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ECONOMIC ANALYSIS: Daniel's toll-road plan futuristic, not dated

November 20, 2006

Is building roads innovative? Some reactions voiced in the wake of the Gov. Mitch Daniels' proposal to build a 75-mile beltway around the east and southern quadrants of central Indiana say no.

Outer belts, it is said, are a mistaken product of 1960sera thinking, robbing growth from central cities and helping create the faceless suburban landscape that surrounds so many major cities today. Innovative thinking on transportation, one might say, would embrace new technology and get us away from the entire mind-set created by a century of automobile dependence.

If this is the only thinking you would consider new, the words in this column are not likely to change your mind. But I would submit to you that the governor's proposal is in fact quite innovative, in ways some might not immediately appreciate.

Of course, just the fact that Daniels can credibly float a proposal for new spending on the scale of his Indiana Commerce Connector roadway already reflects creative thinking that other states are beginning to notice.

The state's bank accounts are flush, thanks to the $3.8 billion infusion of cash from the Toll Road lease proceeds. That, by itself, doesn't make our decision-makers any smarter, but it does help ensure that good ideas don't go starving for lack of resources.

But it is the road plan itself that is the issue. Most roads are built or expanded as a response to demand. Indeed, traffic counts on existing roads figure prominently in the formal needs analysis used to justify new road construction. That demand is sparked in turn by the interaction between economic growth and patterns of land use.

Roads are more than a response to growth-they can be a tremendous catalyst for growth as well. The new findings of economic geography tell us it is access to the full diversity of products, services and knowledge businesses and households want that ultimately gives an area a competitive edge. And roads are a big part of that equation.

That's why it has always amazed me that some can dismiss new roads built to relieve congestion-only to become congested themselves-as failures. New roads get busy because the economies they serve are growing, gaining market share and adding wealth.

That is what is innovative about the Commerce Connector. While there can be some justification in serving existing needs by rerouting through traffic around Indianapolis' existing beltway, the thrust of the proposal is aimed at creating growth, not servicing it. And that's just what many of the smaller communities outside the Indianapolis metro area need desperately.

Links to the potential market for auto parts in Greensburg, links to the Indianapolis airport, and links to intermodal transport connected to the Ohio River would improve greatly if the new roadway were built, and could help economically stagnant economies in eastern and southeastern Indiana rekindle growth.

It is true that the road's impact on Indianapolis is ambiguous, and that it does not address the state's largest metro area's almost total reliance on personal autos for work-related and other commutes.

This is perhaps the most refreshing innovation of the Daniels plan, at least from the perspective of those of us who live elsewhere-it's not about Indianapolis. The performance gap between the Indianapolis area and the adjoining parts of the state have reached the point where action to address them is amply justified.

Of course, one last innovation of the Commerce Connector might doom it to fall on the proverbial cutting-room floor. That is its reliance on private money to fund construction and, through tolls, to finance operations.

We don't like toll roads, it is said, and there's plenty of evidence to that effect. But coughing up a few bucks to pay for a ride to a good-paying job or a profitable customer seems a small price to pay.



Barkey is an economist and director of economic and policy study at the College of Business, Ball State University. His column appears weekly. He can be reached by e-mail at pbarkey@ibj.com.
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