Back in 2006, when Ken Blackwell was running for Governor of Ohio, he introduced a proposal to lease Ohio’s turnpike to a bunch of foreign investors. It seemed like a bad idea back when Blackwell proposed it and, when you realize that Blackwell’s Turnpike lease proposal was written by well-known conversative kook Jerome Corsi, it really pushes the idea into dangerous and crazy territory.
And yes, I’m talking about THAT Jerome Corsi. The Obama Nation, Unfit for Command, 9/11 Truther who thinks the Earth magically creates oil and natural gas because the bible says the earth is only 5000 years old so there could never possibly have been dinosaurs or prehistoric forests.
If you, like me, believe that any idea put forward by Jerome Corsi and Ken Blackwell would have long ago been debunked and is so politically radioactive that no politician in his right mind would possibly touch it – even from a safe distance with his least-favorite golf club, then you would be half right.
It’s true that the “leasing the turnpike is a wise investment for the state” myth was smacked down many years ago (more on that in a minute) – but it turns out not everyone got the memo. As Modern just reported, John Kasich – realizing he is running out of options to plug the massive state budget hole – just dug out an old warped driver and is now poking at the rotting, irradiated carcass of the Turnpike lease proposal.
As we’ve already seen, this is a big flip-flop for Kasich given that he said he would not pursue leasing the Turnpike and he critized Governor Strickland for using “one-time money to balance the budget” and now he’s proposing doing both things.
But more importantly the Turnpike lease will not help solve any of the Ohio’s financial problems and will effectively give away control of one of the most important transportation assets in our state.
A study analyzing Blackwell’s Turnpike lease proposal was done back in 2006 and the basic findings are as relevant today as they were back then. The authors found when they factored in the cost of paying off existing Turnpike bonds and of rebuilding the turnpike over the life of the lease, the actual value to a potential lesser is about $1 billion, not anywhere close to the estimates that are currently being thrown around.
And even if we find someone crazy enough to pay three times that amount, remember that we have an $8 billion hole in the current budget. We only get this cash once and they get the turnpike until we – and most likely our children – are long dead and gone. Hardly seems like a fair trade and it certainly doesn’t solve our long term budget problems (or even our near-term ones).
According to the same study:
* The highway’s condition will not improve if we lease it – and it may get worse
* There will be no major cost savings to the state by turning the Turnpike over to a private company
* The only way to make the lease profitable for a private company is to greatly increase the tolls
The authors of the study sum up the situation well, so I’ll leave it to them…
Please remember that there is no free lunch in the economy. While receiving a big bag of money for the Turnpike looks like a great deal; in the end, it is a financial transaction that has to be repaid. Think of the long term lease of the Turnpike as the state equivalent of a home equity loan. The cash you receive may be desirable, but the equity has to be replaced eventually. And the rationality of a home equity loan also depends on how you use that cash – do you put your kids through college or take the family to Disney World?
Decades ago Ohio’s voters were told that proceeds from the Ohio Lottery would be the silver bullet that would fix the state’s school finance woes; it was not. The lease of the Ohio Turnpike will be as effective in financing economic development as the Ohio Lottery has been in financing public education. This is not a comforting thought.
The only reason to lease the asset, given our analysis, is an ideological drive to shrink the size of government.