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In This Issue
Legislative Update
The Fall Agenda
Economic Development Update
Client Focus

 July 2011

 

Dear Friends:

 

New Governor + new legislative leaders + new (and unprecedented) budget challenges + an old anemic national economy = a busy first half of 2011.  While activities in Columbus have settled into a more routine pace over the past few weeks, we don't expect that to last long. 

 

In this issue, we highlight the first months of the legislative session, look to the upcoming policy and political agenda, provide details on JobsOhio and Third Frontier and discuss ways to encourage new investment in Ohio. 

 

As always, please feel free to contact any of us at Hicks Partners if we can be of help.

 

Sincerely,

 

  
Brian K. Hicks
President & CEO

Legislative Update

 

Budget Steals the Show

 

Facing the largest budget shortfall in Ohio history, the Kasich Administration and 129th General Assembly composed a balanced budget that tackles tough issues, cuts red tape and works to rebuild Ohio.  Budget deliberations generated hundreds of hours of testimony; some routine, while other debate was highly contentious.    The budget - passed along party lines - contained more significant policy than any budget in modern times.  Much has already been written on budget details, but it is clear that the budget Governor Kasich passed with the Republican led legislature will go down in history as a remarkable achievement for all involved.money

 

Ohio's fiscal fortunes are looking brighter.  The state balanced its budget at the end of the fiscal year (as constitutionally required) and also set aside $247 million in its rainy day fund.  Moreover, tax revenues continue to come in higher than expected and Standard & Poor's upgraded Ohio's credit outlook from "negative" to "stable" last week.  This news provides hope for better fiscal days ahead. 

 


Other Important Matters Play Supporting Roles

 

Aside from the Herculean effort on the budget, the Ohio General Assembly has been active on many other issues, including reforms of health care and Medicaid, economic development initiatives like JobsOhio, expansion of Ohio's concealed carry laws, and efforts to reform how government is structured and operates.  Hicks Partners has been pleased to work closely with clients and legislators on these and other issues.  To learn more about our legislative activity, please contact Zach Holzapfel.


 

New Legislators

 

The Ohio Senate recently appointed two new members due to the departures of Senators Jimmy Stewart and Karen Gillmor.  State Representative Troy Balderson succeeds Senator Stewart, who left office to become Executive Director of the Ohio Gas Association.  Representative David Burke has been tapped to replace Senator Gillmor, as she joins the Ohio Industrial Commission.  

House of Rep 

The Ohio House is expected to name replacements for Balderson and Burke soon, as well as a successor to Representative Robert Mecklenborg who has submitted his resignation effective early August.   

 

The Fall Agenda

 

New Energy Policy to be Considered

 

Governor Kasich's "21st Century Energy & Economic Development Summit " in September will launch a newenergy summit 2011 dialogue on future state energy policy.  The summit's preliminary agenda includes topics on power generation demand and efficiency; coal usage; the role of renewables such as wind and solar in today's economy; alternative fuels in the transportation industry; and a special focus on upstream, midstream, and downstream opportunities in the Marcellus and Utica Shales. In addition, discussions will focus on energy regulation and incentives; human capital and education; manufacturing; and the environment.
 

Keynote addresses are scheduled to be delivered by Dr. E. Gordon Gee, President of The Ohio State University, Dr. Jeff Wadsworth, President & CEO of Battelle and Governor Kasich.

 

Given the topics and speakers, we expect significant policy changes to arise from the summit.  For more information on the summit or to discuss how Hicks Partners can assist your company with the resulting policy initiatives, please contact Tony Brigano.  
 

November Ballot Issues

 

Three statewide issues are expected to be on the November ballot.  The most closely fought battle will be over the repeal of Senate Bill 5, the highly controversial reform of Ohio's collective bargaining laws.  The repeal effort has been certified to the ballot, and it is certain to generate multi-million expenditures on both sides of the campaign.
 

VOTEA second issue likely to appear on the fall ballot will be an effort to allow Ohio to opt out of the mandatory coverage provisions of the federal health care reform law.  The "Health Care Freedom Amendment" seeks to protect Ohioans from the financial burdens of complying with new federal mandates and from penalties resulting from non-compliance.  Organizers of this effort are in the process of collecting petitions to place the issue on the November ballot.


Finally, Ohio voters will see a constitutional amendment to increase the Ohio judicial age of retirement to 75 years of age.  Currently, Ohio law prohibits any individual from election or appointment to judicial office if they turn 70 before assuming office.

 


Likely Legislative Action

 

In addition to possible energy issues arising from the Governor's summit, legislators are expected to consider further JobsOhio legislation and possible reform to the Ohio Bureau of Workers' Compensation.


The all important work of redrawing districts for the Ohio General Assembly and Congress will be taken up this fall.  Republican control of the State Apportionment Board should favor the GOP in line drawing at the state level.  At the federal level, Ohio will lose two House seats due to slow population growth during the past decade.  Given the Republicans' 13 to 5 advantage over Democrats in the Ohio congressional delegation, observers should expect inter- and intra-party debate to be contentious.  New districts for both the state and federal level representatives will be effective for the 2012 elections.


Speaking of 2012, a Cleveland businessman is once again lighting up plans to legalize marijuana for medicinal purposes.  This effort, which would roll out in 2012, would be the second time in the last decade Ohioans have voted on this issue.  In 2002, a similar measure went up in smoke after voters overwhelmingly rejected it with a NO vote of 67 percent due in large part to an aggressive opposition campaign led by former Governor and First Lady Bob and Hope Taft.

  

Economic Development Update

 

JobsOhio Gets Rolling

 

JobsOhio, the new not-for-profit entity designed to lead the state's economic development efforts, held its first board meeting on July 11th.   Former Ernst & Young and Cleveland Cavaliers executive James Boland was named board chair, while Mark Kvamme was selected as President and interim Chief Investment Officer.  A national search for the permanent CIO is being conducted.  Kvamme is expected to be a candidate for the permanent job.
 
JobsOhio will be getting organized in the coming months, hiring staff, setting up its office in Columbus, selecting regional JobsOhio Network partners to market the state and executing its plan to lease liquor profits from the state.  JobsOhio will seek additional legislation later this fall to more clearly define its job creation efforts.

 

Ohio Third Frontier - Closing SFY11 and Opening SFY12 

 

The Ohio Third Frontier (OTF) continues to move forward with fulfilling FY11 objectivesOTF-2 while planning for FY12 and beyond.

 

The OTF Commission approved funding recommendations for cluster grants in the Sensors, Biomedical and Biomedical Imaging areas earlier this month. Grant proposals in the Advanced Materials cluster will be considered in August.

 

Looking to the future, preliminary recommendations for the future of The Ohio Third Frontier Project contained a mix of new and previously vetted ideas.

 

Two new ideas include the creation of the JobsOhio Network and the launching of Venture Seed Loans. The details of the JobsOhio Network are being finalized but in essence, JobsOhio would provide $4 million over two years to six different regional economic development agencies. The agencies would utilize its infrastructure and resources to grow jobs in Ohio and market the state within strategic industries.

 

Venture Seed Loans (VSL) are expected to replace cluster development grants. Loans would range between $1 - $2 million to be used for late stage demonstration and market entry objectives for the commercialization of new products, services or processes. Repayment terms for the VSL have not been revealed yet but we anticipate that these will be non-recourse loans with repayment expected from the successful market entry of the new product.

 

The preliminary plan recommends the remainder of the approximately $200 million funding for FY12 be geared toward existing programs with some administrative and functional changes. The programs that will remain include:

  1. Internship Program
  2. ONE Fund
  3. Entrepreneurial Signature Program
  4. Targeted Industry Attraction grants

Final program and budget decisions are to be made at the next OTF meeting in late August.

 

For more information on the coming changes to the Ohio Third Frontier program, or to discuss how Hicks Partners can help your company win Third Frontier funding, please contact Emily Turner.

 

Client Focus

 

Cleveland International Fund - Encouraging Investment in Ohio

 

In the early 1990's, Congress created a program to encourage foreign investors to make investments into the United States in exchange for an accelerated visa review.  The program, known as EB-5, requires the creation of US domestic jobs and allows foreign investors to obtain a Green Card in exchange for investing a minimum of $500,000 into an approved fund established by a "Regional Center".  Since Congress created the program, the U.S. Citizenship and Immigration Services has licensed approximately 150 EB-5 RegionalCiF Logo Centers across the nation.  In Ohio, the most active EB-5 Regional Center is the Cleveland International Fund  (CiF).

 

CiF has brought vital foreign investment dollars to Ohio, spurring real estate development and creating local jobs.  Early projects have included $45 million to help finance a new office building and hotel in downtown Cleveland (the Flats East Bank project) and up to $80 million in financing for expansion of facilities at University Hospitals.

 

Public officials from around the country are actively supporting local EB-5 Regional Centers to foster additional investment to their regions.  The Cleveland International Fund has a developed a proven track of attracting investment and creating jobs.  Ohio needs more successes like CiF.  Look for more information about EB-5 program soon.  

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