Did Indiana’s governor allow ideology to drive yet another decision that might have cost Hoosiers dearly? There’s no question that, when the practical, non-ideological side of Mike Pence comes to the fore, good things happen, such as the expansion of Medicaid and the institution of HIP 2.0 that has now covered 350,000 previously uninsured Hoosiers.
Far too often, though, on issues like RFRA and turning down the $80 million federal grant for universal preschool, Pence has allowed his right-leaning ideology to trump the best interests of all Hoosiers.
Now, as state government struggles to find the means to finance badly needed infrastructure, it looks as if Pence’s bent toward privatization prevented him from seriously considering retaking the Indiana Toll Road lease rights when he had the chance to do so.
The governor specifically rejected advice from U.S. Sen. Joe Donnelly, who understood that the toll road operator’s bankruptcy permitted a once-in-a-lifetime opportunity to retake this valuable revenue-generating asset for Hoosiers. With the toll road lease rights selling for $5.75 billion in a court-supervised auction in March of this year ($2 billion more than it was sold for eight years ago), it’s a crying shame that Pence didn’t consider exercising the state’s rights to reversion.
Remember, former Gov. Mitch Daniels convinced the Legislature to sell the lease rights in 2006 only by promising legislators that, if the lease holder ever went bankrupt, the state could reclaim the toll road. Sen. Brent Waltz, R-Greenwood, in fact wrote an op/ed last year pointing out that he had pushed for “an automatic reversion should the ‘unthinkable’ happen.” He stated he was assured, as were his colleagues, that “the road would revert back to the citizens in the event of the bankruptcy of the lease-holding company.”
Donnelly pointed out that the bankruptcy filing gave the state maximum leverage it could have asserted in the bankruptcy court. He was insistent—and a study by Minneapolis investment bank Piper Jaffray confirmed—that the Indiana Toll Road would still be generating tens of millions of dollars annually in free cash flow after debt service and capital investment, literally billions of dollars over the remaining 67-year life of the lease. Yet Pence’s insistence that the toll road remain fully privatized prevented this from happening.
Once the state took a pass on exercising its reversion rights, LaPorte and Lake counties formed a consortium with the help of Jaffray that submitted a bid competing with seven other joint ventures. The toll road was viewed as such a solid, revenue-generating asset that one of the world’s largest banks—Bank of America/Merrill Lynch—agreed to serve as underwriter for the county governments’ bid. Globalvia—the world’s second largest infrastructure operating firm—signed on as our potential operator, creating the ideal public-private partnership.
Rather than standing with their fellow Hoosiers, Pence’s Indiana Finance Authority was highly critical of the county governments’ bid, content to let tens of millions in Hoosier motorists’ tolls flow offshore annually, rather than be reinvested in northwestern Indiana. It was a mind-boggling decision that was just as counterproductive to our state as the governor inexplicably turning down the $80 million that would have allowed universal preschool in our state rather than his anemic five-county pilot project that is turning away more than half of the applicants.
Hoosiers have long preferred hard-working, middle-of-the-road realists as our governors, rather than those ruled by rigid ideology. The state’s unwillingness to consider retaking the toll road during bankruptcy and then not supporting the county governments’ bid for those lease rights has proven to be yet another decision driven by ideology, rather than the best interests of Hoosiers.•
Shaw R. Friedman is the LaPorte County attorney and was co-counsel for the Lake/LaPorte County consortium that bid on the Toll Road lease rights.