The right step

Third Frontier issue on May ballot invites vote for progress in Ohio

The Columbus Dispatch

Sunday,  February 7, 2010

Wonder of wonders, the General Assembly sometimes can compromise to do something good for the state.

The May primary ballot will feature State Issue 1, which would allow Ohioans to authorize $700 million more in bonds to fund high-tech business ventures through the Third Frontier program. That’s not as large a reinvestment as Gov. Ted Strickland wanted, but it is significant, and putting it on the ballot signals to potential investors that Ohio is a place where innovation is welcomed and nurtured.

Out of a legislature that has spent far more energy on partisan political battles than on solving Ohio’s serious problems, this is a welcome change of pace.

Most lawmakers and state leaders recognize the value of the Third Frontier initiative, which has generated more than 41,000 jobs and $6.6 billion in economic activity since 2003. But a familiar partisan divide had opened, with the Democrat-controlled House of Representatives approving a measure to allow a $950 million bond issue and the Republican-controlled Senate scaling it back to $500 million, saying the state couldn’t afford debt payments on the larger amount and that voters wouldn’t approve it.

The $700 million final figure is a reasonable compromise, and it’s one voters can be comfortable with, in light of a statement by a bipartisan pair of former state budget directors that Ohio could issue up to $1 billion more in general-obligation debt for Third Frontier without jeopardizing its credit rating.

The process for awarding Third Frontier grants has been distinguished by independent review of proposals, so awards can go to the best, with the greatest chance of success. The May ballot issue will require similar independent review of future applications.

The fact that competition for a portion of fiscal-year 2010 Third Frontier grants was restricted to only 24 applicants should not undermine confidence in the program’s integrity. The funds in question, $11 million out of $133.5 million to be awarded for the year, make up the Pre-Seed Fund Initiative, designated for early-stage entrepreneurial ventures, as opposed to those involving innovations by established companies. Such ventures naturally carry the highest risk of failure, and in the current harsh economic environment, that risk is higher than ever.

On the advice of experts, the nine-member Third Frontier Commission decided that, in such tough times, the program should consider only those venture-capital enterprises with a history of success using Third Frontier funds.

Several of the 24 businesses have ties to people who have made political contributions to both Democratic and Republican state leaders, but this is a fact of political life. It doesn’t negate the validity of earlier rewards to those ventures nor their successful track records.

Renewing the Third Frontier will help Ohio build momentum toward a faster economic recovery and a more prosperous future.