"An interesting situation has played out over the last year or so, because the report has been used to both help us and hurt us on occasion," says Andrew Doehrel, president and CEO of the Ohio Chamber of Commerce. "The benchmarking report speaks volumes about Ohio not having a competitive business tax structure and the need for changes there.
   "We at the Chamber have not been convinced that the Commercial Activities Tax, which the legislature adopted, was the right way to go," adds Doehrel. "We felt they addressed a lot of changes in our tangible personal property taxes and personal income taxes that were absolutely necessary to be done, but we didn't like the remedy they used."    Nevertheless, the SRI report added momentum to a tax-reform train that had already left the station. On the other hand, he says, a bond package on the ballot last November to help fund the Third Frontier innovation funding program for high-tech industry was passed in part because of the report's call for that very kind of program.
   "The tax reform legislation passed by Ohio last year was huge," says Ed Burghard, executive director of the Ohio Business Development Coalition, in Columbus. "Many companies could lower their costs by locating their manufacturing operations to Ohio. This sets a new, strategic course for Ohio."
   Adds Lt. Gov. Bruce Johnson, who directs the state's economic development office: "Manufacturers generally like the tax reform a lot – the Ohio Manufacturers Association was a huge advocate, and they support staying on this path throughout the implementation period. Every time someone suggests a new tax change, they are reminded of all the pain we went through a year ago to get this reform and what a dramatic improvement it has been for Ohio."
   As for areas the benchmarking report indicated could use improvement, Johnson says the state is more user-friendly. Examples include streamlined Environmental Protection Agency permit processing, more online access to state taxation and other filings and creation of an ombudsman for small businesses.
   A bigger challenge for Johnson and his successors is to maintain Ohio's strong performance in the Governor's Cup, in which it finished second behind Texas, and the Competitiveness ranking (see page 319) in which Ohio placed sixth, just as it did the previous year. Luring projects to the state and growing jobs are two different things, notes Johnson. "To directly address the issue of jobs, we would have to be working on hiring people, and we don't do that," he says. "We work on business development projects, and where they are happening, there is a healthier economy."
   In 2005, Ohio produced almost as much steel as it did 25 years ago, but it did so with 80 percent fewer employees, Johnson illustrates. "In Ohio, we are much more concentrated in manufacturing as a percentage of our GDP than the average state, and all the pressure is on reducing inputs, including labor. Lots of buildings and new equipment usually translates into more production and fewer people. It's the same transition agriculture has gone through for the last 100 years. It's a natural occurrence in the economy."