Dec. 13 (Bloomberg) -- The Ohio Turnpike Commission would issue as much as $1.5 billion in debt backed by tolls to help pay for transportation projects, under a proposal Governor John Kasich announced today as an alternative to leasing the road.
The plan, which requires legislative approval, calls for the Turnpike Commission to issue about $1 billion in bonds as soon as next year, and about an additional $500 million in four to five years. The proceeds would be used for highways in northern Ohio and elsewhere in the state, as well as refurbishing the turnpike, Kasich said.
While the first-term Republican had considered leasing the 241-mile (388-kilometer) toll road to a private operator, it would remain under control of the Turnpike Commission. Tolls could go up as much as the rate of inflation annually -- less than the increases during the past 20 years -- with a 10-year freeze on the charge for trips of less than 30 miles, Kasich said.
“By leveraging the turnpike’s untapped resources while keeping it under state control the way it is now and keeping the rein on tolls, we can begin to solve Ohio’s highway funding crisis in a balanced and thoughtful way,” Kasich said in a video message announcing the plan.
Ohio’s revenue from state and federal gasoline taxes has declined by $328 million since 2007 as construction costs have increased, delaying as much as $1.6 billion of highway projects for lack of funding, the Department of Transportation has said.
Toll revenue declined last year to $231 million from $232.2 million in 2010, according to the Turnpike Commission’s 2011 annual report. The cost to travel the entire road from Indiana to Pennsylvania is $11.25 for passenger vehicles using an E-ZPass and $16.50 in cash, and $35 or $44 for most commercial vehicles, the commission said.
While issuing debt is preferable to other options, customers won’t like proceeds being used elsewhere, said Gary Suhadolnik, a Republican who was executive director of the Turnpike Commission from 2003 to 2008.
“You’re taking out a home equity loan and you’re going to spend the money on your neighbors’ homes, but you’re going to pay for it,” Suhadolnik, who opposed the lease, said in a telephone interview. “I don’t think it’s a good idea.’
Kasich’s plan lets Ohio keep control of the turnpike and avoid disruptive changes, Jerry Wray, the state’s transportation director, said in the video message.
The plan ‘‘provides the funds Ohio’s roads and our economy need, while preserving the turnpike in a way Ohioans want,” Wray said.
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