Bloomberg News

Ohio High Court Declines to Rule on Legality of JobsOhio

September 28, 2012

Ohio’s Supreme Court declined to rule on the constitutionality of legislation creating JobsOhio, an economic development program that would assume responsibility for wholesale liquor sales in the state.

The court said in an opinion today that it didn’t have jurisdiction to decide the question. A ruling that JobsOhio is legal would clear the way for the sale of $1.4 billion in taxable bonds to pay for the transfer of the state’s wholesale liquor enterprise for 25 years to fund the entity.

The administration of Republican Governor John Kasich filed a complaint Aug. 10 seeking to clarify the legality of JobsOhio after separate court challenges. The Supreme Court was asked to find the program legal and to make the director of Ohio’s Commerce Department transfer the liquor franchise. The court dismissed the case, saying JobsOhio could ask elsewhere for a declaration that the program is constitutional.

“We will not decide constitutional claims raised by parties who seek an advisory declaratory judgment for which they have adequate remedies in the ordinary course of law,” a majority of the justices wrote. Two justices dissented.

While JobsOhio “obviously would have preferred the court to weigh in,” the decision “isn’t a barrier to our mission to help create jobs in Ohio,” spokeswoman Laura Jones said in an e-mail. She declined to say whether JobsOhio would seek a lower- court ruling or proceed with the bond sale.

Liquor Profits

While Ohio doesn’t have government-run liquor stores, it buys and distributes alcohol to retailers. Liquor profits in fiscal 2012 were $251.4 million, up from $237 million in 2011 and $229 million in 2010, according to the Ohio Commerce Department.

JobsOhio has agreed to pay the state $500 million for the transfer of liquor profits, an estimated $800 million to retire debt backed by the liquor money and $100 million for economic revitalization projects previously approved and funded by liquor profits, according to the Commerce Department.

The state anticipates about $100 million will be available yearly to spend on job creation. The state’s economy is improving after losing 556,700 jobs from 2000 to 2010, according to federal data. Ohio’s jobless rate was 7.2 percent in August, compared with 8.1 percent nationally.

An Ohio appeals court on June 14 upheld a lower court rejection of a challenge to JobsOhio by two Democratic lawmakers and ProgressOhio, a Columbus nonprofit group. Opponents said JobsOhio violated the state constitution by having public dollars invested in a private entity that would spend government revenue secretly and free from accountability.

Complaint Dismissed

Their complaint was dismissed by a Franklin County judge in December on the grounds that they didn’t have the right to sue, which the appellate court affirmed. The lawmakers and ProgressOhio filed a notice of appeal July 27 with the Ohio Supreme Court.

Brian Rothenberg, the executive director of ProgressOhio, said he hopes the state will seek a court ruling about the constitutionality of JobsOhio.

“My fear is they will try to move forward with this program with constitutional questions hovering over it,” Rothenberg said in a telephone interview.

The largest bond sale by Ohio issuers was about $5.5 billion in tax-exempt securities in 2007 by the Buckeye Tobacco Settlement Financing Authority, according to the office.

The case is State ex rel. JobsOhio v. Goodman, No. 2012- Ohio-4425, Supreme Court of Ohio.

To contact the reporter on this story: Mark Niquette in Columbus, Ohio, at mniquette@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net; Michael Hytha at mhytha@bloomberg.net.


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