It’s Too Early to Derail Daniels’ Tollway plan

Indiana's transportation efforts are leading a national trend

Gov. Mitch Daniels promised to move Indiana forward when he was elected, and he’s pushed the envelope hard seeking innovative solutions to some of the state’s most pressing issues, from welfare reform to energy to health care.

But none of these initiatives has received more criticism than his forward-thinking approach to transportation policy. Indeed, many believe his eminently sensible, yet controversial, proposal to lease the financial albatross that is the Indiana Toll Road contributed to Republican losses throughout the state in November’s elections.

Today, Indiana is on the cutting edge of transportation policy and several other states are following Indiana’s lead, leasing toll roads and asking the private sector to build new ones. If Indiana retreats from its aggressive and strategic approach the state’s economic competitiveness will suffer.

Daniels recently proposed the Indiana Commerce Connector (ICC), which would form an outer-belt tollway connecting six interstates and linking areas like Franklin, Greenfield, Martinsville, Pendleton and Shelbyville. For some, the ICC has created a new level of angst and they are trying to kill the idea right now. That would be a big mistake.

Indiana’s traffic congestion costs travelers in Indianapolis alone more than $360 million per year in wasted fuel and lost time. Today, a rush-hour trip in Indianapolis takes 24 percent longer than it should. By 2030, that same rush-hour commute will take 42 percent longer than it should, according to a new study by Professor David Hartgen of the University of North Carolina-Charlotte.

How bad is that Indy traffic going to be? Much larger cities like Houston and Miami experience delays similar to those looming for Indianapolis.

The only real solution to traffic congestion, particularly in a state where 99 percent of all motorized travel is by car, is adding more road capacity. Thus the ICC could be a prudent and realistic attempt to stave off traffic congestion before it cripples Indiana’s economy.

At this stage, the governor is merely gauging the level of interest that private companies might have in building and developing the series of toll roads. A study has recently emerged suggesting there would be little traffic impact from an outer beltway. Studies casting doubt on private-sector solutions to problems have been wrong in the past though. For example, the state estimated the Indiana Toll Road’s value at $2 billion — falling some 80 percent short of the value the private sector placed on the same asset.

Given this, Daniels should have earned some latitude to work with the private sector to determine if there is some interest in further partnering with the state.

One of the benefits of the proposed arrangement is that the ICC project would move forward only if the private sector is willing to pay to build the roads. These potential builders will get involved only if they estimate that enough drivers will use the roads and pay the tolls to make it financially viable for them. If there isn’t demand for the road, it won’t be built. Further, the construction and financing risks would belong to the private sector, not taxpayers. Hoosiers would be totally protected from cost or time overruns — since it would be private money at stake.

If the private sector is interested, Gov. Daniels will have accomplished several things. First, the ICC will provide for increased mobility and long-term congestion relief. Second, the deal will bring funding for other road and transportation projects throughout the state — most notably a toll-free I-69 extension. And third, these vital projects would be completed years or decades sooner because of the private sector’s funds and involvement.

The ICC is yet another example of Daniels following through on what he promised to do — ask questions and seek cost-effective solutions to Indiana’s challenges. It’s too early to know if the private sector will even be interested in developing the ICC, so there certainly isn’t a compelling reason to derail the project at this early stage.

Segal is director of government reform and Staley is director of urban and land use policy at the Reason Foundation. An archive of Segal’s work is here and Staley’s work is here. Reason’s transportation research and commentary is here.