Study: Indiana Toll Road To Cost Hoosiers In Long Term

The report says state officials should not have spent the $3.85 billion all on roads.

college of william and mary

Photo: Benuski (Flickr)

The top of Tucker Hall at The College of William and Mary

A new article on the 2006 leasing of the Indiana Toll Road claims future generations of Hoosiers will be stuck paying the long-term cost of the resulting road projects, including Interstate 69.

The study, published in this month’s edition of the Public Administration Review, contends the upfront benefits of the agreement may even out during the next 68 years. The article, says the 75-year $3.85 billion leasing of the road to an Australian-Spanish consortium has consequences for future generations.

Report author John Gilmour teaches government at The College of William and Mary and says spending the resulting cash on more roads may turn out to be a bad choice.

“The tolls will continue to rise over the course of the lease. They started out relatively low, but because they can rise every year, after thirty years or so they will be quite high,” she says. “By then, the benefits from the road building program will be depleted and the roads will be falling apart and need to be repaired, but the state won’t have any revenue from the toll-road.”

Gilmour says the location of the Indiana Toll Road, near the state’s border with Michigan, may not adversely affect the majority of Hoosiers, because they do not use it regularly. As tolls begin to rise in 2016, commuters will bear the majority of the cost hike.

But Governor Daniels says the leasing agreement allows the state to develop new infrastructure projects and pay for a toll-road he claims was losing money.

“It would’ve been 75 more years of losing money,” Daniels said. “We were losing money on the toll road. On top of that we got overpaid. The world knows it. I was kind of polite about saying it, but we got paid about three times what that road was worth in politician’s hands at the best.”

Gilmour says asset-leasing is increasingly attractive to politicians, as it allows them to bypass restrictions on revenue bonds and other funding mechanisms currently in place.

  • Floryhawk

    Nice article. Has Governor Daniels ever spoken to the long term cost issue directly?

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