In just a few months, Robert A. Taft II"”known to all as Bob"”will end his second term as Ohio's governor"”and most likely his 30-year political career.

His administration was marred by the political corruption scandals known as "Coingate," and by that one day in 2005 when Taft pleaded "no contest" to four criminal misdemeanors for failing to report some golf outings with lobbyists and assorted gifts totaling about $6,000.

Taft, 64, came from Ohi'™s most historically prominent political family, a great-grandson of a U.S. president and Supreme Court chief justice. Now he wants to remind Ohioans that he still leaves a record of notable accomplishments. With that purpose in mind, the governor recently invited Cincy Business to an exclusive interview. I met Taft in his office overlooking the Scioto River in downtown Columbus.

The governor quickly presented a packet of positive news and success stories: progress reports on his standards-based education reform; the $5 billion Jobs & Progress transportation plan that includes major interstate highway improvements; reform measures passed by the state legislature on business taxes, workers' compensation and tort litigation; the Clean Ohio Fund for environmental improvements; and the Excellence in Exporting awards given in June to 29 Ohio companies.

On business, Taft is especially proud of the Third Frontier Project, launched in 2002 as a 10-year, $1.6 billion initiative to expand high-tech research and collaboration, with the aim of creating more high-paying jobs. Among the projects, he noted the University of Cincinnati's Genome Research Institute, which involves collaboration with Children's Hospital Research Foundation, Procter & Gamble Pharmaceuticals, Acero Inc., and the Air Force Research Laboratory at Wright-Patterson AFB.

How do you view your legacy as governor?

We're in the knowledge world today, when it comes to business attraction and recruitment, the work force is a huge issue. So education has been, overall, probably the No. 1 focus.

In the education area, what I'm happiest about is that we now have high, rigorous, specific academic standards for our schools. We didn't have any specific standards at all. You know, what should kids know and be able to do in order to succeed in today's world, to succeed in college and to succeed in the job market.

The overall improvement in test scores is about 17 percent on average. I'm particularly proud that when I took office we had less than half the kids reading at grade level in elementary schools. Today, it's three out of four kids. That's a key to future learning.

We also are implementing a program now where, within two years, we'll have very clear, specific data on how much value a particular school or a particular class adds to a student's education each year. So we can really start to measure what impact teachers and schools are having, to help teachers do a better job and to hold schools accountable for results.

-Ohio Governor Bob Taft

In your State of the State address this year, you took this to another level with a call for a more demanding curriculum for Ohio high school students.

Our final act will be, hopefully, to adopt this "Ohio Core" for rigorous high school curriculum, so more kids will take that curriculum in math and science and be prepared to succeed in college and be prepared to succeed in the higher-skills job market.

So, on the legacy question, would you like to be remembered as an education reform governor?

I hope so. Not that the state is where it needs to be, but we've definitely made significant progress over the past eight years.

What would be NO. 2 on your legacy list?

I think we've really not only just initiated this Third Frontier project, but we've actually created momentum that will sustain it over a period of years. I think it's a model for what a state can do with limited resources to build on our strengths and create more good jobs, high-paying jobs for our citizens, building on our research strengths.

The important thing about Third Frontier is that we selected areas of strength based on the Battelle study. Biosciences is one, but instruments and controls, advanced materials, polymers, energy and fuel cells"”these are areas where Ohio has research strengths and business strengths, and we're trying to marry those strengths by funding business research partnerships, to attract more federal research money to the state and also to help businesses innovate and create new products through research, and promote new company formation from the new ideas that evolve from the research.

We're not just doling this money out based on political factors. We're allocating it based on a merit-based, rigorous, competitive process, with the large projects administered by the National Academy of Sciences. We're trying to encourage institutions to work together. We have those collaborative partnerships down in Cincinnati, with the University of Cincinnati, Procter & Gamble, smaller companies and Children's Hospital.

There's a perception in Cincinnati that they've not been treated as well (in Third Frontier funding).

Well, Cincinnati has done very well in the competition. If you look at all these projects, the Center for Computational Medicine (got) $27 million, the Genome Research Institute (got) $9 million, a whole host of smaller projects in Cincinnati. They've got a lot of good research going on and a lot of exciting partnerships down there. 

And there's this sense of competition.

There's nothing wrong with the competition, but there's also collaboration among the regions. For example, there's a little company in Butler County called AtriCure that's involved with the Cleveland Clinic in a very strong partnership where the Cleveland Clinic is doing a lot of the clinical research and helping the AtriCure product get launched. You'll see Ohio State involved with GE Aircraft Engines, for example, developing a the next generation of engines through a Third Frontier-funded project.

Do you think Third Frontier would be sustained by another political party?

I would certainly hope so. You know, it was Gov. Celeste that first started these Edison Centers, with the idea to commercialize technology. Down in Cincinnati we have one (TechSolve).

What about your tax reform package? There's still a perception that Ohio is still a high-tax state for businesses.

I'd put that at No. 3 (in his legacy accomplishments). If you look at the overall business tax structure, credible studies I've seen put Ohio in the middle of the pack. One reason that we're not lower than we are is, frankly, has been the very high burden of one of the taxes that we're phasing out, and that's called the tangible personal property tax, the tax on machinery and equipment and investments, furniture and fixtures, any inventories. That's the tax that was the least competitive and gave us all kinds of problems in competing with neighboring states and other states across the country. It was a very high burden and really a tax on business investment, which you really don't want, because in this world if you're going to manufacture and stay in business you're going to have to invest, you're going to have to become more productive, more efficient.

We're phasing that tax out over four years. For new projects right now, I can tell any company that wants to expand or come to Ohio that if you invest in this state there will be no tax on your investment in machinery and equipment, so that's a competitive advantage.

The second reason Ohio was viewed as a high-tax state is because we had a relatively high top rate on our corporation income tax, but the fact of the matter was our tax rate was high but our collections were very low. Because it was so high there was incentive for companies to do tax planning and avoid it. There was a lot of shifting of income to other states by large corporations, other states that don't tax at our rate or at all. So, we're phasing that tax out over four years and phasing in this new commercial activity tax, which is a very low rate. It is on gross receipts, but the most important thing about that tax is it excludes gross receipts from sales outside Ohio. So companies that use Ohio as a platform to serve North America have a very favorable tax rate, and those are the companies we're competing for.

We attracted a company from San Diego called Amylin (Pharmaceuticals), down in Cincinnati, Butler County. It's very innovative biotech, biosciences firm. They have a new treatment for diabetes and they're going to manufacture that in Ohio in part, they say, because of our tax reform plan.

The third reason we were viewed as a high-tax state, from a business standpoint, is because our top rate on our income tax was over 7 percent. It's a big source of revenue and you're not just going to eliminate it. But what we are doing is bringing down all the rates by 21 percent over a five-year period starting in tax year 2005. That helps the small companies that pay based on the personal income tax. That's about 300,000 small companies.

What are you most frustrated about, what you didn't accomplish or wish you could have, and that you feel your successor should pay attention to?

A couple of areas. One is the structure of the school funding system in Ohio. I talk about how much progress we've made in raising educational standards and improving student achievement. Too often you don't read about that in newspapers. Too often what you read about is the tax levies, and schools having to go back to the ballot. Then they can't get the levies passed.

It has become a major issue. You've got an aging population on fixed incomes, and we've got levies going down in some of our highest growth areas.

It's a huge challenge. And again, it's a two-sided coin. The flip side is, that Ohio has better controls on inflationary, unvoted increases in property taxes of any state in the country. The downside is the schools have a challenge because their local property tax revenues are basically frozen. And they've got inflation, so they have to go back to the voters every four or five years. We had a task force that looked at that and came up with a very complicated solution which has been hard to get support for in terms of allowing some growth in the property tax cap, to 4 percent.

Now I don't want to say we haven't increased state aid to schools. We're spending $2.2 billion more than when I took office. That's over a 50 percent increase and about three times the rate of inflation. There's still a design problem with our school funding system.

If you go back and you read the (original Ohio) Supreme Court decision on why our school funding system is unconstitutional, most of the words talk about the horrible condition of school buildings in Ohio. We now have the most aggressive school rebuilding program in the whole country. We have projects completed or under way in half of the school districts in Ohio. That, I believe, is a very important accomplishment we've achieved.

We want educators to be focusing on educating kids, and focusing on making sure every kid knows how to read, every kid graduates prepared, and not be preoccupied with trying to pass a school levy every three or four years.

What are your future plans?

Ever since I started working for the Bureau of the Budget in Illinois back in 1969 I've had a real passion and interest in state government. This has been the best job I've ever had, in spite of all the challenges and problems that we've had. I don't have a desire to ever go to Washington. I like being close to the action and seeing the fruits of your labor, working with local communities. I love traveling Ohio. So I hope to continue doing that kind of work, not necessarily in a government position. I want to focus on schools, and school reform. I want to work on that and I'll try to figure out the best vehicle through which I can do that. I may also do some teaching, about state government and education. I may continue to doing some tutoring, as I'm tutoring some school kids now.


What do you think Cincinnati does well, doesn't do as well as it could or should in terms of business and economic development?

I think Cincinnati has done a good job of reaching out to the entire region. It's hard for me to say cause part of that is Kentucky and Indiana. But there's been a lot of progress from the standpoint of looking at the whole economy as a region. I think a lot of it has to do with marketing and telling the story. I mean, Cincinnati, Cleveland, we have incredible qualities of life in these communities. They're affordable, they have all kinds of arts and sports and amenities.

Cincinnati has had some incidents involving crime and issues like that. Unfortunately that gets the national attention, as opposed to the great collaboration with the business sector and the private sector down there to get things done. I think they just need to work on telling their story and talk about their successes and what they're accomplishing.

I think Cincinnati may be a little too reluctant to blow its own horn about what's going well. Cleveland is a little better about that. Obviously, we need to work on telling that story too. I think it's very impressive that you've got all the business organizations now in one group, under this partnership up there (Greater Cleveland Partnership). Plus they've got Team NEO looking at the region economy. They've got NEO Tech for high tech. So I think they've got some good institutions that really have the right authority and the right scope to get things done. I think Cincinnati could look at Cleveland from that standpoint.

But I'm very optimistic about the future of the Cincinnati economy. It's diverse. It's very exciting to hear about Citibank (announcing a new facility in suburban Blue Ash that would employ more than 1,000 people). There are some companies that really recognize the advantages of locating there. So tell the story.

A smaller accomplishment that's very important to the business community is that we have now launched a sustained, professional marketing program for the state of Ohio. That's called the Ohio Business Development Coalition. You've got the private sector involved; the legislature was willing to put up some money. We brought in a P&G executive to do a lot of research. You talk about the image of Ohio, the branding, the whole business of telling our story to the key business decision-makers across the country. That's a legacy project that will be sustained over time.