By Spencer Hunt
Enquirer Columbus Bureau

COLUMBUS - Voters refused Tuesday to give Gov. Bob Taft the $500 million he wanted to help create new high-tech businesses and jobs for Ohio.

Issue 1, the final piece of the governor's $1.6 billion, Third Frontier economic stimulus plan was lagging at the polls late Tuesday with opponents leading supporters 52 percent to 48 percent, with 84 percent of the precincts reporting.

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Without Issue 1 bonds, Gov. Bob Taft still has up to $1.1 billion to spend over the next 10 years to help fund high-tech projects and create new jobs in Ohio. Businesses and universities looking for a Third Frontier award must first have their proposals approved by the National Academy of Sciences. Academy-approved proposals must be approved by the governor's Third Frontier commission, composed of the director of the Ohio Department of Development, Taft's science and industry adviser and the Ohio Board of Regents chancellor.

Issue 1 would have let the state borrow the $500 million, and use it as seed money for university research projects and startup businesses that have the potential to create jobs.

Taft, who has a history of passing statewide ballot issues, blamed the defeat on the state's poor economy.

"I believe Issue 1's failure is a sign of the times," Taft said. "These are tough times, and I think voters were reluctant to support a new spending issue."

Burdened by the loss of more than 100,000 jobs due to the recession, Taft sees the Third Frontier program as an economic rebuilder and savior.

The millions spent on research, high-technology and bio-technology initiatives were intended to help create new inventions. Those would have in turn created new businesses and more jobs for Ohioans.

In Greater Cincinnati, Clermont and Warren counties appeared to reject Issue 1 by wide margins, while Hamilton County voters were more supportive.

Issue 1 opponents - including a handful of conservative GOP lawmakers, their allies, and groups representing farmers - argued that there was no reliable way to predict how many jobs the Third Frontier would create.

They also pointed out that while Issue 1 wouldn't raise tax rates, it would cost taxpayers at least $63 million in interest to pay off the $500 million in bonds.

"Once they heard that public money was flowing to private companies, I think a lot of people changed their minds," said state Rep. Tom Brinkman Jr., R-Mount Lookout. "I mean, that's scary."

The Buckeye Institute, a conservative think tank, said the Third Frontier also erases a ban on state ownership in private business that dates back to 1851. Issue 1 would have changed the Ohio Constitution to let the state become an investor in companies.

Taft had said he wouldn't allow the state to do that.

Largely unorganized and unfunded, Issue 1 opponents did little to counter the governor publicly.

Taft put together a coalition of supporters that included his fellow Republicans, Democrats, businesses and labor leaders. He also persuaded businesses to donate at least $2.6 million. Most was spent on television commercials, many of which said Issue 1 would create up to 30,000 new jobs without raising taxes.

Taft also has a history of winning statewide issues. In 1999 he persuaded voters to approve a cheaper method to finance the state's $10 billion school construction and renovation program. In 2000, voters approved $400 million for environmental clean-ups across Ohio.

As part of his campaign for Issue 1, Taft has already handed out millions in Third Frontier grants across Ohio. That money came from hundreds of millions already set aside in the state's capital budget, its tobacco settlement fund and a loan program fueled by state liquor profits.

Included in the Cincinnati area was a $1.2 million grant to Girindus America Inc. in Reading. The company creates fragments of DNA and RNA that can be used to develop new cancer treatments and disease-fighting drugs.

Mark Laskovics, the Girindus president, said the grant will help his company produce larger quantities of the fragments. He said the only other way to get that money would have been through a venture capital firm.

Taft also gave $970,000 to Triathlon Medical Ventures, a Cincinnati firm that is trying to put together a $60 million fund that could be invested in bio-tech companies like Girindus.

"This shows there is state support for what we're trying to accomplish," said John Rice, a Triathlon managing partner and co-founder. "It shows we're serious, competent and experienced."

Issue 1 would have supplied even more money for companies like these. Without it, Taft still has $1.1 billion to spend. He said he'd spend that money to help create new jobs.

"We cannot allow economic uncertainty to paralyze this state," he said.

E-mail shunt@enquirer.com