalist, a role that requires nimble, often secretive actions.
The Ohio Constitution prohibits the state from spending more than 5 percent of its general revenue fund plus lottery profits on debt service. With the state expected to approach that limit within the next few years, the question on the ballot, a constitutional amendment, exempts the Third Frontier and "shovel-ready" portions of the bond issue from the cap.
The lieutenant governor estimated the total interest on the entire $2 billion over 30 years at about $900 million. Kurt Kauffman, debt manager for the Office of Budget and Management, said the total cost could be up to $1.2 billion, depending on the interest rates the state would receive.
Contact Jim Provance at: email@example.com or 614-221-0496.
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