Civil Discourse Now

Where the far left and far right overlap for fun and enlightenment

"Jabberwocky" and how Indiana was bitten by the monster's jaws in the Indiana Toll Road lease.

   The image from the 1977 flick still is with me. The economic lesson of the cooper and his amputated feet is one that would have served as guidance a few years back when Indiana’s governor and legislature saw fit to lease—for seventy-five (75) years—the Indiana Toll Road. The notion, as one popular blogger has said, was to pay for Indiana’s backed-up road projects that were sorely in need of money.

   The problem with the solution—the 75-year lease of the Indiana Toll Road to a Spanish-Australian joint venture, for which Goldman-Sachs reportedly received a fee of $20 million—is that the people of Indiana built the toll road with our tax money in the 1950s and the new lessors paid 2006 dollars to operate the road for the next 75 years, during which economic conditions and values could (and no doubt will) change significantly.

   The lease of the Indiana Toll Road was a classic political Band-Aid® . The politicians bring in a pot of cash to fanfare. By the time the problems with the deal become apparent, those politicians are out of office—either retired, elected to higher office, or on salary with a lobby group or one of the companies to which lucrative leases were let during the politicians’ time in office. Of course, there always are Boards of Directors with empty chairs at the conference table.

   The "backed-up"road projects—according to the popular blogger I previously quoted—was politicians (I think his finger was pointed at members of the Democratic Party) had not been willing to raise taxes to fix the roads.

   We need to stop at this point.

   Politicians from neither party, particularly in Indiana, are willing to raise taxes for anything because the citizens have had drubbed into their heads that any taxes are bad. To say that politicians should have had the foresight to raise taxes to levels sufficient to pay for necessary things—such as maintenance of our roads and highways—is correct. I agree with Abdul (if you were wondering the identity of the blogger to whom I referred) on this point. Unfortunately, a raise in taxes would not have been an option. The citizens of Indiana would rather live under the illusion they are better off leasing a capital asset for pennies on the dollar to a corporation—no matter whether it is foreign (from out-of state), alien (from out of the country), or organized here—than to see one penny’s raise in taxes.

   The money we received in 2006 nearly is gone. 69 years remain on the lease.

   There should be an amendment to the Indiana Constitution that limits the terms of leases into which the State and municipal governments can enter. I do not know if the term would be four years, five years, or no more than ten years. The point is the same. Under gun-boat diplomacy, the United States forced a 99-year "lease" on Panama so we could build and use the Panama Canal. Indiana has had a relatively cheap lease forced on us for a long term. The benefits go to the more sophisticated party—in this case the consortium from Spain and Australia.

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Comment by Kurt Lorey on May 22, 2012 at 4:50pm

Did you call Gov. Daniels an unsophisticated negotiator? Maybe you meant his minions? They have also recently given away the store to the Commonwealth of Kentucky concerning the new bridge over the Ohio River near Louisville. That's another fine mess his minions have gotten us into. Did I say "minions"? I imagine I meant something similar that does start with an "m" and also ends with an "ns", but whose meaning is a little different.

Comment by Paul K. Ogden on May 22, 2012 at 11:26am

We never raise taxes?  We raise taxes all the time.  I grew up when sales taxes were 4%.  Before that they were 2%.  Now they are 7%, not counting the local food and beverage tax, which also was added during my lifetime, which kicks up the sales tax to 9%.    Property taxes have gone up.  User fees have gone up.  It's hard to find a single tax that hasn't gone up. 

You are right though about the danger of long-term privatization contracts.  Privatization has to be about instilling the competitiion of the marketplace into the delivery of services.  It can't be about long term contracts, in particular when it involves leasing or selling capital assets.

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