Thursday, November 29th, 2007

Ohio Facing $3.5 Billion Road Construction Shortfall

The Ohio Department of Transportation this week unveiled its 2008-2009 business plan. This plan calls for a “new dialogue on how best to determine Ohio’s transportation priorities and identify the fairest ways to finance them”.

Why this new dialog? Basically Ohio is facing a convergence of an over-committed road building program and an inflation rate for new construction that vastly exceeded the previous (ridiculously low) estimates. Typically Ohio overcommits to 20% of projects. This is done so that if one project hits a delay, another project can be slotted in its place. However, the Transportation Review Advisory Council recently over-committed by 47%. On the inflation front, ODOT has experienced 41% inflation in construction costs since only 2004. Prior to 2005, ODOT didn’t even take inflation into account in its construction projections, with a paltry 1% forecasted rate. The commodities boom and oil price spikes, exacerbated by the collapse of the dollar, led to much greater inflation. Add it all up, and Ohio is $3.5 billion short.

In addition to laying this on the table, ODOT has some interesting items in this report. Some of these are of the motherhood and apple pie variety one would expect, but are nonetheless good to read and think about. For example, their new mission statement:

“To seamlessly link Ohio’s highways, railways, transit, aviation and port facilities, the Ohio Department of Transportation will promote a world-class, integrated multi-modal transportation system that is efficient, cost-effective and reliable for all of the state’s citizens, businesses and travelers.”

Multi-modality is a big theme, as is world class. What that means in reality remains to be seen.

Also, they lay out a series of core values. Interestingly, two of them are “High Ethical Standards – We will uphold the sacred duty of telling the truth” and “Financial Responsibility, Efficiency, and Accountability – Money matters. We will be good stewards of the public trust”. I believe there had been some bridge inspection bribery problems in Ohio. But beyond that, this seems to indicate a department that wants to shoot straight with the public about the real cost of projects and state’s ability to pay for them, not indulge in chicken in every pot politics.

There is a lot of other good stuff in there. For example, ODOT is legally prohibited from starting any new major build projects until it completes its entire list of committed “Tier 1” projects. This sounds good in theory, but in practice will put big constraints on the department, especially as the list of uncompleted projects gets smaller. There is a lot more, so check out the full report.

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Topics: Transportation
Cities: Cincinnati, Cleveland, Columbus (Ohio)

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