Issue 1 on the Nov. 4 ballot asks voters to amend the Ohio Constitution to allow the state to borrow up to $500 million for science and technology initiatives.
Voter permission is necessary because the state can issue bonds only for those purposes delineated in the constitution. Each time lawmakers wish to tap into Ohio's borrowing power for a new purpose or in an amount larger than previously approved, they must convince voters to amend the constitution.
Just after World War II, the first such amendment approved the use of bonds to fund payments to veterans. Since then Ohioans have passed amendments allowing the state to borrow for Korean and Vietnam War veteran bonuses; highways; public facilities, including schools and universities; conservation and wildlife management; housing subsidies; police and fire training; and equipment for services such as water, sewage and sold waste disposal. In 1999 voters approved the use of state-issued bonds to finance a public school construction initiative, and in 2000 they approved $200 million for conservation and environmental clean-up.
In addition to approving another bond issue, Issue 1 also asks voters to override constitutional provisions that prohibit local governments and the state from borrowing money and handing it over to companies that are not directly providing a product or service in return.
"The credit of the state shall not, in any manner, be given or loaned to, or in aid of, any individual association or corporation whatever," says Section 4 of Article VIII of the state constitution.
"No laws shall be passed authorizing any county, city, town or township, by vote of its citizens or otherwise to ... raise money for, or to loan its credit to, or in aid of, any such company, corporation, or association," says Section 6 of the same article.
The proposed amendment would "authorize the state to participate or to assist in the financing of 'science and technology based research and development purposes' undertaken by ... private sector entities." It would also "authorize state-supported and state-assisted institutions of higher education and local public agencies to issue bonds or other obligations to pay their costs of participating in and implementing those purposes."
The proposed amendment skirts the constitutional prohibitions by simply declaring "these activities would be public purposes not subject to the Ohio Constitution's prohibitions regarding lending aid and credit."
In other words, the proposed amendment strives to sidestep a very clear and purposeful section of the constitution simply by declaring that the section is simply not applicable in this case.
Yet this "because we said so" approach is exactly how constitutions work. The Ohio Constitution sets the parameters within which state lawmakers must work. For example, because the constitution requires the state to provide a "thorough and efficient system of common schools," lawmakers must do so, even though they have, for the moment, successfully ignored this particular provision.
If State Issue 1 passes, private sector entities could directly benefit from the state's credit because Ohio voters will have changed the constitution to allow it. Sort of. Most Ohio voters will not have knowingly agreed to punch a temporary hole in the constitutional wall separating state borrowing and private enterprise, because they do not know about the wall or the hole they're creating.
The amendment doesn't make it clear that "financing" could -- and probably will -- include outright giveaways of borrowed state money to private entities. The proposed amendment is worded so that, if successful, it will merely slide this one instance through the hole and then immediately re-patch it without generating much attention.
Such surreptitiousness certainly makes Brian Hicks' job easier. Hicks, Gov. Bob Taft's former chief of staff, is heading the campaign to get Issue 1 passed. According to The Columbus Dispatch, Hicks claims to have raised $3 million in support of the amendment. It's a safe bet that the commercials funded by this arsenal will emphasize the wonderful things that $500 million will do for Ohio's economy, without once mentioning that the state could then legally turn all of this money over to private entities -- with no strings, requirements or expectations attached.
In addition to the somewhat underhanded manner in which it will undoubtedly be marketed, Issue 1 raises several other questions.
Last month The Columbus Dispatch reported that 90 percent of the funds awarded for rebuilding Ohio's public schools went to architects and contractors who had donated money to help pass the 1999 ballot issue that approved the use of bonds for that purpose. Will those entities whose donations comprise the $3 million in the Issue 1 campaign fund also realize a return on their political investments? How can Ohioans be guaranteed that their $500 million will be turned over to companies based not on political donations but on their ability to rebuild Ohio's economy? With no guidelines for awarding funds contained in the proposed amendment, there is no such guarantee.
As unavoidable globalization shifts manufacturing jobs to other countries, Ohio -- due at least partially to cuts in higher education and research made by the Voinovich and Taft administrations -- has failed to successfully transition into the new, technology-based U.S. economy. The state's recently established Third Frontier project has committed $1.1 billion of state funds to aid in this transition, but even more is needed. Given the condition of the current state budget, borrowing might be the most fiscally responsible method to raise additional funds.
But State Issue 1 is not the best way to accomplish this. The structure of the proposed amendment nearly guarantees that many Ohioans will never know that they're being asked to hand their money over to private entities that won't be required to directly provide anything to the state. The ballot issue also yields too much power to an administration that cannot be trusted to distribute funds in the manner that best benefits all Ohioans.
An honest, viable ballot issue and amendment would contain guidelines for awarding the bond proceeds to companies and would clearly communicate to voters that those companies could receive grants from the state without providing a product or service in return.
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