John Kasich’s Lame Case for Selling the Ohio Turnpike

I just got done reading this article: Gov. John Kasich Fires Back at Cleveland Leaders Fuming at His Administration’s Shortchanging of Bridge and Road Projects, Plain Dealer. And it didn’t leave me feeling too optimistic about the future of the state of Ohio.

To summarize, Ohio Gov. John Kasich has put off funding the second phase of Cleveland’s Innerbelt Bridge — a vital and decrepit passage to downtown Cleveland — until 2023. Also in jeopardy is funding for Cleveland’s West Shoreway highway-to-boulevard project, which is considered by Cleveland’s regional chamber of commerce to be the most important project to Greater Cleveland’s economy.

The Kasich Administration is strapped. No one is denying that. And that is exactly the administration’s excuse for leaving greater Cleveland (the state’s largest population and economic center) out of its highway spending while favoring rural sprawl projects. In his characteristic aggressive style, Kasich blamed past administrations for setting up unrealistic expectations among Cleveland leaders.

“Look, for many, many governors’ terms, Ohioans have been misled, plain and simple. ‘You want a project, we’ll get you a project, don’t worry about it.’ Well we’re $1.6 billion short.”

Meanwhile, shocked observers have speculated that the Inner-Belt Bridge decision is a political play by the Kasich Administration to build support for his plan to privatize the Ohio Turnpike, a proposal that was shot down by the state legislature recently.

Kasich denied being motivated by political reasons, but did not waste the opportunity to promote his privatization plan in the Plain Dealer, saying “I’ve got to tell you, you get a couple billion dollars from either bonding against the revenue stream or you get a couple billion dollars from leasing it for a period of time where we maintain underlying control. We have to absolutely look at that.”

Ok. So I’ve got to say, I’ve got nothing against infrastructure privatization on principle. There are good infrastructure privatization examples and there are bad. Indiana’s Turnpike privatization is a good example, from what I’ve read. But there are far more bad examples than good.

Chicago’s parking meters are the classic cautionary tale — a total catastrophe, from the perspective of public interest. The city sold 35,000 meters to Morgan Stanley (under a 75 year lease) for $1.15 billion. The closed-door deal is expected to net Morgan Stanley ten times that amount. Meanwhile, the city of Chicago blew through the money in a few years. Chicago could have earned nearly a billion more dollars up front had it just raised meter rates itself and bonded out the revenue, according to Chicago’s inspector general.

Here’s the thing about privatization of public infrastructure: the government is essentially brokering a deal to sell some very valuable public property. It can be done right, but it takes very shrewd political leadership to fully understand the value of that infrastructure and negotiate a good deal for taxpayers’ investment. The whole process is vulnerable to sweetheart deals and swindling, Chicago being a particularly egregious example.

The question I ask myself as a taxpayer on the subject of the Ohio Turnpike, is do I trust John Kasich (a former Lehman Brothers banker) and ODOT Director Jerry Wray (a former asphalt industry lobbiest) to negotiate on behalf of the public in good faith rather than do political favors for well-connected friends that could potentially benefit them financially in the future? The answer is: no I don’t. I wish I did, but I truly do not.

Infrastructure privatization deals are very, very, very complicated business transactions. It would be next to impossible for the average taxpayer or media representative to fairly evaluate any proposal — so government trust is really critical.

Even putting financial details aside, Kasich’s case for privatization is a bad one. John Kasich says he wants to sell the Ohio Turnpike to use the money to plug a hole in the state’s infrastructure budget. He told the Plain Dealer that he would not raise the gas tax (really the only responsible course of action) because he “wants Ohio to be competitive.”

John Kasich has strange ideas about what makes a place competitive — or maybe not so strange as much as simplistic. Are we to believe it need not matter if Ohio’s bridges are falling down, it’s roads in disrepair, traffic congestion preventing access to its major cities? All that matters to competitiveness is low taxes.

Were that the case, Mississippi, the state with the lowest personal tax burden, would be the most competitive state in the nation. Instead, it is the state with the highest obesity rates, the highest rates of teenage pregnancy, the worst dental and educational outcomes. Mississippi is the state that appears at the bottom of just about every measure of well being worth recording.

Meanwhile, places that have invested in good, 21st Century infrastructure, including rail transportation — bike infrastructure and smart land use planning — are eating Ohio’s lunch, and by that I mean New York, Chicago, Portland, Washington, etc. People who live in the Portland region save a combined total of $2.9 billion annually over similarly sized cities thanks to the investments they have made in their infrastructure that allows them to choose cheaper modes of transportation including transit, biking and walking. That’s money that recirculates within its economy, rather than going overseas. That’s money in Ohio we flush down the toilet because our governor doesn’t like trains.

John Kasich wants to sell the Ohio Turnpike just to solve a short-term funding problem. In essence, his plan just pushes Ohio’s infrastructure funding problem along to the next governor (something John Kasich seems completely oblivious of even while scolding past governors for doing so).

If Ohio is going to sell the turnpike and receive a one-time influx of cash for infrastructure, we need to have a better, more sustainable use for it than propping up an transportation system that overreliant on capital-intensive, road capacity projects, which have outstripped our ability to pay for them and meanwhile, caused a host of social problems too numerous to name here.

There are better uses for Ohio’s scarce transportation resources than bypassing Portsmouth and adding interchanges outside of shrinking Canton (projects that are slated receive funding ahead of the Inner Belt). One of the very best uses of public infrastructure money would have been for the state of Ohio to surrender pittance in transportation money it would have cost to operate 3C rail (less than it costs the state to mow highway medians,) a truly viable alternative to highway development. Instead, Kasich doubled-down on the absolute most expensive and inefficient form of transportation there is — single occupancy vehicles. Now he complains about the sad financial state of ODOT.

What Ohio needs is alternatives to 25-minute highway commutes. And the alternatives are vastly cheaper, in both real dollars and return to the public. John Kasich and ODOT Director Jerry Wray clearly have no concept of this whatsoever. So they want to have a fire sale with public infrastructure to support outdated transportation projects that have no business receiving state support in the first place.

There is absolutely no reason Cleveland’s Inner-Belt Bridge, a vital connection to the largest city in the largest metro region in the state — literally the state’s most important economic engine — should not be the number one project on the state dockets. It is extremely worrisome that suspicion has even been raised that the Governor of Ohio would play a political game of Russian Roulette with the state’s economy — especially being as fragile as it is right now — by withholding funds for this project.

If I had any faith in Governor John Kasich’s ability to govern — rather than do his best to chalk up ideological victories — I would be willing to consider his argument for privatizing the Ohio Turnpike. Unfortunately, this pair just haven’t given me any reason to, especially when it comes to transportation.

-A.S.

Leave a comment

Filed under Headline

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s