JobsOhio Looks To Give State $1.4 Billion For Liquor Profits

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The state wants to use liquor profits to fund tax breaks and other job-creation efforts.(Photo: Joseph A. (Flickr))
The state wants to use liquor profits to fund tax breaks and other job-creation efforts.(Photo: Joseph A. (Flickr))

Gov. John Kasich’s office is releasing the complicated details on how the state will transform more than a billion dollars in liquor profits into private money that can be used for job creation.

The 25-year, $1.4 billion deal will keep control of licensing and operations related to liquor with the state, but the profits would go to JobsOhio, the non-profit private entity set up by the legislature last year and headed up by Mark Kvamme.

“Since JobsOhio is a private entity, it will be 100 percent private funds, because we are paying a fair consideration of the liquor business,” Kwamme said.

The process will start on Monday, when the state will go to a panel of lawmakers who approve non-budget related money items and ask for permission to transfer $237 million in liquor profits from last year to JobsOhio. That will be used as seed money for its tax incentive program.

JobsOhio will also seek $1.5 billion on the bond market to cover the transfer of the profits and other extra expenses. But budget director Tim Keen says there’s no risk for Ohio taxpayers in the process.

“JobsOhio will issue long-term bonds backed by future revenue from the franchise,” said Keen. “The franchise transfer agreement ensures that debt raised will be a liability of JobsOhio and not the state, and the state will never assume the debt, even if JobsOhio should go out of business.”

Once in JobsOhio, the money will be used for attracting and retaining companies, for cleaning up environmental problems and brownfields through the Clean Ohio program, for workforce training, and for marketing. And Kvamme says there’s an extra bonus in JobsOhio taking over certain functions that the state is paying for now.

“Not only are we going to be utilizing 100% of the funds for economic development and revitalization here in the state, we will be saving the state approximately $60-80 million dollars a year in past general revenue funds.”

Kvamme says the success or failure of JobsOhio will be measured on three things: net new jobs created and retained, new capital investment in the state, and return on investment to the state. And he says the state’s goal is what he calls sustainable economic development – for instance, the taxes that come in to companies given incentives need to exceed those incentives in the first year.

As head of the Department of Development, Christine Schmenk will be auditing JobsOhio to monitor its results.

“If JobsOhio substantially fails to execute its responsibilities or continuously underperforms on the metrics despite the economic climate, the contract does allow for termination.”

And for Ohioans who don’t have any contact with JobsOhio, but do drink alcohol? They won’t notice a difference, says David Goodman, director of the Ohio Department of Commerce, which will keep control over licensing and other operations.

“For consumers, nothing changes. Bars, restaurants, and others follow all the same licensing and other processes they currently use. They will see no change.”

And the Department of Development will soon be no more. It will be renamed the Ohio Development Services Agency, in a bill that was nicknamed “JobsOhio 2″ by House Republicans last week.

As the jobs-development functions are split away and assigned to JobsOhio, some services will stay in the ODSA, such as tourism. Schmenk says she doesn’t anticipate big layoffs, but that the agency will have at least 30 percent fewer employees than it had when Gov. John Kasich came into office.

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