NCPA - National Center for Policy Analysis

HOW TO BUILD MORE -- AND BETTER -- ROADS AT LOWER COST

March 13, 2006

Indiana Gov. Mitch Daniels has embarked on an ambitious plan to lease the Hoosier state's 157-mile toll road to a private company in order to save money and improve the condition of the road. The plan calls for a 75-year lease to an Australian-Spanish consortium that will pay Indiana $3.85 billion dollars to maintain and collect tolls on the road.

If approved, Indiana's public-private partnership (PPP) would allow more funding for other highway improvements because the consortium will pay for improvement and maintenance of the toll road, says the Bluegrass Institute.

  • Leasing toll roads to private companies is not a new idea. Several countries have successfully engaged in PPPs for road projects. Since 1999, six toll roads have been leased, five of which were in Canada and Europe.
  • Such PPPs are mutually beneficial to government and the private sector. They allow the government to save money and make improvements to its highways at the expense of a private company, which collects the money and makes a profit.

According to transportation expert Geoffrey Segal, director of government reform at the Reason Foundation, Daniel's proposed PPP offers Indiana taxpayers four major benefits.

  • The agreement would bring a large net investment into the state's transportation system.
  • More transportation projects will be constructed sooner.
  • Higher-quality highways will be built to better serve motorists.
  • Risk is shifted away from taxpayers to investors.

Kentucky should consider the usefulness of PPPs as a proven way to eliminate patches and potholes on existing roads while replenishing its transportation coffers, says the Institute.

Source: "How to build more -- and better -- roads at lower cost," Bluegrass Institute, Bluegrass Digest, vol. 4, no. 3, March 8, 2006.

 

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