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Indiana Examines Its Needs

CHICAGO — A committee of Indiana legislators will hold the first in a series of hearings today to review the state's infrastructure needs — estimated at $5.4 billion with an $800 million annual shortfall going forward — as proceeds from the long-term lease of the Indiana Toll Road are set to run out by 2015.

The 25-member bipartisan committee will take testimony from federal, state, and local officials as well as business representatives to examine the state's infrastructure needs through 2035. It expects to consider funding sources next year.

Indiana finances its transportation needs with a mix of federal and state gasoline tax revenue and proceeds from the 75-year lease of the Indiana Toll Road. The largest privatization of a public asset at the time, the 2006 deal netted the state $3.8 billion.

Indiana put $500 million of the proceeds into a legacy account. Lawmakers can use the interest only to finance infrastructure projects.

Another $2.6 billion was funneled into a 10-year infrastructure program dubbed Major Moves.

Gov. Mitch Daniels, who oversaw the toll road deal, last month marked the five-year anniversary of the program, touring the state and touting its accomplishments, which he said includes funding for more than 200 road and bridge projects across the state, with 400 new miles of highways expected by the end of 2015.

But all of the projects under that program have been scheduled, and the proceeds — aside from the legacy fund — are expected to be spent by the end of 2015.

Beyond the toll road lease money, the state's reliance on gasoline tax revenue is a funding source that is "not wise" and in need of review, said Rep. Ed Soliday, R-Valparaiso, chairman of the new joint study committee.

Part of the problem is that the state regularly taps its gas tax money to help fund the state police budget and the Bureau of Motor Vehicles expenses.

"One of the reasons we appear to be having a crisis is that costs have gone up, and gasoline taxes haven't," Soliday said in a telephone interview Monday. "If you listen to what the futurists are saying, we're going to have less and less demand for gasoline — it's not really a sound funding system."

Soliday added that the toll road lease was a great deal for the state and that "you couldn't get a P3 [public-private partnership] deal like that done today," referring to the stronger state of the capital markets and investor interest at the time.

The committee will meet throughout September and will watch closely the debate in Washington over the federal transportation bill, set to expire Sept. 30, Soliday said.

"We are trying to take a very responsible approach to what we're going to do with infrastructure, and we're trying to do it at a rational pace and in a bipartisan way so that we can be prepared for whatever the federal government is going to do," he said.

Lawmakers will not consider new revenue sources for at least a year, Soliday added.

"Nobody is going to touch funding this year in Indiana," he said. "We need to define the situation before we start throwing solutions at the wall. And we don't even know what the feds are going to do."

A 2009 report that examined Indiana's local infrastructure — which accounts for 90% of the state's public roads — warned that local agencies face an immediate shortfall of $5.4 billion and an annual shortfall of $858 million going forward.

The study was conducted by the Indiana Local Technical Assistance Program, housed at Purdue University.

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