Friday, October 7, 2011

Ohio Reps say Hell No When State Asks for Public Funds to Study Privatization (Updated)

Posted By on Fri, Oct 7, 2011 at 3:40 PM

Sellin out? Goin corporate?
  • Sellin' out? Goin' corporate?

Update: So that bottom line there on the original story — because we know you all made it that far on a Friday afternoon with only hours to go until beer o'clock — has blown up into a bit of a tiff. Originally, ODOT head Jerry Wray said in a release that in his conversation with Federal Highway Administrator Victor Mendez, the latter blamed “political pressure” for the agency's reversal.

But the Federal Highway Administration is now denying that account of the conversation. This came out today from Cathy St. Denis, a spokeswoman with the federal agency:

“Administrator Mendez said nothing about political pressure in his conversation with Director Wray. He told Wray the scope of work as currently designed was not an eligible use of federal funds —period.”

Yup, pretty awkward.

Also, if you skip down below, you can now read the full letter sent my the Ohio Democrats.

***

The tension between the private-public sectors is getting a lot of mileage these days in the conversations about what state governments can do to save money. One Republican-friendly approach has been to privatize state institutions such as prisons and liquor boards, putting the fiscal responsibility in the hands of companies. The administration in Columbus has also floated the idea to privatize the turnpike. In order to test the viability of that brainstorm, the Ohio Department of Transportation asked the federal government to fork over some funding. The request was initially greenlit for about $1.5 million. That's right: one public entity asked another public entity for public money to study whether or not a public entity could be made private. You see the issue with that last integer there.

So did Ohio's Democratic representatives in Washington. According to the Plain Dealer, US Reps Tim Ryan, Marcy Kaptur, Dennis Kucinich, Marcia Fudge, Betty Sutton and Sen. Sherrod Brown all sent a letter to Department of Transportation demanding that the federal funding for the privatization study be cut off. The department bowed to the wishes of the Ohio legislators.

The feds say they initially approved the money because, as the PD puts it, the “request was written in a way that made it appear to be an eligible use for the money” — which really makes you wonder who exactly is making the calls down there in the Beltway about what's eligible and not if they can't figure it out on the first pass. Anyway, ODOT has been invited to reapply for the money, but ODOT head says he's been told by the feds that “political pressure” has forced the agency to rethink it's stance.

Here's the letter:

October 4, 2011

Secretary Ray LaHood
Department of Transportation
1200 New Jersey Avenue, SE
Washington, DC 20590

Dear Secretary LaHood:

We are writing you today with our concerns over the use of federal funds by the current Ohio Governor's administration. It is our hope that the appropriate agency within your department can clarify the use of this money, and if the actions are against DOT guidelines, take the proper action to recoup these taxpayer funds.

Recently it has come to our attention that throughout the process of moving towards privatizing the Ohio Turnpike, the Ohio Department of Transportation (ODOT) has been using federal funds towards this purpose. This information was released to the public through an August 19th, 2011 ODOT document entitled "Ohio Turnpike Public-Private Initiative, Questions and Answers" (attached). It is our understanding that the portion of federal funds being used is through the State Planning and Research (SP&R) Program to fund a contractor advising the State on turnpike financing issues. While the SP&R Program's guidelines are laid out in a way that should get the full value from these investment dollars, we have serious concerns that using federal funds to progress plans to sell off a state asset is far from the intended spirit of the program.

As numerous recent reports and articles have documented, we have a serious infrastructure deficit in this country. The SP&R Program is exactly the kind of forward-thinking program we need to evaluate deficiencies in our infrastructure and find best practices solutions to rebuild America. However, using these funds to advance a privatization plan that could potentially severely cost drivers via increased tolls, threaten the job security of over 1,000 Ohioans, and drive up costs for local governments through increased maintenance costs of local roads, is a questionable use of federal taxpayer dollars and exposes a loophole in the program guidelines.

While we may not all agree on the State's actions towards privatization of the Ohio Turnpike, federal taxpayer funds should not be serving to facilitate a particular policy initiative to privatize a public asset. Should the US Department of Transportation and the appropriate administrators find that the State of Ohio's use of these funds is in fact within the guidelines of the State Planning and Research Program, it is my hope we can work together to narrow the guidelines so use of these funds falls more in line with the mission of the Federal Highway Administration. Thank you for looking into this matter and we look forward to your response.

Sincerely,

Representative Tim Ryan
Representative Marcy Kaptur
Representative Dennis Kucinich
Representative Marcia Fudge
Representative Betty Sutton

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