Even though most Hoosiers and countless outside observers long ago figured out what a spectacular success the lease of the Indiana Toll Road has been, a confusing story and editorial in The Journal Gazette left a different impression. They suggested that the state is not in a strong “financial position,” and that the transaction will leave the next governor with a problem he would not have otherwise had.
That’s exactly backward. First, with a balanced budget, AAA credit rating (better than the federal government), the lowest debt and pension burdens in the nation, and nearly $2 billion in reserves, Indiana has one of the strongest financial positions anywhere.
The story didn’t really mean to deal with our “financial condition” but rather with the totally separate matter of long-term highway construction and the dedicated gas tax that funds it. It’s a national problem that the gas tax no longer comes close to meeting the modern needs of the 50 states for infrastructure. All over the nation, virtually everywhere except Indiana, roads and bridges are crumbling and states are struggling just to patch potholes in the roads they have. Here and here alone, a record building boom is under way. Plus we got a vastly better Toll Road – with electronic tolling, more state trooper patrols, and new lanes for less congestion – in the bargain.
The story tried to make the point that, when the lease’s proceeds have all been reinvested, Indiana will rejoin the other 49 states in the dilemma of inadequate gas tax receipts. But Indiana will do so with more than 200 new road projects that otherwise never would have been built, with at least a third of our bridges rebuilt, and with a permanent half-billion dollar trust fund that will continue to generate earnings to augment future highway budgets. Other states can only dream of such a situation.
Rep. Win Moses added to the distortion by saying the “state mortgaged the future.” He knows that’s nonsense. The Toll Road proceeds paid off the mortgage, the more than $200 million of debt that still burdened the Toll Road after 50 years of political-patronage operation. And remember, the road was losing money; there was no “future” to mortgage.
The May 17 editorial said “the state essentially burned through 75 years’ worth of highway project money in less than 10.” The upfront $3.8 billion payment was money the state never would have had and was always intended to be promptly turned into new, long-needed public assets such as the Fort to Port and Hoosier Heartland Highways as quickly as possible. Surely The Journal Gazette is not suggesting that we’d have been better off without them and the Next Generation Trust Fund?
This administration has brought a host of major changes to Indiana and most, such as leaner government, lower taxes, ethics and education reforms, or right to work, are subject to honest debate. But what is not open to debate is that Indiana is in uniquely strong fiscal shape and our future is vastly better with the Toll Road transaction than without it.
http://www.journalgazette.net/article/20120527/EDIT05/305279969/0/SEARCH
Here is the editorial from the May 17, 2012, Journal-Gazette:
Six years after state lawmakers approved Gov. Mitch Daniels’ controversial plan to privatize the Indiana Toll Road through a long-term lease, both advocates and opponents can find evidence to support the views they expressed in 2006.
Proceeds from the lease have unquestionably improved the state’s highways. By the end of this year, the state will have added 375 miles of new roads, improved pavement on more than 5,000 miles and replaced or rehabilitated more than 700 bridges.
Two key Major Moves projects, financed largely by the lease, directly aid economic development efforts for the Fort Wayne area. The last segment of the Hoosier Heartland Corridor – offering a four-lane highway from Fort Wayne to Lafayette – will be completed. Indiana will also complete its part of the Fort to Port project – offering four lanes from Fort Wayne to Toledo.
And the lease injected hundreds of millions of dollars into the economy at a time when Hoosiers really needed it. Highway and bridge projects have employed hundreds of laborers, providing evidence that the labor interests who broke with Democrats and supported the lease were correct about creating jobs.
But.
The consortium that leased the road for $3.8 billion has to make money, and that money comes from people who drive the Indiana Toll Road – many of them Hoosiers.
Already, for automobile drivers paying cash, the rate for the 157-mile length of the road has nearly doubled in six years, from $4.65 to $9. For a five-axle truck, the increase has been greater – from $14.55 when the lease was approved to $36.20 today.
The strongest argument from opponents was that the 75-year term of the lease is exorbitantly long. And, if such a lengthy lease is in any way justified, it was worth more than the state received.
Consider how cars and trucks and roads changed from 1931 to 2006. No one knows how leisure and business travel will change through 2081, much less transportation of freight, but many aspects will be different – perhaps radically so. Consider: When the lease hits its halfway point, Mitch Daniels will be 94.
Indeed, as Niki Kelly’s Sunday story explained, by the time the next governor takes office, little to no money will remain for new state road projects, though counties that the Toll Road runs through are still sitting on piles of cash. The state essentially burned through 75 years’ worth of highway project money in less than 10. And while the state has doubtless benefited from the projects, the new roads add to the miles of highways the state must maintain for the next 69 years.
As State Rep. Win Moses noted: “We have built some important roads. But we did so by mortgaging heavily the future and allowing the tolls to go up quickly.”
How will Hoosiers of 2081 judge the decisions made in 2006? Will they consider the lease a huge win for the state? Will the Toll Road consortium still exist, or will economics and energy resources make cars and trucks little-used luxuries or obsolete relics?
For the short term, the next governor will still be responsible for maintaining highways and building new projects.
He will have to do that without the billions of dollars the lease brought to Indiana, and that could well mean an increase in the state’s 18-cent-per gallon tax on gasoline.
http://www.journalgazette.net/article/20120517/EDIT07/305179930/0/SEARCH
Proceeds from the lease have unquestionably improved the state’s highways. By the end of this year, the state will have added 375 miles of new roads, improved pavement on more than 5,000 miles and replaced or rehabilitated more than 700 bridges.
Two key Major Moves projects, financed largely by the lease, directly aid economic development efforts for the Fort Wayne area. The last segment of the Hoosier Heartland Corridor – offering a four-lane highway from Fort Wayne to Lafayette – will be completed. Indiana will also complete its part of the Fort to Port project – offering four lanes from Fort Wayne to Toledo.
And the lease injected hundreds of millions of dollars into the economy at a time when Hoosiers really needed it. Highway and bridge projects have employed hundreds of laborers, providing evidence that the labor interests who broke with Democrats and supported the lease were correct about creating jobs.
But.
The consortium that leased the road for $3.8 billion has to make money, and that money comes from people who drive the Indiana Toll Road – many of them Hoosiers.
Already, for automobile drivers paying cash, the rate for the 157-mile length of the road has nearly doubled in six years, from $4.65 to $9. For a five-axle truck, the increase has been greater – from $14.55 when the lease was approved to $36.20 today.
The strongest argument from opponents was that the 75-year term of the lease is exorbitantly long. And, if such a lengthy lease is in any way justified, it was worth more than the state received.
Consider how cars and trucks and roads changed from 1931 to 2006. No one knows how leisure and business travel will change through 2081, much less transportation of freight, but many aspects will be different – perhaps radically so. Consider: When the lease hits its halfway point, Mitch Daniels will be 94.
Indeed, as Niki Kelly’s Sunday story explained, by the time the next governor takes office, little to no money will remain for new state road projects, though counties that the Toll Road runs through are still sitting on piles of cash. The state essentially burned through 75 years’ worth of highway project money in less than 10. And while the state has doubtless benefited from the projects, the new roads add to the miles of highways the state must maintain for the next 69 years.
As State Rep. Win Moses noted: “We have built some important roads. But we did so by mortgaging heavily the future and allowing the tolls to go up quickly.”
How will Hoosiers of 2081 judge the decisions made in 2006? Will they consider the lease a huge win for the state? Will the Toll Road consortium still exist, or will economics and energy resources make cars and trucks little-used luxuries or obsolete relics?
For the short term, the next governor will still be responsible for maintaining highways and building new projects.
He will have to do that without the billions of dollars the lease brought to Indiana, and that could well mean an increase in the state’s 18-cent-per gallon tax on gasoline.
http://www.journalgazette.net/article/20120517/EDIT07/305179930/0/SEARCH
