Monday, June 11th, 2012

Media Finally Wakes Up to Louisville Tunnel Boondoggle, But Misses the Bigger Picture

The Indianapolis Star finally did a report this weekend covering the ridiculousness of Indiana taxpayers and motorists paying for a $255 million “tunnel under the trees” in Kentucky as part of the Ohio River bridges project.

Their article is a good one, and reveals that Kentucky officials deliberately listed the property as historic to drive up the cost of the bridge project as a poison pill attempt. Though the headline should better have been phrased as a question: “Why Exactly Is Indiana Paying $255 to Tunnel Under Kentucky’s Trees?” The only answer seems to be because Mitch Daniels wants to.

The idea of Indiana paying for a useless $255 million tunnel in Kentucky is the most easy to grasp ludicrousness in this project, but far from the worst element. It’s too bad the Star did not examine other even more troubling problems, such as:

  • As the Star’s own graphic shows, Indiana is actually spending $737.5 million on roadway in Kentucky. That’s over $100,000 per foot! You could probably literally gold plate the road for that. It’s more expensive than any project anywhere in Indiana. It is more than combined cost of the Indiana side of the river plus the new bridge.
  • The two states managed to take $1.5 billion in cost out of the project – good. But as part of that Indiana’s cost actually went up by $200 million while Kentucky’s went down by $1.7 billion – hello?!?!
  • The Star reports that Indiana and Kentucky will evenly split money from the bridge tolls – news to me – even though Hoosier motorists will pay $5 million more per year than Kentuckians. So not only is Indiana paying more than it’s fair share on a cost basis (including that $737 million in Kentucky) – it’s also shipping a huge chunk of Hoosier money across the river ever year to help Kentucky pay for its part of the project. Hoosiers will pay fully 74% of all local tolls collected on the bridges.

In short, it just doesn’t get much dumber than this.

It’s stunning to me that, to burnish his legacy by getting a bridge project done that had eluded both states for 40 years, Mitch Daniels is willing to throw Hoosier taxpayers and motorists under the bus like this. This is a deal that will live in infamy as Indiana’s worst transportation finance decision since the 1830s epic canal fiasco that bankrupted the state. I cannot think of another governor in modern times who so clearly acted contrary to his own constituents’ financial interests in a transportation project.

Again, I am 100% four square behind building the East End bridge as a key state priority – I just don’t think it’s worst giving away upwards of a billion dollars the state didn’t need to in order to do it.

I’ve written extensively on this project before, so won’t reprise it all here. But you can read much more at:

Indiana’s Bridge Deal Boondoggle:
Part 1: A Financial Fiasco
Part 2: Hoosiers to Pay Even More With Tolling
Part 3: Indiana’s Mini-Big Dig
Part 4: A Better Way

Hoosiers to Pay 74% of Local Tolls in Bridges Project
The Case for 8664

Topics: Transportation
Cities: Louisville

13 Responses to “Media Finally Wakes Up to Louisville Tunnel Boondoggle, But Misses the Bigger Picture”

  1. Kilroy says:

    If hoosiers make up 74% of the bridge’s traffic, doesn’t it make sense for Indiana to pay 3/4ths of the project? After all, these are people working in Kentucky, but living in Indiana. Indiana gets the properties taxes and other tax income from people that Kentucky is employing.

  2. Chris says:

    Kilroy, if you make any purchases in Kentucky, which I know many Hoosiers do on a daily basis, then you pay sales tax to Kentucky. So, Kentucky gets a good share of taxes from Hoosiers streaming into the state on a daily basis.

    More importantly, you do not understand how interstate highways are funded. It is irrelevant as to which state gets property taxes or state income taxes. Neither property taxes or state income taxes pay for interstate highways. We have federal and state gas tax to pay for interstates. A portion of property taxes may help pay for local roads, but they do not pay for interstates.

    So, no the percentage of Hoosiers using the bridge should not be determinative of which state foots the biggest bill. Nor should usage be offered as justification for a boondoggle tunnel, regardless of which state should pay the biggest share of the overall project. An unnecessary tunnel is an unnecessary tunnel is an unnecessary tunnel.

  3. Paul says:

    As one northern Indiana state senator put it at the time, Major Moves was always mostly about pork. The Ohio River Bridges projects is one of the Major Moves projects.
    I suspect that Gov. Daniels always wanted to make sure that every penny that the state gained from Major Moves was committed before he left office.

    While the sale price for the Toll Road was nothing short of astonishing, I was and remain concerned that those in the northern part of the state will pay a price for the deal for years to come in view of the highway improvement restrictions imposed on the state respecting roads parallel to the toll road and the possibility of service deterioration on the toll road whenever the value of the dollar slips against the yen. (I’m guessing the consortium relied on a yen denominated load to finance the deal).

  4. Kilroy says:

    Chris: You don’t have to patronize. I understand all you are saying. But much like a business incentive that encourages businesses to locate in Indiana, the bridge encourages Louisville area workers to live in Indiana and pay Indiana property taxes and sales taxes. So Indiana has a lot to gain by easy access to and from Louiseville. I don’t see that Kentucky gains much in the other direction. And I’m not talking about the tunnel, that is ridiculous.

  5. Dan Borsch says:

    Why should Louisville/Kentucky support an interstate EE Bridge without a regional compact and/or the removal of elevated interstates in our urban core? What about opening up 10,000+ acres to development after we have lost 150,000 in population from the old city of Louisville; Louisville relying heavily on occupational taxes in a state that does not have many local taxing options; not having a plan to deal with 7000+ vacant or abandoned properties; facing huge sunk costs for sewers, pensions, deferred infrastructure maintenance, etc.; and we still have to deal with elevated highways in our urban core that serve Hoosier commuters?

    What’s wrong with a local access bridge(s) for a couple hundred million dollars to get us through the next decade(s)? Where are the ROI, opportunity cost calculations, etc. for an EE Interstate Bridge? Why do Cincinnati’s loop of bridges fail to prevent congestion on the downtown bridge? Even if you get the EE Bridge down to $700,000,000, why is that money not better spent fixing existing infrastructure deficiencies? I have not seen serious answers to these questions.

    It’s easy to sell news stories about rich people who gamed the system, but who wouldn’t put up a fight to stop a highway in their backyard? They have the means to put up a fight that most people don’t have and made it clear they were going to fight this project. We should be more upset with the Transportation department and elected officials who did not deal with the realities of the situation and tried to force the project without getting the support of those with the power and means to fight or coming to the table with a plan that doesn’t leave so much to be desired. It was not a secret that the property had been listed and what the requirements that would spring from the listing were likely to be. Despite this knowledge the transportation departments still chose to go forward with a two bridge plan and a route through a “historic” property while spending $300,000,000 million with no approval to toll the existing I-65 bridge, no publicly released investment grade toll study, an incomplete understanding of the implications of tolls, no commitment of funds from the market, and no firm costs of construction from the bidding teams.

    Sorry for the lack of editing, but have to finish a couple of projects.

  6. Babbage says:

    As a former resident of the Louisville area, what’s ultimately best for the region in the long run is greater connectivity between both sides of the river. If the east end bridge diverts 5-10% of traffic then that is enough to greatly reduce congestion as the top 5% of peak volumes contributes most to congestion. Just look at how much I-64 and I-71 back up every afternoon.

    We can only hope this continues to gain public attention, with the outcry becoming strong enough to force some kind of change to plans. There are better ways to spend $255 million…officials in Kentucky didn’t seem to have any problems bulldozing homes in the city that were older than that property.

  7. Jeff Gillenwater says:

    I wonder with Daniels sometimes if it’s zeal to get the project done or if motivation comes from a more ideological place of pushing for increased privatization.

  8. Chris says:

    Kilroy, the word “patronize” means to treat another person with false kindness in a manner that betrays ones contempt for that person.

    There was nothing patronizing about my post. I don’t know you and I have no reason to have feelings toward you one way or the other.

    I disagreed with the argument you made in your original post and I gave you my reasons for disagreeing–that’s all. Do not be so sensitive if you are going to post on a public forum. If I write something nasty to you, fine, then complain; otherwise, just take it as a friendly discussion/debate.

    Also, Kentucky gains plenty from having this bridge. It gains access to workers who provide labor for businesses in Kentucky and also access for business and personal consumers who buy plenty of goods and services in Kentucky and pay Kentucky sales tax. If Kentucky were not to gain much from the bridge, then why would it be contributing a substantial (if still inequitable) amount toward funding its replacement?

  9. Kilroy says:

    Chris: Patronize means “to adopt an air of condescension toward.” When you start telling someone that they just don’t understand something, you are being patronizing. Whether posting on a public forum or a private conversation, basic manners should always be expected. Good day to you, sir.

  10. Chris says:

    Kilroy, the word “patronize” means exactly what I said it means in my previous post. It is a more specific word than “condescend.” It is a way of being condescending toward someone by exhibiting false kindness or pity.

    In any event, my original response to you was neither patronizing nor condescending. It is neither patronizing nor condescending, in and of itself, to tell someone that they do not understand something.

    I am not interested in dealing with silliness in what is supposed to be a discussion forum about urban development and politics.

    Your original post lead me to reasonably assume that you did not understand how interstate highways were funded because you referenced property and sales taxes, rather than gas taxes. My original comment to you was both civil and perfectly appropriate.

    You are behaving in a melodramatic and oversensitive fashion, and it is certainly not the way anyone would behave if they wished to demonstrate so-called “basic manners.”

    If you want to engage in a discussion about urban development and politics, I would be glad to have one. But, if you prefer to behave like a drama queen, I am not interested in joining you.

  11. Bow says:

    Aaron, Telling one “I told you so”….but..” is not a great thing but..”I told you so”

    Without going back to your original post on the subject, I believe I pointed out very directly why this horrible deal was
    happening..So.Indiana/Louisville are of little interest in Indy/Indy Metro/central Indiana Region. Daniels of course, fully understands this. Keeping it out for the press in urban central Indiana was vital to keep his deal alive…guess the parties over for Daniels. My estimate would be around of 2.6 million people blowing a casket.

  12. Stunoland says:

    The east end bridge was part of the Eisenhower transportation plan 52 years ago. Every scientific poll ever conducted on an east end bridge has shown metro wide support. Just because special interest influence has led to an absurdly expensive $795 million dollar luxury highway does not mean we should ignore public opinion. The majority of people in this community do not support another bridge downtown. After the events of Shermaggeddon this community is going to build another bridge. Canceling both components of the Ohio River Bridges Project is a political Hail Mary. Thinking long term the east end bridge is a prerequisite for removing or improving freeways in Louisville. The vast majority of medium to large cities in the world have a 360 degree bypass to remove traffic from the densest parts of the city. Most cities require non-local tractor-trailers, especially haz-mat, to bypass the densest parts of the city. Louisville is not a truck stop town and the east end bridge must be built financially decoupled from the undemocratic, economically detrimental, and socially unjust downtown bridge project. Divide the project, not the community.

  13. nick says:

    “It’s stunning to me that… Mitch Daniels is willing to throw Hoosier taxpayers and motorists under the bus like this.”

    Really?! you’re stunned by this behavior? Really? either you’re incrdibily naive or I’m just a bitter cynic. I find nothing “stunning” about Daniels’ priorities as he has made them painstakingly clear going back to his days as Bush Jr.’s budget director: privatize profit and socialize cost, whenever and wherever possible.

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