The following article originally appeared in the Ohio Capital Journal and published on News5Cleveland.com under a content-sharing agreement.
Ohio economic developer JobsOhio is quick to say it’s a private, not-for-profit company and quick to add that its hundreds of millions of dollars are also private.
“JobsOhio is a private, not-for-profit corporation funded entirely by an independent private source — the profits of the JobsOhio Beverage System (JOBS) liquor business — that JobsOhio purchased in 2013 and operates today,” it is. as it describes its “unique funding model” on its website.
This statement, however, might bear scrutiny, given that the agency works outside of the state open archives law and has made questionable investments.
In 2017, JobsOhio forfeited a $12 million loan to Akron-based FirstEnergy to clean up the site of a coal plant.
That was a few years before federal authorities accused the company of complicity in a $61 million corruption scandal that netted it and related companies a $1.3 billion taxpayer bailout. dollars. But that was the same year that a sympathetic public utilities commission allowed politically connected FirstEnergy to add a new charge to ratepayers’ bills, supposedly to modernize the power grid.
FirstEnergy was never able to show that it used the money for this purpose, and the state Supreme Court later ruled that it was improper. But FirstEnergy was allowed to keep the $460 million it had already raised.
JobsOhio has also poured $67 million into an as-yet-unlaunched project in eastern Ohio that would convert natural gas molecules into plastics and resins, the Columbus Dispatch reported last month.
On the other side of the ledger, JobsOhio played a role this year in securing a big win, a $20 billion investment to manufacture computer chips in central Ohio.
But there are questions about the agency’s effectiveness since it was established in 2011 under the then government. Jean Kasich.
Last year, US News and World Report ranked state economies using criteria such as employment, business environment and growth in the years leading up to the coronavirus pandemic. Ohio ranked 34th, well in the bottom half of the states.
Despite this, JobsOhio employees seem to be doing quite well.
In fiscal 2021, JobsOhio’s 106 employees received an average of $180,000 a year in salaries and benefits as part of its $19 million payroll, according to its financials for the year. It also spent $210 million on economic development, $33 million on marketing, and $16 million on professional services.
JobsOhio spokesman Matt Englehart said the state got a good return on the organization’s employees and its spending.
“You can see that although we have added (people) and increased salaries, we have become more productive and efficient,” he said in an email. “What has not been disclosed before is that we have also increased (the return on investment) for the state. In 2018, the projected payroll tax the state received by JobsOhio FTE (as a result of new jobs) was $3 million. In 2021, that grew 66% to $5 million. So yes, more employees who earn more, but who report 66% more to the benefit of the State.
The job creation and payroll tax projections are from JobsOhio, and it remains to be seen how accurate or statistically significant they are.
It’s also unclear how accurate it is when JobsOhio claims it’s a private company that doesn’t use public money.
The entity was created by the legislature as a 501(c)(4) nonprofit organization. Its Board of Directors is appointed by Mike DeWine in his public capacity as Governor of Ohio. And the money he uses comes from what was at least a public good – the state monopoly on liquor franchises.
Not only did the legislature give JobsOhio the exclusive right to purchase Monopoly, but it allowed JobsOhio to pay for it with Monopoly proceeds. These funds were previously used to help finance the state government.
Still, Englehart said JobsOhio received nothing from taxpayers.
“In 2013, JobsOhio, through its subsidiary JobsOhio Beverage System (JOBS), purchased the rights to operate the liquor franchise by issuing bonds, which we are still repaying,” he said. . “JobsOhio Beverage System uses the profits from this business, which they own, to pay for their operations, which are more productive and efficient than ever…The alcohol profits are then granted by JobsOhio Beverage System (JOBS) to JobsOhio to fund JobsOhio’s economic development mission.
Englehart said liquor monopoly profits have been used to make $380 million in deferred payments to the state since 2013.
Engelhart said JobsOhio received nothing when the legislature allowed JobsOhio to buy the state liquor monopoly using profits from that same monopoly.
“There was no reward,” he said. “The liquor business was sold to JOBS for 25 years and is no longer a public good because of that sale.”
JobsOhio faced no other bidders when it won control of the liquor monopoly.
“The Legislative Branch authorized the sale to JobsOhio and the Executive Branch through (the Office of Budget and Management) and the Department of Commerce was instructed to execute the sale through (Ohio Revised Code 4313.),” said Englehart.
For at least one jurist, there was no way to disguise the funds JobsOhio uses as anything other than public money. Former Ohio Supreme Court Justice Bill O’Neill wrote a dissent in 2014 as a majority of his colleagues rejected a constitutional challenge to the JobsOhio Act. The majority had ruled that those who challenged “had not demonstrated that they had a personal interest in the outcome of this litigation”, so that they did not have standing to bring the case.
But for O’Neill, the court was shirking its duty to protect the public — and the public’s money.
“Hundreds of millions of dollars of public funds are funneled into a black hole to be disbursed without public scrutiny, and the highest court in the land looks the other way,” he wrote. “The Supreme Court of Ohio is the last house on the street, and to hand over this case is an abdication of our duty as protectors of the Constitution.”