The Indy Star followed, to some extent, where Aaron Renn led much earlier in examining Indiana’s deal with Kentucky to build a bridge over the Ohio River. The Star article is entitled “Why Indiana is paying $255 million to tunnel under Kentucky’s trees”
Renn suggested that the headline should’ve been phrased as a question, ““Why Exactly Is Indiana Paying $255 to Tunnel Under Kentucky’s Trees?”” and noted that the Star missed the even bigger picture. (The linked blog post contains further links to Renn’s extensive analysis of the deal.)
As the Star’s own graphic shows, Indiana is actually spending $737.5 million on roadway in Kentucky. That’s over $100,000 per foot! You could probably literally gold plate the road for that. It’s more expensive than any project anywhere in Indiana. It is more than combined cost of the Indiana side of the river plus the new bridge.
The two states managed to take $1.5 billion in cost out of the project – good. But as part of that Indiana’s cost actually went up by $200 million while Kentucky’s went down by $1.7 billion – hello?!?!
The Star reports that Indiana and Kentucky will evenly split money from the bridge tolls – news to me – even though Hoosier motorists will pay $5 million more per year than Kentuckians. So not only is Indiana paying more than it’s fair share on a cost basis (including that $737 million in Kentucky) – it’s also shipping a huge chunk of Hoosier money across the river ever year to help Kentucky pay for its part of the project. Hoosiers will pay fully 74% of all local tolls collected on the bridges.
. . .
It’s stunning to me that, to burnish his legacy by getting a bridge project done that had eluded both states for 40 years, Mitch Daniels is willing to throw Hoosier taxpayers and motorists under the bus like this. This is a deal that will live in infamy as Indiana’s worst transportation finance decision since the 1830s epic canal fiasco that bankrupted the state.
It’s not especially stunning to me. Look at Daniels’ role in drumming up the Bush administration rush to war in Iraq. He underestimated the cost to a laughable extent. He’ll nickel and dime programs he doesn’t particularly care about anyway. But, when the Governor misses financially, he misses big.
But aren’t hoosiers the primary beneficiaries of the bridge in the first place? At the property tax base in Indiana seems to gain a lot. Bridge will encourage more Louisville workers to move to Indiana and commute in.
There does seem to be some superficial similarities between Governors Noble and Daniels. Lucky for the present Governor that this project won’t get started until a subsequent Governor’s term. If things go sour, Governor Daniels can always blame his successor. For his part, Governor Noble blamed the General Assembly for “failing to follow his tax proposals”.
One of the biggest scams Mitch Daniels has pulled is making everyone believe he’s a fiscal conservative. Or that he can handle money. (Witness the $300 million that seems to pop up in the state mattresses now and then.)
I agree. A fiscal conservative would not do this:
a) Lease the toll road
b) Get 75 years worth of toll revenue up front
c) Spend 95% of that revenue within just a few years
Couple intersting things about the toll road deal:
a) It’s nothing but a tax dodge, benefiting wealthy investors in Macquarie Capital. When Indiana owns the road, there’s no depreciation to take, because governments don’t depreciate things. With Macquarie leasing the road, its owners CAN take the depreciation, which is worth about $1 billion over the life of the lease.
b) Vi Simpson voted in favor of the toll road lease even after admitting she didn’t understand it. Brilliant !