Ohio turnpike lease a step closer

A new budget signed by Republican Governor John Kasich last week enables the Ohio Department of Transportation to lease the 241-mile toll road to private operators.

Ohio Governor John Kasich, a Republican, has signed a new state budget that will open up the possibility of leasing the 241-mile Ohio Turnpike to the private sector.

In a press conference following the signing of the two-year, $56 billion budget, Kasich said funds from a turnpike lease could help Ohio to make “desperately” needed infrastructure improvements.

“We are running out of money,” Kasich said, arguing that the state will not have sufficient funds for paving roads and building new infrastructure in the future.

But Kasich emphasised that any lease is still debatable. “We are not deciding the Turnpike yet,” he said.

Melissa Ayers, a spokesperson for the Ohio Department of Transportation (DOT), said the new budget gives the DOT the authority to consider the option of leasing the turnpike even though the turnpike is a toll road currently managed by a separate agency known as the Ohio Turnpike Commission.

Under the new budget, the DOT and Ohio’s Office of Budget and Management can jointly draft a request for proposals (RFP) for the lease, according to Ayers. Ohio’s state legislature must approve the RFP before the DOT can solicit proposals from private operators and begin the bidding process, but the winning bid will not require the legislature’s approval, Ayers said.

The road generated total toll revenues of $232.2 million last year, according to the Ohio Turnpike Commission’s 2010 annual report.

Kasich, who took office in January 2010, has also enabled public-private partnerships (PPPs) in transportation more broadly. In March, he signed a $6.8 billion transportation budget that gives the DOT wide authority to pursue PPPs. Ayers said the DOT has hired infrastructure consultancy Halcrow Group to assess which projects in Ohio might be suitable for PPPs.

In a ceremony following the signing of the transportation budget earlier this year, Kasich advocated the potential turnpike lease, estimating that privatisation would generate about $3 billion for the state. He argued that, discounting the debt on turnpike, the state would have then about $2.5 billion to dedicate to future infrastructure projects such as dredging harbours in Cleveland and Toledo as well as initiatives outside infrastructure, including low-interest loans and tuition discounts.

If successful, the privatisation of the Ohio Turnpike would not be the first such lease in the US. Indiana recently marked the five-year anniversary of the privatisation of the state’s 167-mile turnpike, which Republican Governor Mitch Daniels leased to a Macquarie- and Cintra-backed consortium for about $3.8 billion in 2006.