Turnaround Ohio is the Strickland/Fisher strategy to move our state in the right direction. The plan aims to keep and create jobs that grow from Ohio’s strengths and that are worthy of Ohio’s workers. We will invest in Ohio’s assets, build the skills that will compete in a global economy, and unleash the creativity and innovation that built our state. Turnaround Ohio will bring our state the jobs of the future by making sure Ohio has the most-educated workforce possible—because, in the future, jobs will go where the workforce is best educated. Our Turnaround Ohio plan focuses on the unbreakable connection between jobs and education. When we forge that connection, we will create a cycle of success for every Ohioan.
The Strickland/Fisher Strategy for Job Creation in Ohio proposal meets a number of Turnaround Ohio’s most important goals: developing the jobs of the future, providing opportunities for our young people, boosting the wages of Ohio workers, promoting better labor relations, spurring entrepreneurship and enterprise expansion, and renewing the state’s economic infrastructure. With these goals, we can raise the incomes of all Ohioans and propel our economy into the 21st century.
Ohio’s jobs and economic development policy must reflect the realities of Ohio today. As Governor Rhodes used to say, “Ohio is a state that makes things and grows things.” Our great state is the 7th largest US state economy, the 3rd largest manufacturing state in the US (after Texas, before Michigan), the 4th largest producer of durable goods (after Texas, before Indiana).1 And our state is 7th in production of bio-resources.2 Yet, despite this prowess, and the accompanying gains in productivity and education over the last decade, there are still major challenges ahead:
By almost every critical measure, Ohio is headed in the wrong direction, and we are in serious danger of becoming a second or third-tier state. Ohio is losing jobs and brains.
On an average day, 45 more people leave our state than move into it. Since 1960, Ohio’s population has grown 16% while the nation’s population has grown more than 50%. Since 2000, Ohio’s population has grown less than 1%;3
The real wages of Ohio’s workers have continued to decline. In 2003, Ohio’s per capita income was 5% below the US average;4
228,656 jobs have been lost between 2001-2004; Ohio is in its 120th month below the national averages in job growth;5
Ohio ranks 50th out of 50 states and the District of Columbia in its ability to attract and hold onto well-educated young people ages 19-24;6 and
Ohio ranks 50th in small business ownership rates.7
Our Turnaround Ohio plan starts with having the right attitude. Incremental change will not be enough. Transformational change will be required to turnaround our state. Today, Ohio is going through a period of dynamic change, comparable in scale and complexity to the dawn of the automotive age – the age that made Ohio the crucible of the American industrial revolution. Globalization, technology and innovation are restructuring our economy. These forces have accelerated the shift of Ohio’s economy from the manufacturing of goods to the conception, design, marketing and delivery of goods, services and ideas. Innovation, entrepreneurship, knowledge, flexibility and creativity now drive our economy. To compete in this new world, and again become the crucible of our next economic revolution will require us to align Ohio’s policies to new global rules of economic prosperity and success. We must keep reinventing ourselves with new products, services, companies, industries, and jobs. Our economic prosperity will depend on the success of our major driver industries to serve global markets.
What are these new rules of economic prosperity and success? Our economy is based on knowledge, which means that our investments in universities, medical research centers and higher education institutions are critical to our business base. For this reason, our citizens and leaders were wise to focus investment on the Third Frontier Initiative. But that is not enough – now we need to build on that base.
We also need to continue to boost new and growing industry sectors in Ohio and take advantage of the work of countless economic development, business and labor leadership groups that have already shown us the way. We need to take some calculated risks to make new industries the heart of Ohio’s future. As the third biggest energy user8 in the country, Ohio has the resources, the skills, the technology and the manufacturing capability to be a major energy producer in the next decade. For this reason, a comprehensive energy and jobs strategy was the first component announced in the Turnaround Ohio plan.
We need to create a business climate that is favorable to Ohio businesses and provides support to Ohio workers to pursue new job, business, entrepreneurship and education opportunities. Ohio’s fiscal, regulatory and tax policies must support high quality jobs, business growth, and healthy capital formation.
As leaders, we must create a state vision for economic competitiveness and development and then apply it across all state programs. We will ensure that every department of state government, not just the Department of Development, is evaluated first and foremost by its ability to keep, attract, and create jobs worthy of Ohio’s workers. Our success will require that every part of Ohio’s state government work together to focus on achieving the same overriding goal.
For example, we must use the state’s capital budget to invest in the infrastructure and physical investments needed to put our cities and towns at the heart of our state’s turnaround strategy. The state’s capital budget must be used as an economic development tool that strategically connects our investments in physical capital to our strategic investments in human capital.
Despite our challenges, there is much to be hopeful about. The proposals in this document, as they are outlined more fully below, will empower Ohio to reach toward the following goals:
By 2015, raise Ohio’s per capita income rate above the national average for the first time since 1987;
By 2010, achieve job growth that is equal to or exceeds the national average;
Move Ohio up from the very bottom rank of small business ownership, from 50th to 25th;
Refocus 75� of every economic development dollar on regional economic development and priorities.
First, to take aggressive action to create Jobs Worthy of Ohioans, the Strickland/Fisher Administration will:
1.) Establish the Governor’s Business Council. Business leaders from every city and region will be invited to meet quarterly to provide insight and ideas on how government and businesses can work together to create a supportive business climate in our state.
2.) Create the Ohio First Initiative. A Strickland/Fisher Administration will provide what it takes for growing Ohio companies to expand in Ohio. And the state should lead by example, using Ohio firms first where it makes sense to do so. Like other states, we need to use the power of the state’s procurement system to anchor jobs, skills and competitive industries in our communities. We should take steps to tie selection of state contractors to the quality and quantity of jobs those vendors have in Ohio.
3.) Establish the 24-Hour Response Line. We will expand Ohio’s Business Gateway so that it provides comprehensive on-line access to Ohio business assistance, regulation and economic development resources. Every business inquiry to the state will be answered centrally at a single point of contact and a response provided to the business within 24 hours.
4.) Create the Governor’s Ohio Jobs Strike Force, connecting businesses and workers in crisis with the capital, tools and training needed to rebound from economic crisis. This Strike Force will be lodged in the Governor’s office and in cooperation with Ohio’s business and labor leaders, will develop an early warning system, so we can deploy state resources when it is most needed – not just after the announcement hits the press.
5.) Aggressively promote Ohio businesses in world markets. In order to compete globally, we must think globally. As Governor of the State, I will be an ambassador for Ohio’s businesses and seek out opportunities in emerging markets as well as aggressively market Ohio as a desirable location for foreign-owned companies. By creating an environment that encourages innovation and capitalizing upon the core competencies of our small to medium sized businesses, we can increase the presence of Ohio in the world marketplace.
Second, the Strickland/Fisher Administration will build on our strengths and grow Ohio’s business base in Ohio.
Today, 75% of new capital investments come from outside Ohio9. We don’t want less outside investment – but it is essential that we increase the investments of our own, homegrown businesses in Ohio’s economy – whether a large Fortune 500 company, or an innovative start-up down the street.
While retaining and growing businesses in Ohio’s largest industries and firms is critical, we also need to look to the jobs of our future. In many of our cities and towns, small and medium-sized businesses are the only type of businesses that are gaining jobs in Ohio. These innovative, niche companies provide the backbone for dynamism in Ohio’s economy and point the way to future growth and development.
To realize this potential, we will:
1.) Encourage new businesses and new jobs through robust startup and small business expansion services, including basic entrepreneurship services, business start-up workshops and technical assistance to companies in their critical early stages. For businesses ready to grow, we will provide the expansion and high growth services they need to reach their full potential. It is essential that Ohio’s high school career centers, community and technical colleges, career and technical education centers, and adult workforce career centers reach into all corners of the state and provide entrepreneurship training and business skill development and help Ohioans turn their desires for a job into a desire to start a business that they control.
2.) Make sure capital is available to provide growth and job security. Third Frontier Funds are waiting to be used effectively, and we must use them to provide capital for businesses that need to expand or grow in key industries of the future. These funds would provide mezzanine capital to small businesses, leverage capital raised by angel networks throughout the state, and invest in small business expansion and succession.
3.) Help stabilize the single greatest barrier to growth and success today: escalating health care costs. There is no aspect of personal or business life that is untouched by the painful realities of the health care crisis. There are no easy answers of course: it will take the determined partnership of health care executives, business owners, advocates, and the health care community itself to arrive at workable solutions. We have already begun a productive dialogue with all these stakeholders, which promises to yield exciting, innovative approaches that will be announced in the near future.
Third, the Strickland/Fisher Administration will regionalize economic development, putting decision-making and resources at the heart of Ohio’s high-growth regional networks.
Our state is blessed with diversity not only in culture, but in natural resources, agriculture, economic history, and business infrastructure. In fact, we have at least six distinctive regional economies – in the southwestern, Appalachian, northeastern, northwestern, and west central, and central areas of the state – as well as our farming areas that may well be our energy sources of the future. It is time we take advantage of the potential offered by this rich variety by respecting the value of each unique marketplace and supporting regional efforts to build their own future. Of course, we will also work to unite Ohio’s regional economic strengths so we can market Ohio’s success story throughout the nation and the world.
Strickland/Fisher Administration initiatives to keep investment and operational decision-making close to home include:
1.) Create Regional Enterprise Networks. Each region will decide on its own key imperatives for a well-rounded local economic development strategy. Then, we will provide the blocks of capital, grants, workforce training and other resources to each Regional Enterprise Network. This will give them the resources and power to make their own decisions about how best to execute their strategies through local networks, capital access and capacities.
2.) Develop an Ohio Economic Growth Scorecard that builds in accountability through performance and outcome standards. Indicators and benchmarks appropriate to the entire state and to each region will be developed in collaboration with business and labor leadership groups to maximize statewide accountability and local flexibility.
3.) Promote Regional Cooperation by empowering individual communities to lower the costs of providing services, boost business and stabilize the tax base, remove barriers to collaboration, pool resources, share successes, and provide incentives to work together. Current law creates numerous barriers to effective regional cooperation. This needs to be changed, and, together with economic development leadership, we will develop, recommend, and advocate modifications to permit joint economic development districts, regional compacts or accords to help communities in the same regional, economic market to work together.
4.) Make a renewed workforce development and training system the core of our regional economic development. As we work in each region to develop worthy jobs for Ohio workers, it is essential to be sure there are workers prepared to fill those particular jobs. Our Turnaround Ohio proposals on workforce development will invest $400 million a year in demand-driven workforce education and training systems that work for Ohio’s workers and businesses.
5.) Promote reinvestment in Ohio’s older communities. We cannot have a great state without great cities and urban areas. We must have a thriving, competitive urban core. Our urban agenda, which will be unveiled soon, will focus on making sure that Ohio’s cities, towns, and older suburbs have the tools they need to thrive. We will encourage smart land use policies and land reclamation and development, including innovative tools for brownfield redevelopment.
Fourth, the Strickland/Fisher Administration will bring order and accountability to Ohio’s economic development programs and ensure that we are getting results.
In 2004, close to $750 million were provided in abatements, incentives, training and grants to Ohio’s private industry. Ohioans deserve solid results for their investment.
Here’s how a Strickland/Fisher Administration will lead us to that goal:
1.) Establish a single “unified budget” for economic development. The first requirement for us to address our economic future sensibly is knowledge. But today, it’s virtually impossible to get a clear overall picture of who is getting what incentives and what promises have been made. All state agencies that control taxpayer development dollars, from Development, Transportation, and Agriculture, to the Board of Regents, Third Frontier Fund and more, will be required to publicly and comprehensively report subsidies to business, including business tax expenditures (exemptions, abatements, etc.), for public inspection and legislative review.
2.) Refocus incentives where they count most: job training and infrastructure, the key building blocks of development, asset and wealth building and competitiveness. The Strickland/Fisher proposal for an Ohio Workforce Guarantee will provide free, customized training to any company that creates more than 20 jobs in a year. Our proposal for Broadband Ohio will create the infrastructure for all of Ohio’s companies to compete in the new information economy. In the knowledge economy, cash incentives are less effective than those investments that are critical to our state’s long-term competitiveness.
3.) Set and enforce job creation and investment goals. Today, we tie incentives to jobs goals, but we need to do more. We need to encourage investment and productivity growth. We need to make sure these incentives are focused on the industries that are central to Ohio’s future and will generate jobs worthy of Ohioans. Companies will report on performance of these goals in a timely manner, and the state will pay out incentives based upon how the company actually meets and sustains their job creation, investment, and productivity goals.
4.) Modernize Ohio’s Enterprise Zone and tax incentive strategy to reflect changes in Ohio’s economy and tax structure. “Enterprise Zones” were created specifically to encourage economic growth in depressed urban or rural regions of the state. In 1983, Ohio had 14 enterprise zones. Today, we have at least 619. But from 1987 to 2004, the total of enterprise zone incentives going to these targeted areas dropped from 85% to just 38%. We need to take action to significantly reform and modernize this program to retarget these benefits to communities in need and to reflect changes in Ohio’s economy and tax structure. The focus of the incentives for doing business in Ohio should be a competitive and fair business tax system that encourages productivity and innovation, economic development incentives that brings degraded worksites back on line, and tax incentives that reward innovation.
5.) Manage our revised tax structure wisely. Ohio has recently undergone a significant change in its tax structure, abolishing the Tangible Personal Property Tax and the Corporate Franchise Tax, and replacing them with the Commercial Activities Tax (CAT). The Strickland/Fisher Administration will continue to be in close contact with Ohio’s business community as we determine the impact of the CAT. We need to assure that we continue to create the favorable business climate that Ohio companies need to expand and thrive.
SOURCES OF FUNDING:
These initiatives will be funded entirely out of current state and federal funding sources, and require no new GRF revenues. In particular, a Strickland/Fisher Administration will:
1.Restructure the Ohio Department of Development’s loans, grants and workforce training programs so that the funds are allocated to six or more regional groups of counties.
2.Refocus Third Frontier bond funds to provide capital to small and medium-sized innovative businesses.
3.Reprioritize funds within the Ohio Department of Development to reflect the priorities of the Strickland/Fisher Turnaround Ohio Jobs and Economic Development Strategy.
4.Realize maximum administrative cost efficiencies by eliminating waste and duplication in antiquated information systems, and improving productivity.
REFERENCES:
“Industry-based Competitive Strategies for Ohio: Managing Three Portfolios for Economic Development Strengths”, Deloitte Consulting and Cleveland State University, May 2005
“An Ohio Technology-Based Economic Development Strategy”, Battelle Memorial Institute, 2003.
“Positioning Ohio and Its Research Institutions”, Battelle Memorial Institute, 2005.
The U.S. Investment Monitor, Ernst and Young, September 2005.
“A Business Leader’s Guide to Ohio Tax Reform”, Ohio Business Roundtable, June 29, 2005
2006 Ohio Economic Development Association State Legislative Policy Agenda
Good Jobs First: Company Specific Disclosure Laws.
“The Role of Metro Areas in the US Economy”, Global Insight, Report prepared for the US Conference of Mayors, March 2006
CITES
1.) Energy Information Administration, US Department of Energy, 2004.
2.) Ohio Farm Bureau, 2006
3.) Cleveland Plain Dealer
4.) Ohio Labor Market Information Service, Ohio Department of Job and Family Services
5.) Center for Community Solutions analysis
6.) State Science and Technology Institute, 2006.
7.) Corporation for Enterprise Development, Assets and Opportunity Scorecard, 2005
8.) Energy Information Administration, US Department of Energy
9.) US Investment Monitor, Ernst and Young, 2005