Indiana Toll Road investments fall short of expectations

Indiana began investing $2.6 billion in lease proceeds in October 2006. The state expected to generate 6.25 percent interest through the June 30 end of the current fiscal year. Instead, the rate is more likely to be 4.5 percent because of the tanking economy.

The Associated Press

12/11/2008

INDIANAPOLIS — Indiana's investments from the $3.8 billion Indiana Toll Road lease are coming up more than $200 million short of projections because of the struggling economy.

State Transportation Commissioner Karl Browning told lawmakers this week that investment income from the money the state received under the lease is about $220 million less than what officials had anticipated two years ago.

Indiana began investing $2.6 billion in lease proceeds in October 2006. The state expected to generate 6.25 percent interest through the June 30 end of the current fiscal year. Instead, the rate is more likely to be 4.5 percent because of the tanking economy.

The state is also seeing less cash from gas taxes. Browning said that income is expected to fall $196 million short of estimates.

"People are driving less," Browning said.

The state hasn't significantly scaled back its 10-year, $11.3 billion "Major Moves" highway construction plan. But the lower interest income may push back some road projects, said Joseph Gustin, deputy commissioner for planning at the Indiana Department of Transportation.

He said some of the Major Moves projects were dependent on traffic increases that haven't materialized.

"We now have an opportunity to look at them and say, 'We're not going to cancel, but we may be able to defer them for a couple years,'" Gustin said.

President-elect Barack Obama plans to implement a major infrastructure program to help boost employment. Obama has said state officials would lose the federal dollars if they did not quickly use the money to repair highways and bridges. He has offered no price estimates for the plan or how the money might be divided.

But Browning said Indiana's share of the potential windfall could be used to close the $416 million shortfall caused by the lower-than-expected income.

"If we don't do anything else, we could fill that hole," he said.