Some of you may know that I'm hardly a monolithic cheerleader for privatization. In fact, I'm probably best known as a critic of the parking meter leases in Chicago and Indianapolis.
However, the Indiana Toll Road lease was a grand slam home run. It was leased at the peak of the bubble to an investor group that radically overpaid. The Indiana Toll Road had never turned a profit in 50 years. The state monetized that into $3.4 billion in cash plus about $400 million in improvements and widening on the crumbling segment through Gary. Plus it included ETC, though not open road rolling I'm sorry to say.
Without a doubt, this partially came from higher tolls paid by drivers (the rest from overpayment, and some genuine savings a private sector operator can obtain, such as not having to go through a burdensome public procurement process to buy things). To the extent that this money was spent outside of the toll road zone and paid by Hoosiers (which is probably a material amount), this did represent an income transfer from northern Indiana to the rest of the state.
Undoubtedly having their quarters to go build roads in places like Cincinnati and Columbus is one reason people in Northeast Ohio oppose this so much. It's not a totally irrational response.
Indiana was also able to spend a lot of the money during a recession when it would go further because contractors and material suppliers need the business.
Ohio may get more for the Turnpike because it has higher volumes than the Indiana Toll Road. But they will never get as good a deal as Indiana got. Still, this is something I think you should strongly consider, provided you use the money for appropriate projects.
Indiana gave some money to localities, plus extra payments to counties through which the toll road passed. $500 million was put into a reserve fund to generate investment income to go into future road budgets. Presumably it could be spent itself at some future point, but calls to tap it were successfully resisted a couple years ago. The rest of the money was used by the state to finance a variety of projects.
The big problem with Indiana's use of the funds is that it really didn't question anything on the backlogged project list. Every project that was in the pipe was deemed worth of funds, even though quite a few of them are outright boondoggles. It's amazing to me that a guy who is as fiscally focused at Mitch didn't even take a run at asking questions on any of these things. As I've learned over the years, there's no highway boondoggle big enough to make even the most fiscally conservative of politicians ever decry it as wasteful spending.
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