Privatized Toll Road Letdown

Link to article here.

Published: April 27, 2010 3:00 a.m.

Toll Road letdown

Journal Gazette

Opponents predicted this would happen.

When Gov. Mitch Daniels sold his plan to lease the Indiana Toll Road for 75 years, some opponents said the financial projections were too rosy, that the $3.8 billion proceeds and interest would not fully fund the lease’s share of a much-touted 10-year highway construction plan.

Now, as Niki Kelly’s Sunday story explained, the Indiana Department of Transportation has begun to take projects off the 10-year plan while delaying others. In all, projected spending for new highway construction in the 10-year plan has dropped from $6.4 billion to $5.5 billion.

Some of the reduction is because of other forces – a drop in gasoline tax revenue, lower estimated construction costs. But a significant portion is because of lower-than-expected interest income from the lease proceeds. Two years ago, in the most recent update, the state said the shortfall was $220 million and counting.

“I think this is absolutely predictable,” said state Rep. Win Moses, whose Democratic Party was in the minority of both chambers of the General Assembly when lawmakers approved the lease in 2006. “It was always oversold.”

If so, it isn’t the first time supporters of a big, controversial government program used overly optimistic projections to help sell the program. Nor is it that unusual for financial projections to be revised, particularly during and after the economic changes of the past three years.

But uncertainty about the future was a primary reason to question a proposed 75-year lease. Of course the finances will change dramatically.

While a few forward-thinking lawmakers such as Moses examined and challenged the finances of the lease, the focus of the opposition was more on the philosophical decision to lease such an enormous state asset to a private, foreign company. Proponents won, largely because it meant a lot of money to finance numerous highway projects over the following decade.

Now that some projects are falling off the list doesn’t mean that Toll Road drivers pay any less. The cost for a passenger car to traverse the 157-mile length of the Toll Road was $4.65 before the lease was signed. Today it is $8 for those without electronic tolling devices, and the price will continue to rise.

Costs are even higher for truckers; the $14.55 cost for a five-axle truck just before the lease was signed has now jumped to $32. Ever-higher tolls could well force some truck drivers off the interstate onto highways such as Indiana 20, raising the cost of maintaining those roads.

Great improvements promised by lease supporters aren’t apparent either. Construction lingers on portions of the road near Chicago, causing backups and dangerous driving conditions. Occasional Toll Road drivers who don’t use the road enough to buy the electronic tolling device are finding longer lines at the cash toll booths.

Tellingly, four years after Daniels and other lease proponents sold the privatization deal as the “next big thing” for cash-strapped states, few – if any – have followed the model.

Perhaps one of the most troubling aspects of the lease isn’t that the 10-year plan is falling short but that it was designed to finance a highway plan for only 10 years – while a private company will continue to bring in revenue for 65 years after that plan is over.

One Reply to “Privatized Toll Road Letdown”

  1. Gary D. Brewer

    The process of forcing trafic off toll roads and onto the government (taxpayer) road is not a new happpening. I saw this occuring in Italy 40 years ago. The result was a very bumpy slow ride. I am very concerned our elected officials are so greedy and so short sighted. Is it possible they can learn by others mistakes? Take a look at Italy today. I will bet the toll roads are like new. the only damage would be from the weather because very few cars and virtually no trucks used them.

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