Dec 13 Ohio would raise $1.5 billion for highway
projects through the sale of bonds backed by future toll revenue
from the Ohio Turnpike, under a plan released by Governor John
Kasich and state transportation officials on Thursday.
The state could also attract an additional $1.5 billion in
federal and local government matching funds to pay for other
road projects, according to the Ohio Jobs and Transportation
Plan, which would need legislative approval.
Kasich, a Republican, said he rejected the option of leasing
the turnpike to a private entity after a study. Instead, he
wants to tap into the approximately $270 million a year in
turnpike toll revenue that is more than what is needed to
operate the road.
More than 90 percent of the bond proceeds would be used for
the 241-mile turnpike or for highway projects in northern Ohio,
under the plan.
But the fact that some of the money would fund non-turnpike
projects could raise red flags with credit rating agencies.
Adam Torres, an analyst at Standard & Poor's Ratings
Services, said the move carries some potential for concern,
citing a 2007 law that required the Pennsylvania Turnpike to
make payments to that state's transportation department. S&P
downgraded the Pennsylvania Turnpike to A-plus from AA-minus in
2008 because of its lower capacity to service its debt, he
The Ohio Turnpike, which has about $575 million of debt
outstanding, is rated AA by S&P, according to Torres.
Connie Wehrkamp, Kasich's deputy press secretary, said the
plan includes a mechanism to increase toll revenue and that
there will be different structures for the bonds.
"The new debt will be structured to satisfy rating agency
criteria and will include both a senior level of debt (higher
coverage ratios) targeted to receive a rating in the AA category
and a subordinate level of debt targeted to achieve a rating in
the A category," she said in an email.
Meanwhile, tolls for local trips using electronic passes
would be frozen for 10 years and increases in other toll rates
would be capped at the rate of inflation.
"Bonding against future turnpike revenue generates enough
money to erase our highway budget deficit," said Ohio Department
of Transportation Director Jerry Wray in a statement. "Combined
with ODOT's work to reduce our cost of doing business and
improve service to the state's motoring public, this plan puts
the resources we need into our major construction budget."
Ohio's dependence on gasoline taxes has led to a $1.6
billion highway budget deficit as economic uncertainty, higher
gas prices and more fuel-efficient cars have depressed gas
sales, the statement said.
The Ohio Turnpike Commission would have expanded authority
and a new name -- the Ohio Turnpike and Infrastructure
Commission under the plan.