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Reason Foundation

The Indiana Toll Road: One Year Later

Examining predictions about the toll roads lease deal

Geoffrey Segal
July 25, 2007

A little over a year after the Indiana Toll Road lease, taxpayers and politicians should look back to see if the predictions about the deal came true. To be fair, one year into a 75-year agreement we can't begin to measure the full impact that the deal will have on Indiana but evaluating the lease thus far is a useful exercise nonetheless.

First, how are operations on the Indiana Toll Road?

Despite doom-and-gloom forecasts, the sky did not fall. The foreign companies operating the road didn't scoop up the pavement and move the toll road to Australia or Spain. When it snowed, the road was plowed. A major construction program has been initiated, electronic tolling was just rolled out and a new third lane to relieve congestion on the road's western end will be developed soon.

Have the private companies raised toll rates through the roof?

Before the lease, tolls hadn't been increased in 20 years, so we knew a toll increase was needed. With tolls of just 15 cents at some booths and the government estimating it was costing about 34 cents just to collect those 15 cents, Gov. Daniels half-joked that the toll road should be shifted to the honor system. Today, tolls for cars are only $4.65 for the entire 157-mile trip; still significantly less than what neighbors in Ohio and Illinois pay.

Additionally, tolls are now being collected electronically for the first time. Toll booths on the first 23 miles of the road have already been equipped for electronic collection. The remaining collection spots will be retrofitted by year's end.

What about the proceeds the state got from the deal?

Indiana is the only state in the entire country that has a fully funded transportation investment program. In fact, Hoosiers are earning upwards of $6 of interest, a second—more than $500,000 a day—while other states struggle to adequately invest in their infrastructure. The state is expected to spend $11.9 billion on road construction by 2015. US-31, I-65 and I-69 are just a few of the beneficiaries of new investments.

In comparison, Ohio has been scaling back new transportation projects; deferring projects until funding can be secured. Things will only get worse for other states too because the Federal Highway Trust Fund is now estimated to run out of money in the next two years.

According to Texas Transportation Institute research, Indiana's traffic congestion has increased 20 percent since 1982, costing travelers in Indianapolis alone more than $360 million per year in wasted fuel and lost time. And a 2006 Reason Foundation study found that to significantly reduce the state's severe congestion and prepare for growth expected by 2030, Indiana needs almost 2,270 new lane-miles at a total cost of $3.1 billion, in today's dollars. The toll road deal makes many of those needed projects possible.

What about politics?

Prior to the 2006 elections, Indiana House Republicans held 11 seats in toll road counties—afterward, they held 10 seats. The only loss was Rep. Steve Heim in the 17th District, which consists of two non-toll road counties and a small portion of LaPorte County away from the Toll Road.

The ultimate political question remains to be answered—can the governor win re-election? Opponents are lining up in hopes that the toll road deal is Daniels' albatross. Yet, Daniels campaigned on shaking things up and changing the way government does business. He can point to the toll road as just one more example of how he kept his word and brought innovation and change to Indiana.

While other states are struggling to fund vital infrastructure improvements Indiana is equipped to build the roads it needs, producing more mobility and reduced congestion for taxpayers and businesses. The bottom line is that one year later Indiana is better off having leased the Indiana Toll Road.



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