FEIGENBAUM: Costly transportation projects may spawn taxpayer road rage

March 10, 2012

We live in a far different world of wheels than we did a few short years ago when Republican Gov. Mitch Daniels sealed a controversial $3.9 billion long-term deal to lease the Indiana Toll Road to a foreign investment consortium.

That 2006 lease unleashed a flood of privately funded investment in toll road infrastructure and created a huge cash pool for highway construction and road maintenance statewide.

Just as some erroneously assumed the Hoosier Lottery would fund education priorities into perpetuity, Hoosiers (perhaps egged on by lofty rhetoric from some officials) seemed to have largely assumed that highway dollars would no longer be an issue in their lifetimes.

Even many lawmakers expected the Major Moves transportation fund would obviate the need to find large amounts of state dollars for critical projects.

But Major Moves proved to be a moving target. State transportation priorities appeared to change without local input or notice, as money was reallocated between projects. And there was little understanding of what had been spent by trust fund vs. other transportation dollars, and what was yet to be funded from which cash source.

Against this backdrop, Indiana and Kentucky this month reached agreement on funding the two new bridges across the Ohio River from Clark County to Louisville. Construction on the $2.6 billion project, slated to begin before year’s end, should be completed within six years.

The two states plan to employ a combination of funding methods, including sharing toll revenues collected on project bridges.

Kentucky pledges $536 million in traditional funding for the downtown portion; Indiana commits $432 million under a public-private partnership “availability payment” model where a private partner covers costs and the state makes annual fixed payments for the East End package.

As proposed, tolls will be collected on the new East End bridge (2017 estimated completion), the new downtown bridge (likely to open in 2018), and the revamped I-65 Kennedy Bridge (June 2018). Tolls will be collected when the first bridge is completed. The U.S. 31 Clark Memorial Bridge and the I-64 Sherman Minton Bridge will remain untolled.

The tolling is not unexpected by residents of Clark and Floyd counties—those most affected by the project. But it has raised hackles and prompted complaints from some local business owners, who expect reduced discretionary travel due to rising gas prices exacerbated by the tolls.

The toll announcement comes too late for lawmakers to effectively intervene this session, although they will catch an earful from disgruntled primary and general election voters.

Northwest Indiana legislators may find themselves in a similar political fix if the state soon unveils a toll-based private fix for East Chicago’s Cline Avenue extension closed suddenly in late 2009.

But even if solons wanted to roll back the toll decision, there are complications.

Much of the financing is presumably predicated upon Congress’ extending transportation policy past March 31. But that presumption may prove problematic. A five-year reauthorization bill for surface transportation programs was to be wrapped up by mid-February. But now a more modest 18-month extension hasn’t even made it to the floor.

Without an extension, most of the 18.4-cent-per-gallon federal gas tax will expire, depriving the Highway Trust Fund of $110 million per day.

But beyond that, other overarching questions arise.

The mix of cars versus trucks on the road affects road fund distributions to counties. As cars become more fuel-efficient and alternative energy vehicles gain popularity, gas tax collections will decline—slipping further when prices reach a tipping point that slashes discretionary travel. Lower gas tax collections force reliance upon alternative financing, such as unpopular tolls and infrastructure sales or leases.

Those circumstances, in turn, increase pressure for mass transit options, which brings us full circle to where central Indiana began this legislative session.

While nothing of legislative significance transpired on mass transit and highway issues this year, the clamor to build and maintain roads and bridges—and Hoosier reluctance to dig deep to fund such effort—will be prominent on the 2013 agenda.•


Feigenbaum publishes Indiana Legislative Insight. His column appears weekly when the General Assembly is in session. He can be reached at edf@ingrouponline.com.


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