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Critics Question Whether Turnpike Lease Is Right For Ohio

Friday, August 26, 2011 at 3:24 PM

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Fourteen investment banks, law firms and other companies across the country are bidding to become the consultant that guides the state with the possible lease of the Ohio Turnpike. That lease could bring in as much as 2.5 billion dollars for the state at a time when it needs the money. But Ohio Public Radio's Karen Kasler reports there are questions about whether a turnpike deal is the right thing right now.

The turnpike lease isn’t a done deal. Ohio Department of Transportation director Jerry Wray says the Kasich administration is still looking into whether to privatize the turnpike, lease it in full or in part, or just selling bonds against the revenue from the turnpike. But one thing is certain, Wray says – this is more than one-time money.

“We’re looking at first of all a short term lease – something in the 30 to 50 range – and we’re looking for a lump sum payment in the beginning with a percentage of tolls for the life of the lease.”

And there’s another thing that’s certain, says Gene Krebs with the think-tank Greater Ohio. The former Republican state lawmaker says ODOT is teetering on the edge of a pending fiscal collapse.

“Between now and 2017, ODOT is due to have – according to their own business plan – a $1.5 billion deficit. My figures are $3.9 billion, and it may even be much worse than that.”

Wray admits there’s trouble ahead for his agency.

“We are facing a crisis and mostly the crisis relates to federal funding. Most people don’t understand that we are a state administered but federally driven program. We depend upon federal money.”

Right now, Wray is worried about a major transportation funding bill held up in a congressional stalemate over funding for the Federal Aviation Administration. The deadline to pass that bill is September 30. And he says for the first time in Ohio history, Ohio could get less from the feds this time than last time. But rushing to privatize the Turnpike while Ohio waits on that federal funding is ridiculous, says one critic.

“How can someone say we should deal with something that is a short-term issue – where Congress may have trouble passing a transportation budget – by leasing an asset for 40 years?”

Zach Schiller is with Policy Matters Ohio, which has produced reports critical of privatization of the turnpike, state prisons and other assets. Schiller says he can’t imagine how a lease could help if the Congressional deadline passes at the end of next month and the contract process is just beginning. But Krebs says the turnpike lease may be the best of a bunch of bad solutions to the problem that gas tax revnue that pays for roads is down because cars use less fuel and younger people aren’t driving as much, and road construction costs are still huge.

“The question is, if you don’t undertake some things to structurally change how ODOT approaches these things, where the money’s going to come from, you’re going to be in trouble.”

Schiller says that’s something to think about….

“…..Which isn’t to say that we don’t have a very real question of how are we going to provide the necessary funding for our transportation needs. We have to decide that. But we aren’t going to easily do so with a turnpike privatization.”

But Wray says the situation is simple and immediate.

“Certainly we’ll have a robust discussion on how we can use that money. However, if we don’t do something with the turnpike, we can have a robust discussion about what we’ll do with nothing.”

Critics have blasted the privatization idea, citing concerns about higher tolls and rising traffic on other roads from drivers and truckers who want to avoid those tolls.  But Wray says a potential contract will be written to prevent dramatic hikes in tolls, and says it will also allow the state to keep the power to take back the turnpike if the deal isn’t working.

Tags

Government/Politics, Transportation, Statehouse News Bureau

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