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Published: Saturday, 3/31/2012

ODOT chief: State must find new sources of road funding

BY DAVID PATCH
BLADE STAFF WRITER

Motor fuel taxes' eroding value and legislative gridlock in Washington are the driving forces behind the Kasich administration's push for alternative revenue sources to pay for transportation projects, Ohio Department of Transportation leaders said Friday. The push has spawned a study of the Ohio Turnpike's "leveraging" potential, among other things, ODOT officials said at a regional transportation conference in Toledo.

Citing Congress's three-year failure to pass a new transportation bill -- it instead on Thursday approved its ninth extension, this one for 90 days, of the old program -- ODOT Director Jerry Wray said it is incumbent on the state to forge ahead with pursuing new revenue streams so that necessary highway, bridge, and other infrastructure improvements can be made to maintain "Ohio's status as a national leader in logistics."

"It's not optional, and it's not inexpensive," Mr. Wray said as the keynote speaker at the Toledo Metropolitan Area Council of Governments' Transportation Summit, attended by several hundred planners, government leaders, and industry representatives at Martin Luther King, Jr., Plaza.

Transportation facilities are "the lifeblood of our economy" but are "in crisis" because of inadequate funds to build even those projects declared to be top priorities through Ohio's Transportation Review Advisory Council screening process, the ODOT director said.

But Mr. Wray and James Riley, the recently minted deputy director for ODOT's Office of Innovative Delivery, repeated the administration's assertion that the ongoing Ohio Turnpike study does not have a foregone outcome, stating that leasing the 241-mile toll road to a concessionaire is one of three basic options to be evaluated, and that "leveraging" -- essentially, borrowing against the toll road's future revenue to finance off-Turnpike projects -- could also be done under ODOT's aegis.

"We absolutely have taken a position: that we want to study the turnpike," Mr. Riley said during a panel discussion that preceded Mr. Wray's address. "A lease is an option. The old model doesn't work any more. There isn't enough money. The needs outweigh what we have."

Mr. Riley shared the dais with Tim Wilschetz, a principal in the infrastructure advisory practice at KPMG Corporate Finance LLC, the consulting firm ODOT has hired for $2.85 million to study the turnpike's current condition and management options. Recommended outcomes could include retaining the Ohio Turnpike Commission, merging it with the transportation department, or varying degrees of privatization, they said.

Mr. Wilschetz said several "study groups" from his company and subcontractors have been examining various aspects of the turnpike for several months, and expect to finish their report late this year. Elements under review include the legal aspects of changing how the turnpike is run, and traffic and revenue forecasting that considers how toll increases could divert vehicles.

Responding to written audience questions, Mr. Riley said privatization would not necessarily lead to toll increases, both because the state could cap such increases and because traffic diversions onto secondary roads would naturally discourage excessive fare hikes.

"I can't see Ohio doing anything more than indexing [tolls] with inflation," Mr. Riley said.

Mr. Wray said Ohio is obligated to look at turnpike possibilities and other "innovative strategies" because its old practice of just lining up the projects and assuming the money will be there when they're ready for construction no longer works. The once-valid assumption of growing fuel-tax receipts is no longer true, he said, while ODOT's budget has been pinched from both sides of the ledger by rampant construction cost inflation --58 percent since 2000 -- and fuel taxes' declining yields because of vehicular efficiency and reduced economic activity.

Since early last year, the transportation department has "undertaken an intensive look at what we can do internally" and left 300 vacated jobs, worth $20 million in annual payroll, unfilled, Mr. Wray said. Officials believe "commercialization" of rest areas, bridges, and interchanges -- the latter two by selling naming rights, allowing advertising, or both -- could raise $100 million to $200 million annually that would be plowed into facility improvements while cutting ODOT's costs, he said.

Contact David Patch at: dpatch@theblade.com or 419-724-6094.



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