Gov. Daniels Touts Indiana Toll Road Lease

Infrastructure Investor magazine’s excellent May 2009 cover story (subscription required) reflects back on the $3.85 billion lease of the Indiana Toll Road and features a wide-ranging interview with Indiana Gov. Mitch Daniels that’s chock full of good quotes. Several are posted below:

  • On the lease itself: “[T]his is the best deal since Manhattan for the beads—except this time, the natives won.”
  • On expectations vs. reality with regard to the winning bid amount: “I was prepared to go out and advocate anything probably north of $2 billion as achieving a clear premium for the state. […] Watching the process, seeing the bids come in, I was optimistic we’d get something north of that but I did not imagine $3.9 billion. And nobody else that I know did, either.”
  • On Major Moves, the 10-year highway program made possible by the $3.85 billion lease payment: “People have begun to see the real results, the long dreamed-of projects actually getting going. […] None of the bad things that were forecast have happened.”
  • On the politics of Indiana Toll Road privatization: “”Well, it became partisan. […] I thought this would be a great bi-partisan programme. And it could have been…but some folks, you know, didn’t get that and there was an irresistable political opportunity, which our good friends on the other side just couldn’t turn down so they jumped all over.”
  • On the letter sent last fall by U.S. Reps. Jim Oberstar and Peter DeFazio to former transportation secretary Mary Peters asking her to reign in Indiana-style toll road leases: “It’s troglodytic. It’s just amazing [that] the people who affect to be concerned about the infrastructure deficit are so theologically opposed to what coupld be part of the answer. […] They’re just totally wedded to a system that’s totally failed.”
  • On the prospects for a federal role in similar leases: “In my dreams the Federal government would incentivize this sort of thing. […] It doesn’t have to be the preferred mode. But to try and stomp it out is to work against the objective that they claim to be pursuing.”
  • On the prospects for bi-partisan solutions for funding future Indiana infrastructure: “I’m happy to support their efforts in the traditional structure, but do the math. We cannot get there any conceivable way without finding new sources and again we found the source which was an absolute bonanza for the people of Indiana. […] We are busily reinvesting and re-employing money we never would have seen through any other means. Not if I added those other 31 [alternative transportation funding] options on that chart together would we have come up with what we did.”

Gov. Daniels discussed the toll road lease in Reason’s 2006 Annual Privatization Report, available here. This excerpt seems worth repeating:

Any businessperson will recognize our decision here as the freeing of trapped value from an underperforming asset, to be redeployed into a better use with higher returns. We viewed it as critical that the dollars liberated from one capital asset must all be reinvested into long-term capital uses, and not dribbled away on any short-term operating purpose.

However obvious from a business and economic standpoint, this proposal touched off enormous controversy and opposition when proposed in the political realm. Many citizens, with a sincere sense of responsibility, misperceived that value was simply being pulled forward from future years. Many have not yet understood that the state is being paid more than $2 billion more than the road conceivably would have been worth in public hands. Far from “stealing from our children,” we have acted to leave our children billions in new public assets—roads, bridges, airports—that they would otherwise not have enjoyed. Turning down this deal would have been the real theft from the future.

Reason’s Transportation Research and Commentary