Tuesday, November 01, 2011

Guest Post: Turnpike Tolls, 'Cash Cows' and Broken Promises

The following is a guest post from Karen Jarvie. Because of the quirks of Blogger, her footnotes are not included in this posting but are retained for reference should anyone need to see them.

Turnpike Tolls, “Cash Cows” and Broken Promises

by Karen Jarvie

While listening to a discussion on Fred LeFebre’s show on WSPD, regarding Governor Kasich’s proposal to sell or lease the Ohio Turnpike, caller after caller reiterated the point that I had heard since childhood, that the tolls had been slated to “go away” when the bonds were paid. Why they were still in place was a question no one seemed able to answer, since most of us were either kids when decisions were made or busy young parents without much time for politics. After the show I e-mailed Tim Brown, my local representative and a fierce opponent of privatizing or leasing the turnpike, and asked him to provide some background. He e-mailed back that he too had been asking the same question in Columbus. Why didn’t the tolls go away? Again, there wasn’t anyone there who had been involved in the decision-making process. So I decided to do some digging on my own.

I pulled newspaper articles from the past, and even contacted the Turnpike Commission for information that would put our current situation into some context. The Commission was very forthcoming with information, in essence making a good case for the existence of the turnpike commission and the turnpike itself. While I have no problem with the way the turnpike is run, or the historical merits of having a well kept road, I was more interested in staying focused on one single issue---WHY DO WE STILL HAVE TOLLS?

Just reviewing the Turnpike’s timeline from conception to the present day opened my eyes.

It seems a dollar is a dollar is a dollar. Ever since the National Road, the first federally funded toll road in Ohio, was completed in 1838, politicians have seen the advantages of collecting cash for access. For one, they saw it as a way of paying for the construction and maintenance of the road without going to those taxpayers that didn’t use it. To quote from the commission’s own overview, “…toll gates were erected starting in 1831 at 20-mile intervals along the completed strips. Records of the Ohio Historical Society show that the toll charges in 1833 netted Ohio the princely sum of $12,259. Two years later, the amount zoomed to a king’s ransom--$51,365.” While the copy appears to mock the amounts as royal sums, the truth is they were. All of us who work our genealogies can relate to the cost of living back in the 1800s, when a few pennies were considered a small fortune. Many of us still remember family stories about homes selling for a few hundred dollars during the Depression, or good wages being in the $25.00 a week range back in the 1940s. My first job in 1965 netted me about $33.00 a week for 40 hours of work. And I thought I was rich! So historically, the idea of levying tolls was very attractive.

In 1955 toll collections (by far the largest portion of the turnpike’s revenue, according to the Turnpike’s own data) totaled over $3.6 million. In 1995, they topped $102 million. In addition, 41 percent of the trips made on it were by drivers of out-of-state vehicles…{and} 28 percent of all the commercial vehicles using the turnpike were licensed in other states, so the firms owning them provided a large share of the toll income. Does that mean that 72% of the commercial vehicles were from in-state firms? If the answer is yes, it explains the objections to continuing the tolls made by the late Dale Craig, president of Craig Transportation Co., when he said in 1989, “It’s just not fair. In addition to paying tolls, you still must pay state and federal fuel taxes for the fuel used while traveling the turnpike.” He went on to say that business entities that would like to use the turnpike regularly find it too expensive. “As a result, they travel the narrow parallel highways near the turnpike. Many of these roads are narrow, curving two-lane highways that pass through small and medium-sized communities…This causes traffic congestion and safety risks that could be avoided if the tolls were ended.” He also went on to make the point (which my own husband has made), “If you were making the choice between locating a business near an interstate with tolls or another interstate with no tolls, because of economics, you would choose the location near a freeway with no tolls.”

And yet safety and increased business activity were two of the hallmark arguments made for building the Turnpike in the first place. To quote the turnpike commission’s chairman, Umberto P. Fedeli, in discussing the expectations for Ohio’s growth held by former governor, George Voinovich, “His vision has always been that the highway be a retainer and generator of jobs,” Fedeli said, “which is one of the three goals we are concentrating on. The other two are safety and accessibility.” Logic would therefore dictate retiring the tolls, at least for the citizens of Ohio. Road maintenance, as Dale Craig asserted, could easily be paid for by concession funds and other non-toll fees. In other words, without the tolls the traffic would increase and with it the peripheral income.

But that was never the plan.

Utilizing Turnpike Commission reports, I learned that the promise to retire the tolls was a matter of expediency. At the time, Government money was only available for turnpike construction if the promise to retire the tolls was made. This was reiterated in a 1964 tripartite agreement between the state of Ohio, the Ohio Turnpike Commission, and the Federal Highway Administrator. This agreement was a request for federal funds to be spent by the State of Ohio on several interstate Highway System approaches to the Turnpike. Like the original Ohio Turnpike Act, “it specified that, when the original Turnpike bonds are paid, the tolls on the Turnpike are to be removed and the facility is to become a free state highway.” (Although, the free aspect of the original bill was deleted when Substitute Senate Bill 7 was allowed to become law on April 12, 1991, without the signature of Governor Celeste.)

To quote from a publication put out by the Turnpike Commission, “Throughout the 1970s, one of the primary goals of the turnpike commission was to liquidate its bond debt, which began at $326 million in 1952 to finance the building of the road. By the end of the 70s, the debt had been reduced to just $26,858,000—despite significant economic recessions during the decade. The strong financial performance was accomplished without any toll increases.” The commission, the piece went on to say, planned to expand the turnpike for eventual toll-free operation. “As part of the Federal Interstate Highway System, improvement on the road would be funded by federal money.” Unfortunately, every effort in the 1970s to qualify for the (regular) 90% federal interstate funding was met with “evolving” federal requirements, which eventually disqualified the turnpike from seeking federal funds.

The 1964 agreement said that the Commission could collect tolls “sufficient to liquidate the revenue bonds…and to pay the cost of maintenance and operation and debt service during the period of toll collections, and to pay the cost of placing the Ohio Turnpike in good condition and repair to the satisfaction of the Director of Highways as required by Revised Code of Ohio, Sec. 5537.21.” It also said, “all expenses attributable…shall not result in increased overall costs to be borne by the toll revenues.”

Somewhere in all of that legalize, I took it to mean that either the toll increases in February 1982, to finance a $250 million bridge reconstruction, fell outside of the agreement; or changes in federal law that year, after the rate increase, automatically disqualified the Commission from seeking further funding.

Whether the chicken or egg came first is no matter. The situation itself (according to the commission report) led Allan Johnson, the turnpike’s executive director “and the commission also to do an about face---to advocate for keeping tolls. Johnson proposed that the Ohio Turnpike Act be modified to allow this to happen. The turnpike’s agreement with the state and federal government to end its tolls also had to be abrogated.” This process would take almost a decade to succeed.

In 1988 an independent survey conducted by a Washington, D.C. firm showed that 77% of Turnpike users surveyed favored keeping the tolls in place, compared to only 13% against it, while 83% of Ohioans statewide favored keeping the tolls, compared to only 13% for removing them. This, as well as “many informal polls and surveys done over the years by newspapers, and organizations such as the Ohio Motorist Association (the northeast Ohio branch of AAA),” was viewed by the Turnpike Commission as a mandate to seek Congressional release from the constraints of the 1964 Tripartite Agreement. To this end Senator Howard Metzenbaum introduced legislation in the U.S. Senate, co-sponsored by Senator John Glenn, to modify the 1964 Agreement which called for the removal of Turnpike tolls, once all of the bonds sold to construct the road retired. It died in committee. The Ohio General Assembly introduced three bills that same year, affecting the Turnpike. Two of them would keep tolls on the Turnpike past the 1992 maturity date of its outstanding bonds, continue operation of the road by the Turnpike Commission, and extend the power of the Commission to issue new bonds to finance other transportation projects. The third bill also called for retention of the Turnpike tolls, but called for the Commission to be abolished and the Turnpike placed under the jurisdiction of the Ohio Department of Transportation. None of the three bills were passed in 1988. Similar legislation in 1989 in both the House of Representatives (by Congressman Douglas Applegate) and the Ohio General Assembly also went nowhere. The same held true for 1990.

Newspaper accounts during this period reflect a bitter battle within parties and between parties, mostly over technicalities. While some legislators, like Representative Frederick Deering, D-Monroeville felt strongly about keeping to the original agreement and retiring the tolls, most of the politicians, on both sides of the aisle, were in favor of extending them. The bickering (and the gridlock) was primarily due to other elements packaged in each bill. For instance, Cleveland Democrats Ike Thompson and Patrick Sweeney sponsored a bipartisan bill in the Ohio House that would keep the tolls, and extend the life of the Turnpike Commission until June 30, 1990, to allow it to issue bonds for other road and bridge projects. Deering, on the other hand, wanted to see the commission abolished and the Ohio Department of Transportation responsible for maintaining the turnpike. Senator Ben Gaeth, R-Defiance, introduced a bill not long after in the Senate to expand the size of the commission and create a Turnpike Oversight Committee to monitor operations of the Turnpike Commission. His colleague, Paul Pfeifer, R-Bucyrus, gave his support to the idea, stating a need to keep the turnpike “well maintained.” Bills appeared to move between the two legislative bodies, without ever reaching a firm consensus.

Then out of the blue eternal tolls came closer to reality on December 31, 1991, when George H. W. Bush signed the Intermodal Surface Transportation Efficiency Act, which not only reversed a 75-year-old anti-toll policy, but supported and encouraged tolls as a financing option for U.S. Highways. In short, the 1964 Tripartite Agreement could be “modified” without the payback of any federal funds. All the Turnpike Commission had to do was ask.

May 18, 1992, less than two weeks before the last of the $326 million in bonds issued in 1952 were to retire, the 1964 Tripartite Agreement was modified. In effect, the phrase “the Ohio Turnpike is to become free to the public upon the liquidation of the bonds” was exchanged for the “mutually agreed” upon statement “The requirement that the Ohio Turnpike is to become free to the public upon the liquidation of the bonds that were outstanding as of July 14, 1964, and the bonds refunding such bonds, is canceled (my emphasis).”

With the stroke of a pen, the turnpike tolls became chiseled in stone. Or to quote Ben Gaeth, R-Defiance, after his Senate bill to retain the tolls won preliminary approval on a 26-6 vote in April 1989, “When you have something going as well as the turnpike, you don’t mess with it. If it isn’t broken, don’t fix it.”


skeeter1107 said...

Thank you for the research. Very enlightening.

Black Swamp Road Geek said...

No where in this summary is the decision, 1993 I believe, to widen the turnpike to three lanes in each direction and modernize service plazas...that is where the tolls are going today

Mad Jack said...

Thanks for the post. At least we know what happened, but to me it was no surprise that turnpike tolls weren't canceled. It's about the money and the control.

This is the most well-written article I've seen on this subject, but I wish a few more politicos had been named.

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