CHICAGO — Reversing a recent decision, the Obama administration Monday said Ohio could use a small federal grant to finance Republican Gov. John Kasich’s effort to privatize the Ohio Turnpike.

Also this week, Kasich announced four key areas that would receive proceeds generated in a privatization deal.

Kasich is looking to lease the toll road, one of the nation’s largest, for up to 75 years. He has said the lease could generate up to $3 billion in up-front cash. The transaction would require the defeasance of $590 million of outstanding toll revenue-backed bonds issued by the Ohio Turnpike Commission.

Two weeks ago, the U.S. Department of Transportation appeared to side with a group of Democratic Ohio congressmen opposed to the toll road privatization when it revoked a $1.5 million grant that the state was using to hire a firm to advise it on privatizing the Turnpike.

The decision appeared to reinforce Democrats’ complaints that it was a misuse of federal funds.

But on Monday, federal transportation officials reversed their earlier decision and announced that the state could use the money, in part because the Kasich administration submitted a revised plan that outlined a broader use of the money.

Meanwhile, Kasich on Tuesday announced four key areas that he said would be in line for funding from the proceeds of a long-term lease. A majority of the proceeds would go to northern Ohio, which is where the toll road is located, his office said.

A portion of the proceeds would be used to finance neglected local projects adjacent to the Turnpike. The state would also use some proceeds to create a dedicated revenue stream for local bridges.

Transit systems statewide, many of them small, would also win a piece of the pie, the governor’s office said.

“Replacing the uncertainty of general revenue funding with a reliable dedicated funding streams allows transit agencies to plan with greater confidence,” according to a release.

In the release, the Ohio Department of Transportation warned that the state will soon lack sufficient funds to even maintain the current transportation system without new money.

“States must look at all options to fund transportation now and in the future and are being encouraged by the U.S. Department of Transportation to do so,” the statement said.

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