Indiana has benefited from toll road lease

An anonymous comment on a recent post accused me of not mentioning the Indiana Toll Road deal because it was “not so good, a bad move”.  Of course, we have talked about the Indiana Toll Road lease many times on our blog, on our website, in legislative testimony, and so forth (see my reply for more), but it wasn’t mentioned in the Wall Street Journal article I was summarizing.

But Len Gilroy of the Reason Foundation has a new commentary summarizing the benefits of the Indiana Toll Road deal:

In short, the lease payment is funding permanent assets to serve the needs of current and future Hoosiers. Further, the concessionaire has spent over $88 million in 2008 so far on construction contracts for work on the ITR itself. Over 97 percent of this work went to Indiana businesses, well exceeding the 90 percent target specified in the lease contract for the roughly $4 billion planned in ITR construction work over the 75-year term. That’s $4 billion in addition to the $3.8 billion upfront payment that will remain in Indiana.

Without the toll road lease, these projects would likely have never materialized, or they would have necessitated tax increases to move forward. And Indiana has also earned over $360 million in interest on the upfront payment in just two years (over $185,000 per day, at current rates), which will be used to fund additional state and local transportation projects for decades.

This sort of wise fiscal stewardship was a key factor in Standard & Poor’s recent decision to award Indiana its first-ever AAA bond rating in July, indicating top-notch financial conditions and management. Indiana’s excellent credit rating means it will save millions of taxpayer dollars in interest payments when it issues bonds to fund capital construction projects and the like.

The Indianapolis Star got it right in a recent editorial, saying that the S&P rating “has validated several difficult, controversial decisions that Gov. Mitch Daniels and the General Assembly made to bring Indiana’s budget back into balance. […] [T]he $3.8 billion in capital leveraged through the [ITR] deal has enabled the state to make much-needed improvements in infrastructure while handing off management of an underperforming asset.”