Indiana Governor Mitch Daniels got in hot water for leasing portions of the Indiana Turnpike to a foreign entity. His opponent this November is making that lease an issue. Only Chicago Mayor Richard Daley, who leased the Chicago Skyway for $1.8 billion to a consortium consisting of Macquarie and Cintra from Spain, may have survived politically. Governor Rendell claims that his $12.8 billion deal with bring in 13% more revenue than the State is able to collect. He said without the tolls that the private/public partnership will bring in the toll revenue from State ownership would be only $450 million annually compared with $1.7 billion needed for infrastructure expenditures over the next ten years. It now costs $22.75 to cross Pennsylvania. Next year there will be a 25% increase in tolls. And inflation increases will be permitted at 2.5% per year. At the end of a 75-year lease, Dennis Enright, a principal of New Jersey-based NW Financial Group, told THE WALL STREET JOURNAL, it would like cost $176 to cross the State. That is exactly what citizens of Pennsylvania fear, although very few current drivers would be behind the wheel at the end of the lease.
My father always said when a deal appears too good to be true it probably is. Foreign money for infrastructure looks tempting but it may not be worth the political grief to those who propose it and put it through.