Indiana panel reviews possible toll road lease

| 1/19/2006

An Indiana House panel heard discussion this week on a bill that would allow the state to lease the Indiana Toll Road to private investors – even foreign private investors.

The leasing initiative is the biggest chunk of Gov. Mitch Daniels’ 10-year, $10.6 billion statewide construction plan dubbed “Major Moves.”

To help pay for the plan, the state sought bids from firms wanting to lease the toll road for 75 years. Bids are due Friday, Jan. 20. They are expected to be revealed to the public Monday, Jan. 23.

“There’s a good chance that again, we’ll be offered money that we could not generate in this state without doubling the gas tax, or doing something equally unthinkable,” Daniels recently told WISE-TV of Fort Wayne , IN.

In the next decade, the estimated $2 billion lease – would help the state to cover a gap of $2.8 billion needed for road and bridge work throughout the state, as well as possibly pay for an extension of Interstate 69 from Indianapolis to Evansville and make it a private toll road.

In return for taking over operation and maintenance of the toll road, a private group would keep all of the toll money collected.

Congress encouraged such public-private partnerships in the Highway Bill, which became known as SAFETEA-LU after President Bush signed it in August 2005. The legislation authorizes $15 billion in tax-exempt bonds for privately financed highways and simplifies their environmental planning process.

Any leasing plans in Indiana would require approval from state lawmakers. With that in mind, Rep. Randy Borror, R-Fort Wayne, is carrying the leasing plan in the General Assembly.

The House Ways and Means Committee held two days of hearings this week to discuss Borror’s bill – HB1008.

Supporters told lawmakers road privatization is the way of the future because traditional funding mechanisms, such as the state’s fuel tax, are proving more inadequate, reported.

Opponents say the plan could turn 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.

A private lease would include a “noncompete” clause barring the state from building a new east-west highway within 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.

The bill also authorizes privatizing airports, cargo ports and transit systems.

The panel could vote on the bill as early as Tuesday, Jan. 24.

While lawmakers discuss privatization and specialized tolls, plans are to go ahead and increase tolls along the 157-mile route by 72 percent for cars and ultimately 120 percent for large trucks.

Daniels’ office reached an agreement with the state’s trucking association to phase in proposed toll increases on the Indiana Toll Road over four years.

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.

In exchange for the phased-in truck rate, the Indiana Motor Truck Association has endorsed the governor’s transportation initiative.

The toll increases could generate as much as $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 demand 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.

“This is not only a publicly owned road; it’s an integral part of the National Defense Highway System. As far as we know, every company bidding for the road is from a foreign country. Have these folks lost their minds?”

– By Keith Goble, state legislative editor