The state of Indiana received $3.85 billion in 2006 by leasing its 157-mile toll road to private investors from Spain and Australia for 75 years.
And even though that money funded a 10-year transportation plan and helped many areas of the state catch up on transportation needs, the money and the interest it earned is going to dry up sooner rather than later. According to the latest reports, the up-front money the state received will be spent or committed to projects by June 2013.
That means the next few generations will see no cash for their needs despite being stuck paying ever-increasing tolls to guarantee investor profits.
This shows that the Indiana Toll Road lease is the gift that keeps on taking.
Sure the 10-year highway and bridge project known as “Major Moves” is helping replace bridges, pave roads and relieve congestion, but it’s a one-time fix. There’s no way those projects will hold up through 2081.
And what of the Indiana Toll Road itself? According to truckers we’ve talked to, it has its share of needs and rough pavement. The investor is supposed to be maintaining and upgrading the highway, but their timetable may differ from a state DOT’s because they have shareholders to pay.
Highway users had every right to cry foul back in 2006 when Indiana Gov. Mitch Daniels signed the lease.
In an instant, users were on the hook for toll increases. The lease guaranteed truck tolls would more than double from $14 to $32 during the first five years. And for the duration, the lease guarantees toll increases will keep up with inflation to make sure the investors don’t lose a dime.
Despite the state of Indiana being able to live high on the hog from the lease proceeds for a few years, the windfall is about to dry up. Once the money is spent and is no longer drawing interest, Indiana will be right back with every other state looking for ways to fill gaps in the budget.
It’s a good thing they only had one toll road to pawn.