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Published: Thursday, 7/7/2011 - Updated: 3 years ago

Ohio mulls turnpike path that Pa. shunned

BY JON SCHMITZ
BLOCK NEWS ALLIANCE

PITTSBURGH -- Ohio may take the road not traveled by Pennsylvania and lease its turnpike to a private operator for up-front cash.

Gov. John Kasich wants to explore the idea, estimating that it could bring in $3.2 billion, $1 billion of which would go for highway, rail, and harbor improvement projects.

Critics say such a deal could lead to higher tolls that would push trucks to secondary roads, causing congestion and safety hazards.

It also would relinquish a revenue-generating asset that brought in a record $232 million last year.

"The greatest potential benefit of a turnpike lease would be an enormous up-front cash payment, allowing cost prohibitive projects a source of funding that they otherwise might never receive," said an analysis by the Akron Metropolitan Area Transportation Study, an Akron metropolitan planning organization.

"However, once the up-front money is gone, it's gone for multiple generations," the study said.

It concluded that benefits from such a deal "are far outweighed by the negatives."

Mr. Kasich's spokesman, Rob Nichols, said the proposal was in the early discussion stage.

"There's no hard, fast proposal to do it," Mr. Nichols said. "It's not something we've said we're absolutely doing but something we've said we are going to take a look at."

Joseph Balog, vice chairman of the Ohio Turnpike Commission and an opponent of the idea, said he thinks Mr. Kasich is serious about privatizing the highway.

"The state will definitely pursue it," agreed Jason A. Segedy, director of the Akron planning organization. "They are very serious in the governor's office about doing it."

Ohio's newly enacted 2011-12 budget authorizes the Kasich administration to draft a request for proposals from private investors, which would have to be approved by the General Assembly before any bids are sought.

With Republicans in control of both houses, the chances of a deal getting legislative approval are strong, Mr. Balog said.

In a typical lease, the private operator pays an immediate lump sum to the government in exchange for long-term control of the highway, including the tolls it generates.

Pennsylvania, like Ohio and numerous other states, is seeking new revenue sources for transportation improvements.

But Barry Schoch, the current transportation secretary and chairman of Gov. Tom Corbett's Transportation Funding Advisory Commission, has ruled out leasing the Pennsylvania turnpike.

Other governments have struck long-term deals to turn over toll facilities to private operators and toll increases soon followed.

The Chicago Skyway, a 7.8-mile toll road, was leased in 2005 for 99 years to a private operator for $1.83 billion up front.

Car tolls have risen from $2 before the deal to $3.50 currently and are scheduled to go to $5 by 2017.

In 2006, the 157-mile Indiana Toll Road was leased to a private operator for 75 years for $3.8 billion.

Cash tolls have risen from $4.65 to $8.80, but transponder users continue to pay $4.65 to travel the length of the state.

Mr. Segedy said a better approach would be for the Ohio Department of Transportation to take over the road, improve operating efficiency, and use excess toll revenue for improvements to other state highways.

"A lot of our fiscal problems are due to rampant borrowing. This [lease proposal] seems to be the same mentality: Let's think short-term," he said.

Mr. Balog, who was replaced as turnpike commission chairman last week by a Kasich appointee, acknowledged that leasing has political appeal.

"I can take this barrel of cash and I can do all these projects and put all my residents to work … but 10, 12, 15, 20 years down the road, the cash is all gone," he said.

"At that point in time, the piper has to be paid."

He also said the deal was more like selling the road than leasing it.

"They use the terminology 'lease.' When everyone sitting at the table negotiating it is going to be dead when it's over, it's a sale," he said.

The Block News Alliance consists of The Blade and the Pittsburgh Post-Gazette. Jon Schmitz is a reporter for the Post-Gazette.

Contact Jon Schmitz at: jschmitz@post-gazette.com, or 412-263-1868.



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