CINCINNATI — The ink isn’t even dry on Ohio’s next two-year budget, but it’s already drawing threats of a lawsuit aimed at blocking the use of unclaimed funds to pay for stadium projects.
Former Ohio Attorney General Marc Dann held a press conference in Columbus Wednesday morning to announce a complaint he plans to file in Franklin County Common Pleas Court - if Governor Mike DeWine signs the budget bill without vetoing the unclaimed funds provision.
“It's a classic, unconstitutional taking of people's property,” Dann said. “The funds that are in the unclaimed funds account do not belong to the state. They belong to the people who lost those funds.”
The Ohio Senate proposed the idea of using unclaimed funds to provide a $600 million grant to a $2.4 billion stadium complex that the Cleveland Browns are planning in Brook Park. The proposal replaced two other funding ideas for the Browns: Doubling Ohio’s sports-betting tax and issuing $600 million in state bonds for the team.
The Senate proposal seemed to be good news for the Paycor Stadium renovation project because it originally called for an additional $1.1 billion in unclaimed funds to be available for other sports and cultural facilities. But by the time it emerged from a House-Senate conference committee Wednesday morning, the proposal reduced the funding for other projects to $400 million.
As for the remaining $700 million, House Finance Chair Brian Stewart said there will be “further discussion as we go along about what priorities may have that type of money. We're going to leave it to our colleagues and further process to determine where those moneys make the most sense.”
Stewart added that the initial $400 million fund will grow periodically because “the monies that have been in the unclaimed funds for more than 10 years now roll over” to the state “on an ongoing basis each year.”
Beyond unclaimed funds, the state budget also changed state law in a way that could impact the Bengals. It modified the Art Modell law, which prevents professional teams that play in taxpayer-funded stadiums from relocating to another city.
“That's about moving teams out of Ohio,” Stewart said. “It's not about moving teams within the same county within Ohio. So, we're clarifying that to say, you know, if you're if you're within the same county, you're not violating the Modell Law.”
The House and Senate are expected to approve the budget, sending it to the governor for final approval.
In the meantime, critics are questioning whether the state can legally remove money from the $4.8 billion pool of uncashed checks, insurance policies and closed bank accounts that Ohio holds for owners who’ve yet to be located.
Senate Finance Chair Jerry Cirino said he sought legal guidance to make sure Ohio has the authority to take unclaimed funds through a process known as escheatment. But the National Association of State Treasurers has questioned whether Ohio’s approach is constitutional.
The Ohio Supreme Court ruled in 2009 that the state lacked the authority to retain interest on unclaimed funds.
“Unclaimed funds are not abandoned. They are the property of their owner,” the court ruled in a case filed by an attorney representing his mother’s estate. “Accordingly, the state may not appropriate for its own use … interest earned on that property.”
A June 20 report by the Ohio Legislative Service Commission said the 2009 ruling also left the door open for future General Assemblies to legalize the escheatment of unclaimed funds.
That’s because the 2009 opinion said “the ‘General Assembly has not plainly legislated that unclaimed funds are or can be deemed abandoned property.’ Although not stated directly, the opinion implies that if the statute contained those words, the court might have ruled differently in this case,” said the LSC report to leaders of the House Minority Caucus.
Dann isn't buying it.
“If the state wants to appropriate tax dollars through the ordinary process with hearings and due process of law and the opportunity to be heard, then they have the right to do that," Dann said. "What they don't have the right to do is to appropriate other people's money, to support the Bengals and the Browns.”
Win or lose, Dann is convinced there are enough legal issues to delay distribution of unclaimed funds to the Bengals and Browns.
“It's a way to hand out gifts to campaign contributors like (Browns owner) Jimmy Haslam, who contributed $300,000 to the leadership in exchange for this $600 million gift of your money and my money,” Dann said. “It's really, it's an outrage, but it's also an unconstitutional act.”
