The Road to Indianapolis
The Indiana governor's controversial move to privatize a toll road is a success, but will it help him win reelection?
12:00 AM, Oct 9, 2008 • By RYAN L. COLE
When Mitch Daniels took office as Indiana's governor in 2005, he inherited a transportation system in crisis. The state was a whopping $2.8 billion short of resources for its roads.
Daniels's options included a significant hike in the state's gas tax, a big increase in the state's debt, or, doing as his predecessors had done, ignoring the problem and making piecemeal improvements to the state's roads as money became available. Instead, he proposed leasing the Indiana Toll Road (ITR), a 157-mile stretch of highway running between Indiana's northern-most borders of Illinois and Ohio, to a private company. Operated by Indiana's Department of Transportation it had lost more than $16 million in 2005.
After considering a pool of bidders, Daniels accepted a $3.85 billion offer to maintain and operate the ITR for 75 years from the Indiana Toll Road Concession Company (ITRCC), a consortium of Cintra, a Spanish toll road operator, and Macquarie, an Australian infrastructure group. In a strictly party-line vote, the Indiana House passed legislation approving the deal, which was shortly green-lighted by the state Senate. In March 2006, Daniels signed the legislation, now known as Major Moves, into law.
And the funds generated by the lease of the toll road jumpstarted a decade's worth of stalled highway projects. Indiana's highway construction budget will quadruple from $213 million in 2006 to $874 million in 2015, which will fund over 200 new highway construction and preservation projects. These projects will in turn create thousands of jobs. (Due in large part to the state's commitment to improving its infrastructure, in July 2006, Honda Motor Company agreed to build a plant in Greensburg, which will employ nearly 4,000 people.)
"Some critics of Major Moves raised the prospect of Hoosiers losing their jobs and foreigners taking our money," said the director of Indiana's Office of Management and Budget, Ryan Kitchell. "But what we have done is just the opposite: we are bringing their money here and putting Hoosiers to work."
Politicians around the country are looking to copy Major Moves' success. In April, Democratic Pennsylvania governor Ed Rendell announced the privatization of the Pennsylvania Turnpike, which is expected to net the state close to $18 billion.
Such a turn of events would be a significant shift in the state's direction. Throughout his term, Daniels has emphasized reducing the size of government and dramatic cuts in state spending to remedy Indiana's economic woes. In addition to Major Moves, he privatized the state's welfare delivery system. Thanks to his Daniels' and Kitchell's focus, Indiana produced a balanced budget for the first time on eight years and is now sitting on a $1.4 billion surplus.
Polls show Daniels ahead of Thompson, and he certainly isn't backing down from his economic agenda. In July, he presided over the beginning of construction of the long delayed and hotly contested extension of Interstate 69. Daniels has spent his
Ryan L. Cole is a writer based in Washington, D.C.