Outsourcing Turnpike maybe not such a good idea
Published 12:00 am Friday, August 25, 2006
This morning I had my usual breakfast at McDonald’s, coffee, and the guys sitting around solving the problems of the world. Billy Rae sat down and had the Ohio Turnpike system on his mind.
“You know, that Strickland guy is against every good idea anybody comes up with. Now he’s against getting $4 billion dollars for the state, and all we have to do is sell the turnpike to a private company, and pay off the debt on the turnpike,” he said.
“True Billy Rae, all true. Why do you think we should sell the turnpike?”
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“Well, that don’t take a genius buddy, for the $4 billion. Why with that money we can do lots of good stuff. Blackwell says we can do a lot of economic development stuff, you know, pay companies to come to Ohio, like that,” he said.
“And that makes sense to you Billy Rae, that we should sell the Turnpike to pay companies to come to Ohio?”
“Sure, why not?” he asked.
“Well, for one thing, maybe tax breaks and free buildings are not what attracts companies. Maybe companies want a well-trained work force, great roads, rails, and communities. Maybe good companies don’t want to deprive schools of tax monies.”
“Whatever. We need to sell that Turnpike and get the money. We can figure out how to spend it later. We could create a government slush fund for projects we like.”
“Billy, let me ask you, if the Turnpike is sold who gets the money?”
“Why the government, of course,” he said.
“Really? Why is that? The taxpayers have paid for the Turnpike and its maintenance since its opening. So, if it is sold, isn’t it all their money? Wouldn’t the proceeds of the sale belong to the taxpayers?”
“Gee, I don’t know. Mr. Blackwell doesn’t mention that part,” he said.
“You know Billy Rae, when the Turnpike was built, the plan wasn’t that the tolls last forever. Once the road was paid for the tolls were to end. They never have, and now they contribute money to the state budget every year.”
“So…so we lose a few bucks, we get $4 billion.”
“Billy, it doesn’t work quite that way. The only reason a private company is willing to buy the Turnpike is they think they can make a lot more running it than what they pay for it. They think the state will take 10 cents on the dollar and sell the toll road, letting the company make huge profits forever. In this case it would be a lease for about 75 years.”
“Um, I hadn’t thought about that part. How does this private investment company make its money?”
“The same way everybody does Billy Rae, by lowing costs and increasing income. So you can expect less road repair and higher tolls. That’s the way it works.”
“So you are saying the state gets $4 billion, has to pay of its debt, then if it puts the money in a slush fund it is using taxpayers money? And the company that leases the Turnpike will do less maintenance and will raise the tolls? And then the state loses 75 years of income too?”
“Exactly Billy Ray. Still sound like a good idea?”
“Not so much. Why would anybody want that?”
“Politics, Billy Rae. It keeps the state from getting negatives when the toll rates are raised, in gives the immediate governor excess money to spend on just about anything, and by the time people realize we have mortgaged our future, he will no longer be governor.”
“But that isn’t good for Ohio.”
“Then instead of outsourcing the Turnpike, outsource Mr. Blackwell.”
Jim Crawford is a local political enthusiast. He can be reached at firstname.lastname@example.org.