MITCH DANIELS: TOLL ROAD MYTH AND TRUTH

Governor Mitch Daniels:

Myth: We sold a state asset.

Truth: We didn’t sell anything to anyone. The state still owns the Toll Road and always will. It is merely being operated under contract, strictly regulated as to prices and service levels, just as many public utilities are across the state. The contract provides for more lanes, electronic tolling, more State Police coverage, better facilities and service than political management delivered. If the contract’s performance standards are not met, the state can cancel the lease and resume direct management.
In fact, this myth has it exactly backwards. Because of the transaction, Indiana became not a seller but a huge buyer of assets. We will buy $4 billion of additional public infrastructure to leave to future generations, all without a penny of new taxes or borrowing.

Myth: We got benefits in the short term but give up money in the long term

Truth: What money? The Toll Road was losing money. The U.S DOT reported that “The ITR was an underperforming asset that consistently lost money – the ITR lost money in three of the last five years it was publicly operated and in 2005, the ITR lost $16 million.” Over the entire 50-year previous history of the Road, a total of $130 million was generated for other purposes. The Major Moves Trust Fund now receives more than that in interest alone.

Myth: The deal wasn’t fair to the seven Toll Road counties.

Truth: Major Moves brought a bonanza to the Toll Road counties. In cash and new projects, the counties received $ 11 for every dollar they got in the 50 years of political management. For Lake County, Major Moves provided more than 5 times as much as the previous 50-year total and for Porter County, Major Moves provided more than 15 times as much as the previous 50-year total. In addition, other proceeds are being used to subsidize passenger car tolls, keeping them where they were in 1985. Indiana Toll Road tolls are among the lowest of any toll road in America. Besides, two-thirds of all tolls are paid by out-of –state vehicles.

Myth: Indiana didn’t receive a good price.

Truth: Indiana got a great price. The $3.8billion payment has already made over two times more for the State in interest than the Toll Road invested in communities during its 50 year history. Indiana’s largest public accounting firm, Crowe Chizek of South Bend, analyzed the Toll Road financial statements and found the $3.8 B to be at least $2 billion more than what the State could possibly have generated on its own, through higher tolls and borrowing. Scholars and publications throughout the world have further validated that this was a great deal for Hoosiers.

Myth: If the contractor could make a profit, the state could have done just as well.

Truth: For 50 years of politicians running it, the Toll Road barely broke even, owing hundreds of millions in debt. How much proof did we need? Through Major Moves, the state has locked in and pocketed a certain profit, a huge one. Whether the contractor and its investors will ever get their money back or not will not be known for many years. So far they have reported a loss of more than $270 million dollars. The risk of lost dollars has been shifted from Hoosier taxpayers to the investors. And, if the investors ever do make a profit they will pay taxes to the state, unlike the previous government management.

Myth: After 10 years, the money will all be gone.

Truth: Gone? It will be invested in roads, rail and bridges, hard public assets that will improve life in Indiana and strengthen the Indiana economy for generations to come. Without Major Moves, Hoosiers in northern Indiana would have waited decades more for overdue roads like I-80, I-94, US 6, US 41, SR 2 and SR 49 while politicians mismanaged the Toll Road and continued making promises they had no way to pay for and no intention of ever keeping. Moreover, $500 million of the proceeds are in permanent trust for future generations.

Myth: Our tolls now go to “foreigners.”

Truth: The only people receiving funds from the Toll Road are the Hoosiers who work there, and those investors in the partnership who paid for the lease. The list of investors is led by American workers’ pension funds such as Mid-Atlantic Regional Council of Carpenters, Midwest Operating Engineers, Painters Union of St. Louis, and Baylor University, as well as U.S. financial institutions like Northwestern Mutual Life on behalf of their depositors and shareholders.

Myth: There must have been some other way to accomplish all this.

Truth: Yes, there was. We could have tripled the gas tax. In the two years since the transaction, 32 states have actually raised their gas taxes, desperately trying to keep up with their infrastructure needs. Indiana hasn’t, and won’t have to. The only choices Indiana had were to simply forget about building the roads Hoosiers need and have been promised, drastically raise the price of gasoline that is already far too expensive, or find a new and creative answer.

And so we did. And that’s the truth.

Advertisements

About Chuck Norton

I write about politics, education, economics, morality and philosophy.
This entry was posted in 2012 Primary, Budget, True Talking Points and tagged , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s