SPECIAL REPORT: Indiana House approves leasing toll road to foreign firms

| 2/1/2006

A bill that would authorize Gov. Mitch Daniels to lease the Indiana Toll Road to a Spanish-Australian group for nearly $4 billion passed the Indiana House Wednesday, Feb. 1.

House lawmakers voted 52-47 along party lines to advance the largest part of the Republican governor's "Major Moves" road plan. It next heads to the Senate for further debate.

The vote came one day after lawmakers spent Tuesday, Jan. 31, making several changes to the leasing bill - HB1008.

Among the changes is a 10-year freeze on the tolls for passenger vehicles that belong to residents in Indiana Toll Road counties. Over-the-road truckers and other travelers, however, would get no special treatment.

Another amendment would create a regional authority to coordinate economic development projects in Elkhart, Steuben and LaGrange counties in northeastern Indiana and provide $100 million in the next decade to help finance them, The Associated Press reported.

That revenue could come from an up front payment of $3.85 billion that a foreign consortium has bid to lease the toll road for 75 years. The bid, which is part of Daniels' highway plan, needs approval from the state's Senate to be completed. Macquarie Infrastructure Group of Sydney, Australia, and the Cintra firm, based in Madrid, Spain, joined efforts to bid on the deal.

Some House Republicans, specifically those from districts that include the toll road, had wavered about backing the bill. But observers said the GOP-led changes approved on Tuesday shored up support that was needed to pass the bill along party lines.

Republicans hold a much larger margin in the Senate where Sen. Robert Meeks, R-LaGrange, will take the lead on getting the bill approved.

The lone Democrat-led change to gain approval in the House was an amendment that would require an American flag be flown at toll booths along the route. It won unanimous support.

However, that was little consolation for the party that said the leasing 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.

Republicans turned down several Democrats' bids to alter the bill's language. Among the rejected proposals were calls to finance more highway projects through existing bonding methods and postpone legislative action on the leasing plan until public hearings could be held and more study done.

"There will come a day when the truth will come out, and this bad deal is not only going to bite those who vote for it, it's going to hurt your constituents," House Minority Leader Patrick Bauer, D-South Bend, warned lawmakers, according to The AP.

Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association, said Daniels' push to get the bill through the legislature without extensive discussion on its effects to the state should be a cause for concern.

"Clearly, it looks like the governor is putting the bum's rush on virtually everybody in the state. It's wholly prudent to take your time and seriously consider all ramifications of what you're doing. The fact they are trying to push this thing through as quickly as they are, sends up the caution flag," Spencer said.

The toll freeze is sure to ease some locals' apprehensions about leasing the route.

It would allow commuters, which comprise one-third of the route's traffic, to pay the same rate they pay now until 2016. The freeze will require the state to pay about $150 million to the private group.

Plans are to go ahead and increase tolls for out-of-state and large truck traffic along the toll road. Cars are expected to pay 72 percent more while big rigs fork out an additional 120 percent.

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.

Local residents will face the higher passenger vehicle rates after 10 years, plus the possibility of future hikes of at least 2 percent annually. The decade-long discount would be given through electronic toll transponders, The Times in northwest Indiana reported.

Until electronic tolling is up and running, commuters in the seven-county area would have to pay the higher rate but could deduct the expense from state income taxes.

The legislative activity follows a bid process on the toll road that wrapped up Jan. 20.

The state received four offers to lease the route, all from foreign companies. But the bid from Cintra-Macquarie 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 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 the governor's 10-year, $10.6 billion statewide construction plan.

In the next decade, the lease would more than 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 and make it a private toll road.

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.

Spencer said despite the huge dollar amounts that are being promised to cover Indiana's transportation funding gap, it's important not to lose sight of the fact the state still hasn't been able to come up with a solution to its funding woes.

"Obviously truckers have a lot on the line," he said. "The Indiana Toll Road will simply be just the first, but certainly not the last to get this treatment. This also prolongs the intelligent discussion of how to properly fund the state's highways.

"Indiana will be no different than other states in their diversions of highway revenues to things other than highways. Simply pumping more money into that system doesn't address the core issue that erodes everything else, and that's diversion of money."

- By Keith Goble, state legislative editor