People still divided on
Indiana Toll Road
June 25, 2007
TOM COYNE, Associated Press
Like its motto, Indiana was at a
crossroads a year ago.
In need of money for major road improvements,
the state dubbed "The Crossroads of America"
decided against raising taxes or selling bonds.
Instead, by a narrow General Assembly vote, it
leased the Indiana Toll Road to a private,
Spanish-Australian company for $3.8 billion. In
exchange, the company will keep the tolls for
the next 75 years.
The wisdom of that decision is still being
debated in Indiana and other states as the June
29 lease anniversary approaches.
Gov. Mitch Daniels, who lobbied hard for the
lease to pass, points to the $11.9 billion in
road construction expected in Indiana through
2015 made possible with money from the deal. He
also says the upfront money Cintra-Macquarie
paid for the road has earned $174.5 million in
interest, which will help the state's finances.
Opponents counter that the lease is a
quick-fix dead end. They argue the money will be
gone within 10 years and future generations will
be left to pay the bill.
The arguments are familiar.
"What's changed in the past year?" said House
Speaker Patrick Bauer, one of the proposal's
Motorists who drive the highway that
stretches 157 miles from the Illinois to Ohio
borders say not much.
"It's just easy to make an easy assumption
that it was negative or positive, but I don't
know," said Nina Howard of Elkhart at a rest
stop in her hometown.
But the Indiana deal and the $1.83 billion
Chicago will receive for a 99-year lease of the
Chicago Skyway have changed the way states look
at toll roads as revenue producers. Other
states, including Pennsylvania and New Jersey,
have considered leasing major toll roads, but so
far none has followed the lead by Indiana and
And change along the 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.
"The idea itself is a very sound idea. But
like any other economic transaction, whether it
is ultimately good or bad depends on the price,"
he said. "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."
Bauer said the problem with the deal is the
state will have money for road projects for 10
years - although he doubts it will last that
long - while ITR will be making profits for the
next 65 years.
"Our hands are tied for four generations,"
However, Daniels argues that the deal is an
"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.
Road projects that would have been on the
drawing board for years will be completed using
lease money, Daniels said.
The state is expected to steadily increase
the amount it spends on road projects. According
to the state Department of Transportation,
Indiana spent $775 million in road construction
for fiscal 2004.
It dropped to $686 million a year later.
During the past year, the department spent $788
million on roads, which was expected to increase
to nearly $1.5 billion by 2015.
Not everyone agrees with Gresik and Daniels
that it is a good deal.
Tim Lynch, senior vice president of American
Trucking Associations, said his group opposes
most such leases because they take money away
from roads. The fact that Indiana is pouring the
money back into roads helps some, he said. But
ATA is still concerned that tolls could get too
high and cause truckers to find alternate routes
through Indiana towns.
Tolls already have increased for truckers.
Rates for trucks with five axles increased in
May 2006 for the first time in more than 20
years, from $14.55 to $17.90. It now costs
$22.60 and will increase to $27.30 on April 1
and to $32 in 2009.
Trucker Don Finstad of Eau Claire, Wis., who
drives the toll road regularly, said he's not
too concerned about the rates.
"If they get high enough, the
owner-operators, we'll get off the toll roads
and go around," he said. "And I don't think
people are going to want big trucks going
through their small towns."
The tolls for passenger vehicles were
expected to rise from $4.65 to $8 when
electronic tolling is fully implemented by
That's when Bauer expects to hear a public
"The hostility will be there because then it
will be more visible that you're contributing to
this foreign corporation," he said.
Daniels believes that as people see the
benefits of the roads being built around the
state they will realize the value of the lease
"Billions of dollars of new assets we buy
without a penny of tax increase, without a penny
of borrowing left for our kids," he said. "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 it."