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Toledo, Ohio & Lake Erie

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A consumer organization contends leasing or selling the Ohio Turnpike to a private company wouldn’t create new value but would, in effect, be merely borrowing against future toll revenue.

The Ohio Public Interest Research Group has released a report that focuses on several issues it says need to be addressed before any deal involving the turnpike is approved.

The group said a study commissioned by the Ohio Department of Transportation and the Office of Budget and Management on how to use funds from the turnpike to help offset dwindling revenues for maintaining the state’s highway system wouldn’t be complete if it didn’t address several questions:

• Could the state raise the same amount of money if it were willing to raise tolls as fast as a private operator would?

• If there are cost-savings anticipated by privatization, what is stopping the state from introducing the same measures?

• Would a lease with a private toll road operator restrict improvements to parallel and competing roadways? Would the state need to pay compensation to the private operator if future public decisions indirectly reduced the private operator’s profits?

• What downsides might result if higher tolls divert traffic onto secondary roads and into local communities?

• What additional costs would the state incur for professional services or in-house expertise to negotiate, monitor, enforce and litigate its privatization deal?

• What information would be restricted from the public if a private operator claimed that information about its operation and finances were proprietary?

“Ohioans are waiting to see what the study turns up,” said Tabitha Woodruff, Ohio PIRG advocate who co-wrote the report. “The public won’t be protected from a bad privatization deal unless these questions are answered.

The transportation department and budget office last November retained KPMG, LLP to conduct the study.

Jerry Wray, ODOT director, said at the time the cost of repairing and expanding Ohio’s highways was outpacing funding and the availability of federal highway funding was “increasingly unpredictable.”

He described the turnpike as a “hugely valuable untapped asset.”

“…While it’s the property of Ohio and would never be sold, there are different ways that it could be leveraged to generate needed funds, so our highways can keep supporting job creation and economic growth,” he said.

ODOT and the OBM originally said KMPG would have until July 1 of this year to make recommendations to the state.

Steve Faulkner, an ODOT spokesperson, said last week the consulting firm will have until the end of the year to submit a report to the state because the parties have refined the scope of the study.

“We will receive a report from KPMG sometime between now and Dec. 31,” he said. “It will include a range of options that the state could choose. That range could include everything from do nothing and leave the turnpike as is for whatever reason. Or it might say the entire base of the turnpike needs to be replaced from state border to state border. That would be a very large endeavor costing billions of dollars. If that’s the case, then maybe it’s not worth it. A lease with a concessionaire might be another option.

“Or something in between. Such as rolling the turnpike day-to-day operations under the direction of ODOT and bonding against future toll revenue. Or something we haven’t thought of yet.”

Several local elected officials have gone on record opposing any privatization deal.

The Fitch Ratings agency last month issued an AA (stable outlook) credit rating for the turnpike commission.

Trick or Treat

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