
Proposed East End Bridge. (Montage based on rendering courtesy ORBP)
[Editor's Note: Aaron Renn is the Urbanophile, an opinion-leading urban affairs analyst, entrepreneur, speaker, and writer on a mission to help America’s cities thrive in the 21st century. Renn is a native of a small town in Southern Indiana near Louisville.This is the first in a series of articles planned to address the current situation of the Ohio River Bridges Project. This article was originally published on January 9, 2012 and is reprinted with permission.]
- Indiana gives away $1.7 billion to Kentucky -
- Indiana’s costs up by $200 million while total project costs decline by $1.5 billion -
- $432 million diverted from other projects to close funding gap recreated by Indiana’s botched negotiators -
- Tolling likely to mean Indiana pays well over half the project –
- Indiana potentially exposed to major risk by agreeing to build a tunnel in Kentucky through Louisville’s most affluent suburb that the state has no expertise to construct -
I’ve noted before how the Indiana Toll Road lease was a stroke of genius (see “Foreign Investors Hurting, Hoosier Taxpayers Smiling“ and “Major Moves Is Majorly Great“). I attribute a lot of it to Gov. Mitch Daniels’ shrewd assessment of the competitive landscape (see “The Shrewdness of Mitch Daniels”). As Daniels is fond of saying, “It was the best deal since Manhattan was sold for beads – only this time the natives won.”
Unfortunately, in the case of Indiana’s recent agreement with Kentucky on a pair of new bridges across the Ohio River at Louisville, this time it’s Indiana taxpayers and motorists who are back in the role of the Indians. I’m a big fan of Indiana Gov. Mitch Daniels, but this is a very bad deal for the state. In a four part series that starts today, I’ll document the reasons why, explaining how:
- · Indiana has trumpeted that the cost of the project has declined by $1.5 billion. But in fact Indiana’s share of the cost has actually gone up by nearly $200 million. Kentucky has pocketed more than 100% of the savings – a massive $1.7 billion giveaway by Indiana.
- · Indiana’s botched negotiating means $432 million in state highway funds will have to be diverted from other projects around the state in order to cover a funding gap in the project.
- · Tolling won’t pay for the bridges, and in any case tolling is likely just another word for “Hoosiers pay.”
- · Indiana is potentially exposed to huge financial and political risk because it is agreeing to take on a $261 million “mini-Big Dig” tunnel in Louisville’s most affluent community. From an Indiana perspective this is like having the state outsource a freeway through Zionsville to Ohio.
- · The are superior alternatives to the project as a whole that are cheaper too and promise major additional savings on top of the $1.5 billion Indiana and Kentucky have already found.
Today I’ll examine what’s clearly the most incredible piece of the puzzle – how Indiana gave so much money away to Kentucky.
Continue reading after the jump.