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The road to privatization

Marketplace Staff Jun 30, 2006

TESS VIGELAND: Some of the hottest American real estate these days is the nation’s tollway system. This week the state of Indiana announced it would not longer manage the Indiana Toll Road. Governor Mitch Daniels is leasing that privilege to foreign investors. In exchange the state gets an asphalt-hot $3.8 billion. Leases usually last a few years at most. But this one is an exception. It’s for 75 years. That practically makes it a sale. From Chicago Public Radio, Diantha Parker reports.

DIANTHA PARKER: The Indiana Tollroad has a nickname: the Main Street of the Midwest. The 157-mile highway is part of Interstate 90 — the section that takes you from Chicago to the Ohio border. More than than 50 million cars and trucks travel it every year.

But the tollway’s been losing money for decades, and the state wasn’t able to maintain it, let alone make improvements. So, after a contentious fight, and vocal opposition from Hoosiers, the state legislature voted to hand it over to a Spanish-Australian consortium called Cintra Macquarie.

CHARLES SCHALLIOL: They’re in the business of running toll roads. Cintra Macquarie, these partners, have some 37 tollroads around the world that they operate. Indiana operates one. And we haven’t operated it very well.

Charles Schalliol is Indiana’s director of management and budget. He says the bill immediately covers the state’s $2.8 billion deficit in transportation funding. He also says it’ll help pay for infrastructure projects that could create more than 100,000 jobs. In short, he calls it a win-win for the state.

SCHALLIOL: Generating this — what we think is a blowaway bid price, just a spectacular offer — puts the state in a position to be the only state in the United States with a fully funded transportation plan for the next 10 years.

But a lot of people are insulted by the idea of selling the country’s public infrastructure to the highest bidder. And they’re alarmed that as many as 35 states are considering similar plans.

Among them is Todd Spencer, of a group called the Owner-Operator Independent Drivers Association. And his objection isn’t only philosophical. The group represents a heavy user of the roadways: truckers. They already pay higher state and local fuel taxes than people who drive cars. And they pay higher tolls.

Spencer says private companies could raise tolls. That would be as bad as raising fuel taxes, and could bankrupt truckers, state by state.

TODD SPENCER: Some of the proposals that are floating —in Virginia, for example — would be the equivalent of collecting a dollar per gallon in additional fuel tax on trucks. That’s just absolutely outrageous. I mean, small business truckers perceive this as highway robbery.

Virginia and other states are looking closely at Indiana’s deal, but they’re also looking at its predecessor — the $2 billion, 99-year lease of the Chicago Skyway. That’s the 8-mile road that connects the Indiana tollway to Chicago’s south side.

Dave Schulz leads the Infrastructure Technology Institute at Northwestern University. Schulz says another catch to these leases is that we have no idea what transportation’s going to be like in the future, maybe even less of an idea than people had in 1907.

DAVE SCHULZ: The automobile was in its infancy, there was no federal aid highway program, roads were largely dirt and gravel in this country. And so the one thing we can say is that we can’t look 99 years ahead. It’s impossible to forecast.

With this in mind, Schulz advises states to write a very, very comprehensive contract like Chicago’s Skyway agreement, which is 300 pages, single-spaced.

A spokeswoman for the budget office says they get requests for copies at least twice a week. And, that it makes no reference to the Jetsons.

In Chicago, I’m Diantha Parker for Marketplace.

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