Lawsuit challenges Ohio public private partnerships

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Lawsuit challenges privatization of state roads, prisons in Ohio
By This email address is being protected from spambots. You need JavaScript enabled to view it., Land Line associate editor
September 11, 2012

Plaintiffs hoping to stop the privatization of correctional facilities in Ohio are also challenging the constitutionality of Gov. John Kasich’s proposal to lease the Ohio Turnpike to private investors. 

The lawsuit filed in August in the Court of Common Pleas in Franklin County, OH, takes aim at the privatization effort by attacking a state spending bill that consolidates and/or privatizes a number of state facilities.

The plaintiffs say Kasich and others violated the “single subject” provision of the Ohio Constitution because the bill tackled multiple unrelated subjects. The plaintiffs want the court to void the law and prohibit the governor from privatizing assets.

An employee of one state-run facility, speaking to Land Line on the condition of anonymity, says Ohio should not follow Indiana into a long-term lease that could come back to haunt taxpayers.

In 2006, Indiana Gov. Mitch Daniels leased the 157-mile Indiana Toll Road to private investors from Spain and Australia in exchange for $3.85 billion in cash. In return for the payment, the investors keep the toll proceeds through 2081.

“Most people I talk to don’t want any asset of the state to be sold off, or leased off,” the source said.

Talk of a lease in Ohio elevated last year during budget negotiations. Since then, state and federal lawmakers have argued about the use of federal money to study how much a possible lease could generate. Gov. Kasich’s initially said a lease could generate up to $3 billion.

According to the Ohio Turnpike Commission, the toll road will generate approximately $249 million this year, helped by a toll increase that took effect in January.

Should a possible lease last 50 years, an investor could make $12.5 billion for its $3 billion investment – and that’s without toll increases. The for-profit entity that runs the Indiana Toll Road was allowed to more than double the toll rates in the first five years of that 75-year lease.

OOIDA and truckers openly question why lawmakers would trade away a state asset for quick cash. Once the upfront cash dries up, roadway users will continue to pay for decades to pad the investors’ pockets.

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