Reports on JobsOhio and the funding it receives from Ohio’s liquor revenue generally quote a $100 million figure for development activities, but this is not the only money JobsOhio stands to receive. An analysis by Plunderbund reveals Kasich’s semi-private development organization could be taking in billions more over the lifetime of the lease.
According to the agreement with the state, JobsOhio will receive all of the state’s liquor revenue each year through 2038. From this, they must first pay an annual fixed amount of debt service on the bond and $43 Million into state’s Clean Ohio fund. JobsOhio will also receive $100 Million per year for operating expenses and development activities, according to news reports.
The “per year” aspect is important and this alone should raise eyebrows. At this rate, JobsOhio will be receiving $1 Billion every 10 years. This isn’t a $100 million capitalization as we’ve been hearing. It’s a minimum $2.5 Billion capitalization over the life of the lease.
This has not been widely reported because JobsOhio and Kasich are deliberately obfuscating the issue by not talking about the ongoing revenue.
Another rarely reported component of JobsOhio’s agreement with the state is the fact that JobsOhio’s gets to keep 25% of any liquor revenue that exceeds the planned 3% growth rate. Over the past decade, liquor revenue has averaged 6.2% growth every year. Last year, liquor revenue hit a record with 7% growth. This means JobsOhio will get millions more each year on top of the $100 Million it has already been allocated.
But there appears to be an even bigger problem here.
If you compare the expected yearly liquor profits to the expected yearly debt service payments as identified in the JobsOhio bond offering circular (see below), there is A LOT of extra money coming in that isn’t going out. That’s because the debt service costs, the allocation to the Clean Ohio fund and the allocation to JobsOhio for development purposes are fixed. While the liquor profits are expected to continuing growing annually.
This chart shows the issue:
The blue shows the ever-growing liquor profits. These numbers come directly from the JobsOhio bond offering circular (page 24).
The green is the allocation to JobsOhio for development purposes. The red is debt service (also from the offering circular – page 4) and the purple is the Clean Ohio allocation. Notice that these stay flat while the profits continue to rise.
Everything left over is in orange. This is the unallocated money. And it’s a lot of money.
The sum of total estimated liquor profits over the lifetime of the lease is nearly $9.9 Billion dollars.
Total debt service is only $2.6 Billion, JobsOhio allocation is $2.5 Billion and Clean Ohio is only about $1 Billion.
This leaves over $3.7 BILLION DOLLARS in extra cash.
There is a very quiet fact in this entire deal: To put it simply, the bond documents allocate all excess revenue to the Issuer. And who is the issuer: JobsOhio!
In total, JobsOhio stands to get over $6 Billion Dollars in funding from the state’s liquor profits.
Tell me again why we don’t need to audit JobsOhio?
Unlike JobsOhio and their secret ROI formulas, Plunderbund is more than happy to show our work.