ADDING TOLLS TO IN­DI­ANA’S

The Bond Buyer - - Front Page - By Nora Colomer

in­ter­states could gen­er­ate be­tween $39 bil­lion and $53 bil­lion for In­di­ana high­way con­struc­tion and main­te­nance and fill a gap cre­ated by de­clin­ing rev­enue from fuel taxes, ac­cord­ing to the In­di­ana De­part­ment of Trans­porta­tion.

DAL­LAS – Adding tolls to In­di­ana’s in­ter­states could gen­er­ate be­tween $39 bil­lion and $53 bil­lion for In­di­ana high­way con­struc­tion and main­te­nance and fill a gap cre­ated by de­clin­ing rev­enue from fuel taxes, ac­cord­ing to the In­di­ana De­part­ment of Trans­porta­tion.

That’s the rec­om­men­da­tion of a fea­si­bil­ity study re­leased by the In­di­ana De­part­ment of Trans­porta­tion.

Omaha, Ne­braska-based ar­chi­tec­tural, en­gi­neer­ing, and con­sult­ing firm HDR Inc. pre­pared the study for INDOT. It was re­leased last week.

It comes as the state posted a re­quest for pro­pos­als from firms in­ter­ested in de­vel­op­ing a strate­gic plan to­ward de­vel­op­ing and im­ple­ment­ing tolling on in­ter­state high­ways. A ven­dor will be se­lected in Jan­uary and the plan would be due De­cem­ber 2018.

The study also ad­dresses the state’s abil­ity to en­ter into pub­lic pri­vate part­ner­ships for toll road projects.

In­di­ana used P3 fi­nanc­ing to pri­va­tize its ex­ist­ing In­di­ana Toll Road in 2006. It also used a P3 for the Ohio River Bridges project.

That P3 was partly fi­nanced with pri­vate ac­tiv­ity bonds, a fund­ing ar­range­ment that would be barred un­der tax re­form leg­is­la­tion mov­ing for­ward in the U.S. House of Rep­re­sen­ta­tives.

INDOT and the In­di­ana Fi­nance Au­thor­ity de­clined to com­ment on what im­pact the de­vel­op­ing fed­eral leg­is­la­tion would have on the state’s study of de­vel­op­ing and im­ple­ment­ing tolling on In­di­ana high­ways.

Fed­eral law cur­rently pro­hibits states from sim­ply adding tolls to ex­ist­ing, unim­proved In­ter­state high­ways, though the study con­tem­plates the avail­able pi­lot pro­grams and cir­cum­stances where it would be al­lowed.

The study on tolling is part of the in­fra­struc­ture bill passed by the In­di­ana Gen­eral As­sem­bly and signed into law by Gov. Eric Hol­comb ear­lier this year.

The bill re­quires INDOT to pre­pare a strate­gic plan for tolling im­ple­men­ta­tion and de­liver a plan by Dec. 1, 2018. To meet that dead­line, INDOT ini­ti­ated the RFP process last week with the in­tent to se­lect a con­trac­tor in early 2018.

“The RFP process al­lows de­vel­op­ment of the strate­gic plan to move for­ward with enough time to meet the De­cem­ber 2018 dead­line,” said Scott Man­ning, strate­gic com­mu­ni­ca­tions di­rec­tor for INDOT. “No de­ci­sions have been made on tolling at this point how­ever. HEA1002 does not give a dead­line for de­cid­ing whether to im­ple­ment ad­di­tional toll routes.”

The in­fra­struc­ture leg­is­la­tion raises $1.2 bil­lion an­nu­ally through a 10 cent-per-gal­lon in­crease on ga­so­line, ad­di­tional spe­cial fees and sur­charges, and shifts 4.5 cents of the ex­ist­ing state sales tax on gas from the In­di­ana Gen­eral Fund to the State High­way Fund. The bill also called for the toll study. Toll fund­ing could re­place the de­cline ex­pected in fuel tax rev­enues. Fuel tax rev­enue has be­come less sta­ble over time as ve­hi­cle fuel ef­fi­ciency im­proved, ac­cord­ing to the INDOT study. “This will have a neg­a­tive im­pact on road fund­ing,” INDOT wrote.

“The is­sue is that in 2021 the rev­enue from sales from ga­so­line and diesel sales falls off like a rock and it keeps fall­ing into the 2030s,” said state Rep. Ed Sol­i­day, R-Val­paraiso. ‘’When you look at what are our al­ter­na­tives to fill that gap and you sure don’t want to use the gen­eral fund be­cause you’re tak­ing money out of ed­u­ca­tion so user-pay is where we’re at, and there’s only so many tools avail­able.”

An In­ter­state tolling pro­gram would en­able In­di­ana to fo­cus on the por­tion of the high­way sys­tem that is the most heav­ily trav­eled and the most ex­pen­sive to main­tain. INDOT was ini­tially seek­ing a firm to study tolling on five cor­ri­dors: I-94 from Illi­nois to Michi­gan; I-65 from I-90 south to I-465 and then south from I-465 to the Ohio River; and I-70 from the Illi­nois state line to I-465, then from I-465 to the Ohio state line. It is also con­sid­er­ing tolling in In­di­anapo­lis.

How­ever Hol­comb said in a state­ment is­sued af­ter the INDOT RFP was posted that the I-465 cor­ri­dor in In­di­anapo­lis and other sim­i­lar loop in­ter­states will not be a part of any strate­gic plans on tolling. Man­ning con­firmed that I-465 was re­moved from last week’s fea­si­bil­ity study at the re­quest of the gover­nor. “That route will not be in­cluded in fu­ture anal­y­sis,” Man­ning said.

INDOT’s fea­si­bil­ity study says the state stands to raise bil­lions by ty­ing trans­porta­tion fund­ing to the amount of travel on In­di­ana high­ways. That would help In­di­ana pre­pare for the ex­pected de­crease in fuel con­sump­tion. “An In­ter­state tolling pro­gram would en­able In­di­ana to fo­cus on the por­tion of the high­way sys­tem that is the most heav­ily trav­elled and the most ex­pen­sive to main­tain,” INDOT stated.

The study shows there is an 85% chance that rev­enues would ex­ceed $39 bil­lion from 2021 to 2050. There’s a 50 per­cent chance a toll sys­tem would ex­ceed $53 bil­lion.

The anal­y­sis as­sumes elec­tronic toll col­lec­tion so ve­hi­cles do not have to stop or slow down to pay tolls. It also as­sumes that the bulk of ve­hi­cles will have a toll transpon­der tied to an elec­tronic ac­count. Driv­ers with­out a transpon­der would pay an ad­di­tional $2 sur­charge to cover the cost of toll col­lec­tion via mail.

Tolling sce­nar­ios vary and have the high­est toll at 6 cents per mile along I-64 to 4 cents a mile for the other routes. On an av­er­age, the study as­sumes that pas­sen­ger ve­hi­cles would pay 4 cents a mile; light/medium trucks, 6 cents a mile; and heavy trucks, 19 cents a mile.

The tolling study also looks at whether driv­ers will di­vert from an in­ter­state to avoid pay­ing tolls. It finds that I-64 could lose 22% of its ve­hi­cles due to tolling with a loss of 14% along I-74, 11 % along I-70, 10% along I-69 and I-65 and 9% along I-94.

One state law­maker is con­cerned that the di­ver­sion could cause safety is­sues for driv­ers.

Sen­a­tor Mike Bo­hacek, R-Michi­ana Shores, said that tolling I-94 would di­vert more traf­fic on to U.S. High­way 12 and U.S. 20, and po­ten­tially in­crease the num­ber of ac­ci­dents.

“It’s an area that we know has been a real prob­lem and con­tin­ues to be a prob­lem and we need to make sure we keep our cit­i­zens safe, and quite frankly as I look at I-94 and I look at that cor­ri­dor, that’s not a cor­ri­dor that needs sig­nif­i­cant in­fra­struc­ture im­prove­ment,” said Bo­hacek.

Bo­hacek wants I-94 to also be ex­cluded from tolling. “As far as the I-94 cor­ri­dor to me for tolling is a non-starter, and I will do ev­ery­thing that I can to stop that,” he said.

The fea­si­bil­ity study of the six in­ter­states has been given to Hol­comb for re­view. Man­ning said that the road fund­ing bill does not give a dead­line for when to im­ple­ment the ad­di­tional toll routes but Hol­comb has pre­vi­ously em­pha­sized that tolling wouldn’t start for six, seven or eight years.

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