Batchelder says Yost can’t audit JobsOhio

3/8/2013

COLUMBUS — The leader of the Ohio House said flatly Thursday that State Auditor Dave Yost does not have the authority to audit JobsOhio, the state’s private, nonprofit economic-development entity.

“If there’s clarification needed in the law, maybe it’s because there isn’t any power for him to do what he’s doing …,” Speaker Bill Batchelder (R., Medina) said. “I drafted most of that [legislative language]. He doesn’t have that authority to go into a private corporation and audit it. I’m waiting for him to get into Chrysler Motors or Fiat. You know we bought a lot of those cars this year.”

Gov. John Kasich and Auditor Dave Yost, both Republicans, disagree over the extent of Mr. Yost’s authority to audit the governor’s pet, JobsOhio. Mr. Yost has subpoenaed the entity’s chief financial officer, demanding records he has been seeking for months.

“The Governor and I have the same goal: to make sure JobsOhio’s money is working for the people of Ohio — creating jobs and growing this economy for our families,” Mr. Yost said in a statement. “It’s important to look at the total picture. The private bond proceeds trace directly back to the public money."

Mr. Kasich has downplayed the dispute. “We think the auditor should have access to audit all the public money,” he said. “The problem gets to be when you get into private companies. Any time there’s public money, we’re absolutely in favor of that being audited. Hopefully, we’ll get this all worked out.”

When asked whether he plans to pursue legislation restricting Mr. Yost’s authority, Mr. Kasich said, “Maybe there’ll have to be some clarification. I don’t really know.”

Mr. Kasich’s top priority upon taking office in 2011 was establishing the private corporation that has taken on many of the job-creation functions of the former state Department of Development. Until recently, litigation delayed the transfer of the state’s lucrative liquor business to JobsOhio, which has borrowed against future liquor profits to help fund its operations.

Legislation creating the entity provided $1 million in start-up money, but the entity received $4.3 million in additional taxpayer money than was generally known while awaiting the transfer of the liquor enterprise.

“The state of Ohio has an auditor whose function is to make sure taxpayer money is spent in accordance with the wishes of the General Assembly,” Rep. John Patrick Carney (D., Columbus) said. “The idea that somehow we would shield the auditor from doing his or her constitutional duty seems preposterous.”

A 15-page audit conducted for JobsOhio by the private firm KPMG showed that the entity took in $6.6 million in private contributions from unspecified donors.

Mr. Yost, an ex-Delaware County prosecutor, has subpoenaed Kevin A. Giangola, JobsOhio’s chief financial officer, to appear in the auditor’s office on March 19. He must bring with him JobsOhio books, contracts, and other records that Mr. Yost has been seeking. These records include bank statements for “all accounts.” The word “all” is in capital letters and underlined in the subpoena.

Mr. Batchelder characterized the dispute as “politics” even though Mr. Kasich and Mr. Yost are from the same party.

The dispute feeds into ongoing criticism that many of JobsOhio’s functions, some of them former government functions, remain shielded from public scrutiny. The Kasich administration has said that some secrecy is necessary to protect sensitive information of the businesses working with JobsOhio.

State Rep. Chris Redfern (D., Port Clinton), who also is the Ohio Democratic Party chairman, criticized the chance that legislation could be in the offing to block the audit. “In the old days you’d be a little less transparent, if you’re a crook, in how you’re going to steal the money,” he said. “The fact of the matter is $5.3 million was spent in public dollars.”

Kasich spokesman Rob Nichols said the Development Services Agency’s grant money had been appropriated by the General Assembly for the former Ohio Business Development Coalition, later renamed the Jobs Ohio Beverage System when it was reworked to serve as a repository for JobsOhio’s liquor enterprise.

In a letter dated March 5, DSA invited Mr. Yost to audit its two JobsOhio-related grants. One is the $1 million in seed money. Director Christiane Schmenk said the second grant of an unspecified amount went to the related entity holding the liquor business.

Mr. Batchelder said the extra cash to JobsOhio came from grants from DSA, the downsized successor to the Department of Development.

“There was an arrangement made that I think was visible,” he said. “I knew about it, and the governor didn’t tell me and neither did the auditor.”

While he agreed with Mr. Kasich that the auditor should be able to review public funds spent at JobsOhio, the speaker said Mr. Yost was rebuffed two years ago when he sought broader auditing authority in the original JobsOhio legislation. He said Mr. Yost is “very clearly” overstepping his authority.

Contact Jim Provance at: jprovance@theblade.com or 614-221-0496.