Leasing Toll Roads: Learning From Indiana

While experts now say that the lease term Indiana agreed to was too long, and the payment it received in return too small, so far all parties appear to be better off –- the road, the drivers, the toll takers, the Governor, and the state.

"In the aftermath of the agreements to lease the Chicago Skyway and Indiana Toll Road, lawmakers in California, Texas, Pennsylvania, New Jersey and other states have struggled to muster support for their own lease deals. As these other states try to devise a plan acceptable to their residents, drivers who use the Chicago Skyway and Indiana East-West Toll Road seem to be adjusting to the new operators from Macquarie-Cintra, the Australian-Spanish consortium" who leased the 157-mile Indiana Toll Road for 75 years from the state of Indiana, as well as the 7.8-mile Chicago Skyway from the city of Chicago for 99 years.

But finance professor Jonathan R. Peters at the City University of New York, an expert on toll roads, and other specialists who study toll road deals, cautioned that the lease in Indiana was structured so that tolls would remain relatively stable for the first decade, then could rise quickly for the remainder of the lease - after many of the politicians who signed the original lease have left office. That may explain why drivers on the Skyway and Toll Road, while still suspicious of privatization, are largely pleased with conditions on the roads.

Drivers say they like the additional tollbooths and the introduction of electronic tolls. And while truckers and those using cash saw tolls rise this month in Indiana, drivers of passenger cars with E-ZPass or the local alternatives, known as iPass and iZoom, are still paying tolls that have not been raised in more than two decades."

"IN Governor Daniels, a former budget director under President Bush, said Indiana had been prudent with its money - which has all been dedicated to infrastructure improvements.

In addition, Indiana earned $287 million in interest from the $3.8 billion the state received last year (from Macquarie-Cintra). Mr. Daniels has also distributed $150 million in highway funds to his state's 92 counties since the lease began.

On top of that, he said that, to the best of his knowledge, Indiana is the only state with a fully financed 10-year transportation plan."

The real test comes this November - Gov. Daniels is up for re-election for a second term.

Thanks to Mark Boshnack

Full Story: Toll Road Offers New Jersey a Fiscal Test Drive
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Comments

Indiana Toll Roads

As a former resident of South Bend, Indiana who regularly commuted to Chicago, I always appreciated how well the I-80 toll road was maintained. Although the tolls were a bit pricey, I always felt like I getting true value for my money. In particular, the Indiana Department of Transportation snow removal crew along the toll road is one of our nation's best during the abominable winter months.

Indiana leading the way

Who would have thought Indiana would be the first state willing to experiment with leasing a toll road to a foreign company? Indiana, a Rust Belt state and my former state, has gone through some difficult economic times but Hoosiers aren't just sitting around "clinging" to religion and guns.

Even if there is a significant increase in gas prices and less people use I-80, the state government has already pocketed the money and dedicated the money to transportation projects. The irony is a lot of opponents tried to play on small town xenophobia but it didn't sell because crumbling roads and bridges were a bigger, more visible and immediate threat than some unknown foreign company. Necessity is the mother of invention and state governments can try out some reforms which may spread to other parts of the nation.

Tolls are an appropriate way to convey transportation costs to drivers and may reduce the number of drivers and encourage carpooling.

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