Tuesday, April 25, 2006

Illinois Democrats Take Cue From Daniels On Toll Road Privatization

While Indiana Democrats can't stop criticizing Gov. Mitch Daniels and Republicans for making the decision to privatize the Indiana Toll Road, Illinois Democrats are looking favorably on the plan. The Daily Herald's Eric Kroll fills us in:

Gov. Rod Blagojevich said Monday he’s waiting to see how Indiana’s experiment of leasing its toll road fares before deciding whether to act on a suggestion to do the same for the suburban tollway.

“Stay tuned,” said Blagojevich Monday. “This is an idea that we’ve talked about for years, actually. You’ve got to explore all kinds of creative ways to utilize the assets of the state. It sure is better than putting more burdens on the hard-working people and asking them for their tax dollars.”

Indiana is getting $3.8 billion for leasing its toll road to a foreign business group, and Blagojevich said he’s “looking with great interest” at how it plays out. Critics blast provisions in the Indiana contract that will allow the new operator to raise tolls by 2 percent a year after 2009.

State Sen. Jeff Schoenberg, an Evanston Democrat, has suggested the idea of leasing or selling Illinois’ tollway system, but Blagojevich said he won’t consider it until next year at the earliest. Schoenberg said he’s working independently on the idea, asking a state agency to look at how much a tollway lease could bring into state coffers.

Rich Miller of Capitol Fax Blog, threw the issue out for debate today and got quite a few comments with mixed reaction. You can read them by clicking here. Sen. Jeff Schoenberg (D) posted his own comment, demonstrating just how serious he is about the issue. He writes:

Some additional thoughts before this thread hits the fast lane: One of the key lessons that can be learned from the Indiana agreement is that in order to build support for this type of proposal, it is essential right from the start that a portion of whatever proceeds the state realizes be set aside in a form of endowment that will guarantee there will be no toll increases. Under pressure from his own allies in the IN legislature, IN Gov. Daniels belatedly ponied up $150m from the $3.85b to freeze tolls for 10 years. Because the Illinois tollway system is bigger and in far better condition — both in concrete and on the balance sheet — and because the majority of people who use the system are Illinois commuters, a much larger portion of the proceeds must be set aside and for a longer time period in any Illinois proposal.

Secondly, we need to ensure that any plan to bring private capital into public infrastructure maintains a high standard of accountability and transparency for the tollway’s spending practices and policies. The hard-fought gains that we’ve realized from tollway reform legislation not only protected taxpayers from one Administration to the next, but institutionalized greater accountability for the private sector, too.

Finally, as this proposal begins to percolate, there will be a host of questions on whether or how put together this type of public-private partnership, as well as how to spend the billions that are available to the state as a result of it. I strongly believe that once the bonds are paid off and the reconstruction and toll freeze costs are factored in, the money should go exclusively into capturing $3b available in matching federal transportation funds and tackling the state retirement systems’ unfunded pension liabilities.

It's good to see that the Democrats' near-universal negative reaction here in Indiana is more of an anomoly than the norm. Of course, Mayor Richard M. Daley (D-Chicago) already beat Daniels to the punch when he privatized the Chicago Skyway Toll Road, where communters are already realizing drastic improvements in the highway since it was leased to Macquarie, the same company involved in the consortium which is leasing the Indiana Toll Road.


Doug said...

I don't suppose Illinois has a constitutional provision directing how the proceeds from sales of public infrastructure are to be spent?

I suspect Indiana's disastrous canal experience makes it unique in that respect. Policy considerations aside, the constitutional challenge by the Citizens Action Coalition is an interesting legal question.

Gary R. Welsh said...

It's been a long time since I've read the Illinois Constitution, but I don't think there is an impediment in it. There was certainly nothing that stopped Chicago from privatizing the Skyway.

Cal Skinner said...

Illinois Governor Rod Blagojevich tried to sell the rather fancy Illinois Tollway headaquarters building in his first year in office, the proceeds to be pilfered for operating expenses. (Of course, tolls paid for the new building.)

Attorney General Lisa Madigan ruled that such a diversion would be illegal.

Nevertheless, third party (but Jesse Jackson heir at Operation PUSH) State Senator and Rev. James Meeks, who is flirting with running for governor as a third party candidate, discussed selling (leasing) the Illniois tollway with the proceeds to go to schools, if I understand what happened correctly.

Stay tuned.

Gary R. Welsh said...

Cal--thanks for the update. I've checked out some of your blogging on Illinois politics. You've got some good stuff. Brings back a lot of memories of my days on the House Republican Staff.