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Leasing Ohio's Liquor Sales

By The Reverend Published: March 23, 2011

Ohio Republican Governor LittleJohn Kasich's first order of business upon taking office was to replace the Ohio Department of Development with a brand new privatizing tool called JobsOhio.

The reason given for this changeover was that the old Department of Development, according to Kasich, was not moving at the "speed of business"....whatever that's supposed to mean.

Backers say the bill is a first step in the process of moving the job-creating functions of the Ohio Department of Development into a private nonprofit, called JobsOhio, that they say will be better suited to react to businesses thinking about expanding in the state.

Kasich, experienced in bang-up job accomplishments while working for the now-defunct Lehman Brothers.....saw his JobsOhio plan passed by the Ohio legislature last month....a JobsOhio committee he will chair....

JobsOhio would start with an initial $1 million appropriation from the state and would seek out other public and private funding.

As a private entity, JobsOhio would not be subject to the state's open meetings and records laws, ethics and conflict of interest rules or other requirements that generally affect state agencies.

Kasich hopes to entice new job producers to the state of Ohio. That's a good thing. However, I'm skeptical. And I'm not the Lone Ranger....

"I cannot find another beast out there that is similar to JobsOhio with regard to structure," (Democratic state representative) Skindell said. "... We need to shine the light on job creation in Ohio, not to put it in darkness."

Good Jobs First reports...

Although Kasich argues that a private job-creating entity is necessary for Ohio to match efforts by other states, a recent report by Good Jobs First, a nonprofit, nonpartisan research center in Washington, D.C., concluded that "privatization is often little more than a power grab by governors and politically connected business interests."

Okay. Elections matter....Kasich won last November, ....although Ohio voters have now changed their minds after only a few months.... and has the right to put his best foot forward in leading the state. Setting aside his collective bargaining-busting efforts, as controversial and unpopular as they are.....let's take a look at how LittleJohn Kasich plans to continue funding his JobsOhio program.

Privatizing Ohio's liquor sales.

Profits on liquor sales generate $228 million for the state of Ohio every year. JobsOhio is set to take over liquor sales oversight and own that revenue stream. They, in turn, will sell 30 years worth of that revenue — worth around $6.8 billion — to a group of investors (recruited by a Wall Street firm, who will of course take a cut) in return for a lump sum payment to the state. According to the administration, they expect to receive about $1.5 billion in return for this $6+ billion in state revenue.

Let me see if I understand the complex and sophisticated wisdom of Mr. LittleJohn Kasich's plan.....

Kasich wants to attract new business to Ohio. Ohio is $8 billion in debt and has no "seed" money to spare. Kasich creates a new, not-exactly-transparent JobsOhio committee which he chairs. Kasich leases the state's profitable liquor sales to JobsOhio, an entity which has no assets. The plan is for JobsOhio to "turn to Wall Street to issue bonds" in order to raise the cash to lease the state liquor sales business.

The cash generated for the state through liquor sales has been $228 million annually. The JobsOhio lease will be for 30 years. In the lease agreement, Ohio will receive $1.5 billion from JobsOhio, an entity which is only weeks old. 30 years at $228 million per year, under the state run system, would have provided over $6 billion for the state. Ohio will receive a little under 25% of that amount in the new lease deal.

But LittleJohn's not-exactly-transparent JobsOhio committee will now have a revenue stream of it's very own with which to attract new business to Ohio, presumably moving at the "speed of business". Ohio only had to give away some $4.5 billion over 30 years to secure that revenue stream for JobsOhio.

Tell me, if you can. How in the hell does this make any sense for residents of Ohio?



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