One day after a foreign consortium bid nearly $4 billion to lease and operate the Indiana Toll Road for 75 years, an Indiana House panel gave its endorsement of the plan.
The Republican-led House Ways and Means Committee voted 14-10 along party lines Tuesday, Jan. 24, to advance a bill that would authorize Gov. Mitch Daniels to lease the 157-mile route to a Spanish-Australian group. The measure - HB1008 - now heads to the full House, where Republicans have a 52-48 majority.
If approved by the legislature, the state could receive $3.85 billion in June, The Associated Press reported.
The legislative activity follows a bid process on the Indiana Toll Road that wrapped up Friday, Jan. 20.
The state received four offers, all from foreign companies. But the bid from Cintra of Madrid, Spain, and Macquarie Infrastructure Group of Sydney, Australia, was clearly better than the others, Daniels said.
"Every bid offered an enormous amount of money far beyond anything the state could generate on its own," Daniels announced in a written statement.
The Republican governor had set $2 billion as the minimum bid acceptable.
"It's unprecedented," Charles Schalliol, Daniels' budget director, told Bloomberg. "This is a blowout bid for the state."
The leasing initiative is the biggest chunk of Daniels' 10-year, $10.6 billion statewide construction plan dubbed "Major Moves."
In the next decade, the lease would cover a gap of $2.8 billion needed for road and bridge work throughout the state, as well as pay for an extension of Interstate 69 from Indianapolis to Evansville, IN, and make it a private toll road.
Supporters say road privatization is the way of the future because traditional funding mechanisms, such as the state's fuel tax, are proving more inadequate.
"It's time for boldness and innovative thinking," Ways and Means Chairman Rep. Jeff Espich, R-Uniondale, toldThe Journal Gazette. "What is the alternative? Do nothing?"
But Democrats say the plan puts too much power in the hands of the executive branch and turns operations of state assets to private ventures that would aim for bigger profits by raising tolls higher and higher. Others say the concept is so new that more study is needed.
House Minority Leader Patrick Bauer, D-South Bend, said that instead of calling the plan "Major Moves," it should be dubbed "risky business."
Rep. Dennis Avery, D-Evansville, also voiced his concerns.
"It really concerns me that we are putting Indiana on the auction block," Avery told The AP.
A private lease would include a noncompete clause barring the state from building a new east-west highway 10 miles north or south of the toll road, The Munster Times reported. And the state would have to compensate the toll road operator if it built more than 20 miles of east-west highway within the buffer zone.
In addition to leasing roads, the bill would give the governor sweeping authority to impose an extensive menu of toll rates. That would change existing state law that requires tolls to be uniform by distance.
Daniels wants to be able to increase or decrease tolls for a number of reasons. Among the options being pursued are peak-time rates, high-occupancy tolls, as well as adding electronic tolling.
Before the vote, the panel made changes that limited the bill to only roads and bridges. It previously allowed the governor to seek similar lease arrangements for airports, cargo ports and transit systems.
While lawmakers discuss privatization, plans are to go ahead and increase tolls along the toll road by 72 percent for cars and 120 percent for large trucks by 2010.
If the fare increase is approved after public hearings in March, the rate for tractor-trailers traveling from the Illinois line to Ohio would rise from $14.55 to $18 this year. The rate would climb to $22.50 in 2007, $27.25, in 2008 and $32 in 2009.
Passenger vehicle rates for driving the same distance would rise from $4.65 to $8 this year. No other increases are planned until 2011, when car and truck tolls would be pegged to inflationary indexes.
The fair hikes, which could take effect as early as April, could generate an additional $770 million in 10 years.
State officials are relying on in-state and out-of-state vehicles in their toll revenue projections. Indiana Department of Transportation figures show that 66 percent of 2004 toll road revenue came from out-of-state vehicles, 18 percent from in-state cars and 16 percent from in-state truck traffic.
Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association, said the gradual phase-in is more reasonable than the alternative. But he said Indiana truckers should be receiving a credit for fuel taxes paid on toll road miles.
"Different people can have different views about appropriate toll charges, but what should infuriate every Indiana resident is the governor's plan to auction the road off to the highest bidder for up-front cash," Spencer said.
"It's a lousy idea. It's inappropriate for our roads, not to mention roads that are part of the National Defense Highway System, to be leased to foreign countries. This simply is a green light for others who would love to pick and choose and potentially toll every road in the country."
Spencer's concerns about leasing roads to foreign companies were echoed by Indiana Democrats.
"I don't think Dwight Eisenhower, a Republican, would like that very much," Bauer told Land Line, "because he sold the interstate system (as desirable), and he sold it for national security reasons."
The full House likely will take up the issue early next week.
- By Keith Goble, state legislative editor