Toll Road Privatization: As Ohio Considers It, Indiana Serves As Cautionary Tale

WASHINGTON -- In two weeks, the cost of traveling the 157-mile length of the Indiana Toll Road will rise more than 2 percent, from $8.80 to an even $9, for those who pay the toll in cash. The fare will jump a full buck for truckers hauling semi-trailers, from $35.20 to $36.20.

The July 1 toll hike may not seem so painful, until you consider that those tolls were about half of their soon-to-be rates only five years ago -- and that they hadn’t risen for two decades prior to that. Even harder to swallow for some drivers, truckers in particular, is the fact that their growing contributions go not to the State of Indiana but to overseas investors who've leased the toll road from the state.

"Saying we're less than thrilled would put it really mildly," says Todd Spencer, executive vice president at the Owner-Operator Independent Drivers Association, a trade group that represents truckers. "In Indiana, over the span of a few years, we've watched truck tolls more than double."

In 2006, under the orchestration of Gov. Mitch Daniels (R), the state struck a deal to lease the road for a period of 75 years to Australia-based Macquarie Group and Spain-based Cintra. The investors paid the state $3.8 billion upfront in exchange for the right to collect tolls. The investors are required to maintain and upgrade the road for the duration of the lease.

It's still too early to tell how good or how rotten a deal the state got. In fact, there are those who believe Macquarie and Cintra may have greatly overpaid for the highway, and Daniels himself has gloated that the arrangement was "the best deal since Manhattan was sold for beads." (Daniels' office did not respond to questions about the deal.)

But what can't be denied is that the road is getting more expensive to travel on. And no one knows how expensive it might get. (So far the rates have not been raised on drivers with transponders, but that will change in 2016, when those drivers will start paying the cash rates.) The road's leaseholders can now raise the toll annually at one of three rates -- at a flat two percent, at the percentage increase in the consumer price index or at the percentage increase in gross domestic product -- whichever is highest. Over the course of the coming decades, Hoosiers can expect to learn a hard lesson in compound interest, long after Gov. Daniels is gone.

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Source: Huffington