It’s widely known that the state budget contained major cuts to local governments by slashing the Local Government Fund – a revenue-sharing arrangement that sends a portion of tax receipts to counties, cities and townships.
What has been less widely reported is that, in a separate piece of legislation, the administration reduced funding for the state’s “major new” construction program – funds for new highway and bridge construction – versus the previous transportation budget. Compared to $317 million in fiscal year 2011 (the last year of the prior administration), the Kasich budget appropriates just $60 million in Fiscal 2012 and $123 million in Fiscal 2013 out of a $5.5 billion two-year budget.
What does this mean? The state’s list of major new construction projects starts running a deficit this year, stalling planned projects around the state. These are projects important to local communities like the I-70/71 Split in Columbus, the reconstruction of I-75 in Dayton and the replacement of the I-90 Innerbelt bridge and West Shoreway projects in Cleveland. (Showing its tone-deafness to local priorities, the Kasich administration recently threw cold water on the Shoreway project, assigning it zero points out of ten for “economic impact” even while the City ranks it among its top redevelopment priorities and points to hundreds of millions of dollars of investment in new development in anticipation of its completion – linking neighborhoods to the city’s waterfront.)
Separately, every two years the state passes a capital budget to fund facility construction and maintenance. While primarily a funding vehicle for state projects, it is customary for a small portion of the funding in the bill to be set aside for local projects such as museums, parks and civic improvements. In a typical $1.5 billion capital bill, around $120 million is reserved for House and Senate leaders to allocate to projects in their members’ districts. In 2008, the capital budget included funding for the Columbus Zoo and Scioto Mile project, Youngstown Symphony Orchestra and Cincinnati’s Riverfront Park and Museum Centers, among others.
Recently, Kasich’s budget director, Tim Keen, issued a memo indicating that in the upcoming capital bill, no community projects would receive funding. In Keen’s words: “These projects are nice to have, but not necessities.”
So what does this all add up to? Deliberate policy choices, made by the Kasich administration, to slash funding for local construction projects. In each case, there was capacity available to issue bonds to fund the projects that the administration chose not to use.
Now they are using this very same lack of funding for local projects to strong-arm locals into backing their plans to privatize the Ohio Turnpike. Leasing to a private operator, they say, could result in the state receiving a multi-billion dollar lump sum payment that can be used to fund construction projects – projects the state itself has chosen not to fund in its own budgets. They recently enlisted county engineers and construction contractors to speak with reporters, urging the state to move forward with a study of the feasibility of a Turnpike lease. County Engineers and Construction Contractors are among those with the most to gain from an infusion of new money for transportation projects, so one can assume they were easily convinced to accept a role in selling the proposal in exchange for funding for their projects once the privatization check clears.
A hilarious part of the sales job for the Turnpike is a recent promise by the Kasich administration to spend “at least half” of the money from any privatization scheme in the counties north of U.S. Route 30. Hilarious because 49% of the state’s population, according to the census, live in the counties through which US30 passes or to their north. In other words, Kasich is going to spend half the money on projects for half of the state. Quite the concession.
ODOT recently announced it had hired accounting firm KPMG to assist it in studying whether to proceed with privatizing the Turnpike. As that project moves forward, expect the sales job by the Kasich administration to kick into high gear. Legislators must first approve any request for proposals the administration issues to engage a vendor for a privatized turnpike. Facing elections next fall, legislators will need to be convinced that giving the administration a blank check will pay off for their constituents. For the Ohioans who pay the tolls, having half of their money siphoned off and used to buy the votes of legislators in the rest of the state is going to be a hard sell.