Indiana Toll Road Producing Hundreds of Millions of Dollars in Interest
Via the Indianapolis Star – "Indiana Treasurer Richard Mourdock announced Monday that in 2007 the state earned more than $287 million in interest from its investment of proceeds from the $3.8 billion lease of the Indiana Toll Road." It's important to revisit and highlight this massive toll road and financial success because the popular (and incorrect) take on Gov. Mitch Daniels' lease of the Indiana Toll Road (ITR) for $3.8 billion early in 2006 went something like this: 'Though it raised a lot of money, the deal was a political loser, costing the GOP control of one house of the legislature and making Daniels a likely one-term governor. Those perceptions weighed heavily in New Jersey Gov. Jon Corzine's rejection of privatization, in favor of a state-agency 'monetization' of that state's toll roads (which is also proving very unpopular).' But the politics of the Indiana Toll Road privatization are not what they seem. To begin with, the initial 2006 election-day fallout was limited to three seats changing hands, which did lead to the Democrats gaining a slim 51-49 edge in the House. But that was then. Today, as the invested proceeds from the ITR lease have jump-started $6.5 billion of major new construction between 2005 and 2015, many labor unions seem to be having a love-fest with the Republican governor. Several union leaders are on Daniels' re-election campaign steering committee, and last December a bevy of others formally endorsed him for re-election–including the Teamsters, the Operating Engineers, Carpenters, Sheet Metal Workers, etc. And pundits think the GOP has a decent shot at winning back the lost House seats this November. Besides welcoming all the new highway construction, the labor movement also appreciates that no ITR employees were made worse off by the privatization. All 550 employees were offered jobs with no reduction in pay and benefits either with the toll road company or with the state. According to a recent GAO report, about 85% transitioned to the toll road company, and 115 were offered jobs with the state. All those that left state employment got paid for accrued vacation time, and their pension plan contributions and vested benefits were preserved. Operationally, the concession company is well along on widening 10 miles of the ITR on the western end, where it is used heavily by commuters into the Chicago metro area, at a cost of $250 million–part of about $700 million in near-term improvements the company committed to as part of the deal. It is also equipping the entire ITR with electronic toll collection (which it never had before)–and has joined the interagency group for interoperable electronic tolling throughout the Northeast and Midwest: the E-ZPass system. The western portion is already in operation, and the eastern section's electronic tolling will be completed by April. All of this was enough to provoke Governing magazine into a long and mostly positive profile of Daniels and his first term. Obviously, leasing existing toll roads carries political risks. But when done carefully, the benefits can outweigh the costs.