CLEVELAND: Gov. John Kasich has dumped a controversial idea of privatizing the Ohio Turnpike as a way to raise money for needed highway and bridge projects.
The Republican governor instead unveiled a plan Thursday to generate up to $3 billion by borrowing against future tolls on the 241-mile highway that runs across northern Ohio.
The new money would allow the state to start critical infrastructure projects that have been put on hold and put about 65,000 people to work over the next six years, he said.
“What’s so amazing to me is that we should have done this 25 years ago,” Kasich said during a news conference at the Western Reserve Fire Museum and Education Center.
A museum official opened a bay door so the governor’s backdrop was the ongoing construction of the Inner Belt Bridge. Kasich held similar announcements Thursday in Toledo and Youngstown.
The proposal, components of which will require legislative approval, would allow the renamed Ohio Turnpike and Infrastructure Commission to borrow $1.5 billion backed by future tolls. An additional $1.5 billion could be raised for projects through federal and local matching money, the governor said.
Kasich said the bulk of the money — about 90 percent — would be spent on projects north of U.S. 30.
The governor also said tolls for local trips — those involving one exit or so — would be frozen for 10 years for motorists using the prepaid E-ZPass. Meanwhile, all other toll rates would climb annually at the rate of inflation, which is less than historical toll increases.
The plan offers an incentive for motorists to use E-ZPass because it’s less costly for the state than handling cash.
Cost per passenger
Turnpike Executive Director Rick Hodges said toll hikes have averaged 7 percent a year over the past two decades.
It costs passenger cars about 7 cents a mile to use the turnpike or $16.50 to drive the length of the highway if drivers pay with cash. Trucks pay 18 cents a mile.
About 50 million vehicles use the turnpike each year.
Hodges and others noted that the 60-year-old turnpike is “crumbling underneath” and needs to be rebuilt. New money will help.
Cleveland Mayor Frank Jackson, Ohio Rep. Bill Patmon, D-Cleveland, Rep. Lynn Wachtmann, R-Napoleon, Brecksville Mayor Jerry Hruby and Strongsville Mayor Thomas Perciak attended the news conference and voiced their support.
Patmon said the plan “makes perfect sense.”
The proposal also received the endorsement of the Greater Cleveland Partnership.
“All of us would admit that doing these kinds of projects ... are never going to happen like they used to happen 25 years ago,” President and Chief Executive Officer Joseph Roman said. “We’re going to have to find creative new ways to do these projects. This can be a model, I think, for how we do that.”
State officials have been studying the turnpike for about a year, and Kasich’s announcement coincided with the release of a 142-page study from KPMG Corporate Finance LLC. (The report is available at www.ohturnpikeanalysis.com/Ohio-Turnpike-Opportunity-Analysis-12-12-12-FINAL.pdf.)
The state might have given up some money by keeping control of the turnpike, Kasich said, but it’s too valuable of an asset to lease.
Many elected officials who serve areas along the turnpike, including Summit County Executive Russ Pry, had panned the prospect of privatization. They predicted higher tolls and motorists abandoning the highway to use local roads.
“I’m happy that they have decided not to try to privatize the operation,” Pry said.
He said he needed more time to study the proposal and wanted to see an analysis from transportation leaders such as the Akron Metropolitan Area Transportation Study.
Sighs of relief
Cuyahoga County Executive Ed FitzGerald, Lorain County Commissioner Ted Kalo, Mahoning County Commissioner John McNally and Erie County Commissioner Bill Monaghan issued a joint statement saying they are pleased that “the misguided attempt to privatize the Ohio Turnpike” has been abandoned.
“That would have been a huge mistake,” FitzGerald said in a telephone interview.
But, he said, there still is a concern the state could divert gas-tax revenue now coming to northern Ohio to other areas of the state, with the reason being that northern Ohio is receiving funding through the turnpike bond sale. “That doesn’t strike us as fair,” said FitzGerald, who is still evaluating the overall proposal and implications for the area.
Portage County Commissioner Tommie Jo Marsilio said she’s happy that turnpike employees will keep their jobs. She also said she supports the proposal because it will provide future funding for ODOT projects. “It’s great that we have that revenue,” she said.
It’s too early to say which road and bridge projects would receive funding if the plan is approved, ODOT spokesman Steve Faulkner said.
For example, the state agency has put a major overhaul of the central interchange and Interstate 76/77 in Akron on permanent hold because of a lack of cash.
Gary Tiboni, president of the Teamsters local that represents close to 800 turnpike workers, said he was relieved the proposal will not change how the road operates. “The governor got it right. It keeps my people working,” he said.
Ohio Trucking Association President Larry Davis said raising money through bonds is a better decision than leasing or selling the toll road.
“It makes more sense to leverage the value of what we already have to better our state’s roads and bridges than to roll the dice on an outside operator,” he said.
The Associated Press contributed to this report. Rick Armon can be reached at 330-996-3569 or rarmon@thebeaconjournal.com.