A story of privatization in practice

[Universe Prince]

August 27, 2008
http://www.reason.org/commentaries/gilroy_20080827.shtml

Indiana Gov. Mitch Daniels' has proposed leasing the Hoosier Lottery to fund college scholarships and various education programs. His opponent this November, Democratic gubernatorial candidate Jill Long Thompson, recently announced that if elected, she would revisit and possibly reverse some of Daniels' privatization initiatives, including the $3.8 billion lease of the Indiana Toll Road (ITR) in 2006. [...] And Long Thompson claims to want the money to "stay right here in Indiana," apparently not realizing that it already is. Cintra and Macquarie Infrastructure Group joined together and wrote a $3.8 billion check to Indiana for the rights to run the road, and that money was used create the state's Major Moves transportation program. Under Major Moves, the state is undertaking hundreds of new construction and highway preservation projects, annual state highway spending will quadruple from $213 million in 2006 to $874 million in 2015, and every county in the state has or will receive additional funds for local transportation projects. In short, the lease payment is funding permanent assets to serve the needs of current and future Hoosiers. Further, the concessionaire has spent over $88 million in 2008 so far on construction contracts for work on the ITR itself. Over 97 percent of this work went to Indiana businesses, well exceeding the 90 percent target specified in the lease contract for the roughly $4 billion planned in ITR construction work over the 75-year term. That's $4 billion in addition to the $3.8 billion upfront payment that will remain in Indiana. Without the toll road lease, these projects would likely have never materialized, or they would have necessitated tax increases to move forward. And Indiana has also earned over $360 million in interest on the upfront payment in just two years (over $185,000 per day, at current rates), which will be used to fund additional state and local transportation projects for decades. This sort of wise fiscal stewardship was a key factor in Standard & Poor's recent decision to award Indiana its first-ever AAA bond rating in July, indicating top-notch financial conditions and management. Indiana's excellent credit rating means it will save millions of taxpayer dollars in interest payments when it issues bonds to fund capital construction projects and the like.

November 9, 2008
http://www.washingtonpost.com/wp-dyn/content/article/2008/11/07/AR2008110703146.html

Indiana's Daniels, just reelected to a second term, may offer the best example of the distinctive approach of these politicians. After telling me that he was not sure he had any lessons to offer his party, he began to rattle off important ones: "One thing we have learned is that fiscal restraint works. We dug out of a deficit and now we have a triple-A bond rating for the first time. Market principles work. We have begun to insure our uninsured, with health savings accounts, paid for with a higher tobacco tax. And I had no trouble supporting that, because I remember what Ronald Reagan said: When you tax something, you get less of it. "We've learned that effective government works. We expanded our child welfare efforts to protect more children, and we reduced the waiting time in our license bureaus to an average of 7 1/2 minutes. We leased our tollway, and now we're improving roads all over the state without raising taxes or fees." Daniels said he has traveled constantly for four years, listening to Hoosiers, and "I make a point of naming the voter who first alerted me to a problem." Governing seems abstract, he said, so it behooves officials to be very specific. As for social issues, Daniels said, "I try to live traditional values and affirm them, but not impose them on others. I'm trying to bring the state together to do hard things -- not look for ways to divide us." Does it work? Daniels was reelected with almost 60 percent of the vote, and exit polls indicate that a third of the people who voted for Barack Obama on Tuesday also voted for Daniels. His share of the black vote topped 20 percent.