Indiana lawmakers at odds over toll road

June 27, 2007

By TOM COYNE Associated Press Writer

GRANGER, Ind. — It's been a year since Indiana leased a major toll road to a private enterprise — but it might take another 10 to decide if it was a sound investment.

The state declined to raise taxes or sell bonds to fund major road improvements. Instead, the General Assembly narrowly voted to lease the Indiana Toll Road to a private consortium for $3.8 billion.

The private consortium leasing the road will collect all toll revenue for 75 years.

The wisdom of the decision is still being debated in Indiana and other states as the June 29 lease anniversary approaches.

Even so, the Indiana deal — as well as the $1.83 billion that Chicago will receive from the same consortium for a 99-year lease of the Chicago Skyway — have changed the way states look at toll roads as revenue producers.

In 2006, an Australian company bought a 99-year lease on Virginia's Pocahontas Parkway, and Texas officials decided that year to let a Spanish-American partnership build and run a toll road from Austin to Seguin for 50 years.

Other states, including Pennsylvania, Florida, Illinois, Virginia and New Jersey have considered leasing major toll roads. A Michigan-based firm owns four toll bridges in Alabama.

Indiana Gov. Mitch Daniels, who lobbied hard for his state's deal, points to the $11.9 billion in road construction expected in Indiana through 2015 that was made possible with money from the lease.

He also says the upfront money the Spanish-Australian consortium Cintra-Macquarie paid for the road has earned $174.5 million in interest, which will help the state's finances.

"The money won't be gone in 10 years. It will be here in billions of permanent assets we leave for our children," he said.

House Speaker Patrick Bauer — one of the proposal's staunchest opponents — said not much has changed since the toll road was taken over. And he doubts the state's money will last beyond 10 years, while the private firm will make money for the next 65.

"Our hands are tied for four generations," Bauer said.

But change along the 157-mile toll road is under way, said Matt Pierce, a spokesman for ITR Concession Co., the private firm that runs the road. Electronic tolling began Monday from Illinois to Portage, and the lease calls for a third lane to be added in that area to relieve congestion.

Thomas Gresik, an economics professor at the University of Notre Dame, said leasing roads to private companies can work — depending on the price and how it's paid out.

"Having that money up front makes the actual economic benefit much larger than $4 billion because we can make improvements today that are going to attract new companies," Gresik said.

The state is expected to steadily increase the amount it spends on road projects. According to the state Department of Transportation, Indiana spent $686 million on road construction in fiscal 2005. During the past year, the department spent $788 million on roads, a figure that's expected to increase to nearly $1.5 billion by 2015.

However, the tolls for passenger vehicles are expected to rise from $4.65 to $8 when electronic tolling is fully implemented by November.

Truckers saw an increase from $14.55 to $17.90 in May 2006; it's now $22.60. It will increase to $27.30 on April first, and again in 2009 to $32. That could push truckers to find ways around the toll roads, possibly rumbling through small towns, said Tim Lynch, senior vice president of the American Trucking Associations.

Bauer expects to hear a public outcry as tolls continue to rise.

"The hostility will be there because then it will be more visible that you're contributing to this foreign corporation," he said.

But Daniels believes that people will see the benefits of improving roads without tax increases.

"Look at what they're doing in 49 other states where they're raising the gas taxes, borrowing ungodly amounts of money just to pay for today, and you'll see what a great deal we got," he said.

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On the Net:

Indiana Toll Road contract: http://www.in.gov/ifa/tollroad.html

ITR Concession Co.: http://indianatollroad.org