CLEVELAND — Ohio lawmakers are forging ahead on a plan to use unclaimed funds to provide a $600 million grant for a new Cleveland Browns stadium in Brook Park.
The proposal survived compromise talks to make it into the final draft of the state’s two-year budget bill, said Rep. Brian Stewart, an Ashville Republican who leads the House Finance Committee. Lawmakers expect to release the mammoth spending bill late Tuesday and to vote on it as soon as Wednesday.
RELATED: Ohio's proposed final budget includes tax cut for the wealthy, Browns stadium funding
Budget negotiators picked Senate Republicans’ unclaimed funds proposal over two competing plans to help pay for a new Browns stadium, which would be the centerpiece of a 176-acre mixed-use entertainment district near Cleveland Hopkins International Airport.
In February, Gov. Mike DeWine suggested raising the tax on sports-gaming companies’ profits to create a dedicated funding source for pro sports facilities and youth sports programs. In April, the House advanced a proposal for the state to issue $600 million in bonds for a new Huntington Bank Field — debt the state would have repaid, with interest, over 25 years.
But lawmakers ultimately opted to draw from the unclaimed property fund, instead, providing a cash grant for the Browns using other people’s money. The state is holding $4.8 billion in unclaimed funds from old bank accounts, uncashed checks, utility deposits, life insurance payouts, retirement savings accounts and stocks and bonds.
Stewart said the final budget proposal calls for the state to take ownership of $1.7 billion of that money. Lawmakers are earmarking $600 million for the Browns and putting $400 million into a special sports and culture fund, which could pay for other projects.
“We think that’s a way where we’re kind of meeting the governor where he started, which is having some kind of dedicated source of funding that we can look at,” Stewart told reporters Tuesday afternoon, during a break in the action in Columbus. “Nobody’s automatically approved, but it at least gives us the ability to continue that conversation, doing so in a way that doesn’t divert money from any other priority that we have – and doing so in a way that doesn’t raise taxes on Ohioans.”
It’s unclear where the remaining $700 million the General Assembly takes from unclaimed funds will go, based on Stewart’s preliminary comments.
A spokesman for Browns owner Haslam Sports Group declined to comment on the compromise budget proposal. After lawmakers vote, the bill will be sent to DeWine for his signature and any vetoes. The budget needs to be signed by June 30 to take effect July 1.
Tapping unclaimed funds to pay for stadiums is unorthodox. But states use missing money they’re sitting on for all sorts of things, from scholarships to day-to-day government spending, while keeping enough cash on hand to pay anticipated claims.
But national experts, and some Ohio lawmakers, are raising red flags about language in the budget bill that would let the state take legal ownership of the money — if people don’t act fast enough. Watch more below:
RELATED: Experts raise red flags about Ohio lawmakers' plan to take unclaimed funds
Today, like most states, Ohio lets owners file claims in perpetuity.
Under the budget proposal, the state would take ownership of the $1.7 billion, which Ohio has been holding for at least a decade. The former owners would have a grace period of 10 years, through Jan. 1, 2036, to still file claims and get paid.
In a recent letter to lawmakers, the CEO of the National Association of State Treasurers said that idea “should be repugnant to Ohioans” – and risks violating the state and U.S. constitutions.
He said Ohio lawmakers can achieve their goal of using unclaimed funds to pay for stadiums without actually seizing people’s property. Watch more:
RELATED: More pushback on Ohio Senate plan to take unclaimed funds
A new memo from the Ohio Legislative Service Commission, a nonpartisan research agency, raises similar constitutional questions. The agency noted that a few other states do take a similar approach, called permanent escheatment. But those states focus on smaller amounts of money or give people more time to track down their missing funds.
In weighing the constitutionality of the budget proposal, any court is likely to look at whether Ohio gave the original owners of the missing money enough notice — and time — to claim them, the Legislative Service Commission wrote.
Rep. Tristan Rader, a Lakewood Democrat who released the memo Tuesday, railed against the change-in-ownership language in the proposal.
“Ohioans’ private property should not be taken without due process, and certainly not to subsidize billionaire developers,” he said in a written statement. “This isn’t economic development, it’s a constitutional red flag.”
Lawyers are already mobilizing to respond if the proposed language becomes law. But Senate Finance Chair Jerry Cirino, a Kirtland Republican, has said he believes lawmakers are on firm ground.
“We think we are within our rights as a legislature to be able to do what we’re talking about doing here,” he told reporters in Columbus last week.
“I’ve only heard some things from people who really aren’t experts at this sort of thing,” he added. “And perhaps they think they are.”
