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Guv: “Stay tuned” on tollway leasing

Tuesday, Apr 25, 2006

Is the guv really thinking about leasing the tollways?

Gov. Rod Blagojevich said Monday he’s waiting to see how Indiana’s experiment of leasing its toll road fares before deciding whether to act on a suggestion to do the same for the suburban tollway.

“Stay tuned,” said Blagojevich Monday. “This is an idea that we’ve talked about for years, actually. You’ve got to explore all kinds of creative ways to utilize the assets of the state. It sure is better than putting more burdens on the hard-working people and asking them for their tax dollars.”

Indiana is getting $3.8 billion for leasing its toll road to a foreign business group, and Blagojevich said he’s “looking with great interest” at how it plays out. Critics blast provisions in the Indiana contract that will allow the new operator to raise tolls by 2 percent a year after 2009.

State Sen. Jeff Schoenberg, an Evanston Democrat, has suggested the idea of leasing or selling Illinois’ tollway system, but Blagojevich said he won’t consider it until next year at the earliest. Schoenberg said he’s working independently on the idea, asking a state agency to look at how much a tollway lease could bring into state coffers.

What do you think of this idea?

- Posted by Rich Miller        

  1. - Injou - Tuesday, Apr 25, 06 @ 7:24 am:

    It’s a very good idea as long as we predetermine before leasing the tollway how that money will be spent (on education, pension shortfal, whatever).

    Waiting a bit to see what happens in Indiana seems prudent though.

  2. - DOWNSTATE - Tuesday, Apr 25, 06 @ 7:29 am:

    He really meant’wait and see what’s in it for me.

  3. - Nickname - Tuesday, Apr 25, 06 @ 7:58 am:

    Terrible idea.

    If you privatize the tolls and the private company raises the toll it still amounts to a tax increase on working people.

    While Blago is at it why doesn’t he privatize (”lease”) all roads in Illinois, the public universities, and state services.

    A foreign company bought the tollways in Chicago and Indiana. Is that really smart policy to allow foreign companies to own our roads?

  4. - Backyard Conservative - Tuesday, Apr 25, 06 @ 8:13 am:

    I just want Blagojevich to be privatized.

    But seriously,in general I am in favor of privatizing government services. Usually they give you more service at lower cost, and if they mess up you can fire them.

  5. - zatoichi - Tuesday, Apr 25, 06 @ 8:20 am:

    Bid out everything. Lease UofI and the entire state education system to a Dubai investment group. DNR? There are Canadian investors. Corrections? Probably several British or Asian companies would do that. DHS? There are Swedish investors who would be interested. CMS? WalMart could RFID everything. As Alexi would say “Just looking for the best return for the state dollars.” Just think of how much money would come pouring in. All cost increases would be passed on as price increases not “taxes” so the Gov and all politicians would not be dinged.
    It is simply an innovative concept whose time has come.

  6. - Anon - Tuesday, Apr 25, 06 @ 8:21 am:

    Having GCFA look into the issue will at least tell the GA the ins and outs of the idea. I would think any deal should include a timeline on staggered rate hikes and a scenario for dealing with future IDOT/Locally owned roads expansion near the tollways in the future. Is this a one time sale or would this be considered a revenue stream for several years?

  7. - Anonymous - Tuesday, Apr 25, 06 @ 8:31 am:

    is there anyway to know how this will pay off longterm? or is this just a temporary solution that will come back to haunt us?

  8. - Anon - Tuesday, Apr 25, 06 @ 8:45 am:

    I think any more of the executive’s “brilliant and innovative” financing plans that have been around for years really need to be explained more clearly by the media. Ask yourself why a foreign-owned company would want to lease IL tollroads - it isn’t because there is a legitimate business purpose, i.e., that the foreign business is really eager to LEASE a tollroad. It’s because there are federal tax benefits that Illinois would be able to take advantage of but because it is a state and doesn’t pay federal taxes, it can’t take advantage of the benefits and instead effectively sells these benefits to another company. This looks a lot like a tax shelter that the IRS has identified as being abusive. I understand the the gov is less concerned with legality than with furthering his political career but really, should the state be supporting attempts by foreign companies to avoid paying tax to the federal government? Maybe the answer is yes and IL should take this money as an indirect payment by the federal government to IL. But I doubt the IRS will see it the same way…

  9. - the Other Anonymous - Tuesday, Apr 25, 06 @ 8:55 am:

    Let’s review:

    1) Sell the JRTC
    2) Sell corporate sponsorship of state services
    3) Sell bonds to pay for pension liabilities

    And now lease the tollways.

    I voted for Blagojevich, but I do not remember a single mention of his plan to sell off the State of Illinois piece by piece to private individuals.

  10. - Sen. Jeff Schoenberg - Tuesday, Apr 25, 06 @ 9:35 am:

    Some additional thoughts before this thread hits the fast lane: One of the key lessons that can be learned from the Indiana agreement is that in order to build support for this type of proposal,it is essential right from the start that a portion of whatever proceeds the state realizes be set aside in a form of endowment that will guarantee there will be no toll increases. Under pressure from his own allies in the IL legislature, IN Gov. Daniels belatedly ponied up $150m from the $3.85b to freeze tolls for 10 years. Because the Illinois tollway system is bigger and in far better condition — both in concrete and on the balance sheet — and because the majority of people who use the system are Illinois commuters, a much larger portion of the proceeds must be set aside and for a longer time period in any Illinois proposal.

    Secondly, we need to ensure that any plan to bring private capital into public infrastructure maintains a high standard of accountability and transparency for the tollway’s spending practices and policies. The hard-fought gains that we’ve realized from tollway reform legislation not only protected taxpayers from one Administration to the next, but institutionalized greater accountability for the private sector, too.

    Finally, as this proposal begins to percolate, there will be a host of questions on whether or how put together this type of public-private partnership, as well as how to spend the billions that are available to the state as a result of it. I strongly believe that once the bonds are paid off and the reconstruction and toll freeze costs are factored in, the money should go exclusively into capturing $3b available in matching federal transportation funds and tackling the state retirement systems’ unfunded pension liabilities.

  11. - VanillaMan - Tuesday, Apr 25, 06 @ 9:41 am:

    What Blagojevich means is, “I’m waiting for a really big campaign contribution, so whoever wants me to go forward with this can start sending in the cash!”

  12. - Leroy - Tuesday, Apr 25, 06 @ 9:47 am:

    You guys need to look at Chicago. They are on the cutting edge on turning pavement into profit. Chicago is now selling the naming rights to the Chicago skyway:

    Chicago Skyway naming rights going up for bid:

    I for one, look forward to driving on the SBC/AT & T Expressway. Hope you do too.

  13. - 4% - Tuesday, Apr 25, 06 @ 10:00 am:

    I agree with Vanilla. Where’s the contribution and contract for my close friends?

    I hear that his next effort will be to let Wackenhut to run the DOC. Enron can oversee the ICC.

  14. - KenoMan - Tuesday, Apr 25, 06 @ 10:01 am:

    Let’s face the truth here. Any private company willing to lease the Tollway system will expect a return on their investment. The return will be insured by a TOLL INCREASE. No other way around it. Their is no “profit” in current toll rates.

    I find it interesting that Senator Schoenburg fought so hard to control the Tollway when the Republicans were in control, however, once his party gained control he has been muted. Now he proposes a long term lease deal. A lease arrangment would lead to even less state control over that agency. Interesting to say the least……

  15. - Budget Watcher - Tuesday, Apr 25, 06 @ 10:11 am:

    Good idea - big upside, but also has potential for cronyism and corruption. When you go to the polls, ask yourself who you want managing a big infusion of capital. That’s not an endorsement for either side, as I don’t have much confidence in either candidate right now.

    I agree with Senator Schoenburg about taking care of consumer price protections, resolving existing structural debt problems, and leveraging federal highway funds as priorities before addressing other issues.

  16. - Aaron - Tuesday, Apr 25, 06 @ 10:19 am:

    I don’t like the idea of a private group making a profit directly off of a publicly funded state asset. If there’s room for a profit, then we’re paying too much and there are inefficiencies that should be addressed.

  17. - These are our choices? - Tuesday, Apr 25, 06 @ 10:34 am:

    “Stay tuned”? Isn’t that the same phrase he used during his pledge to resolve the Hate Crimes Commission debacle? And his “rock the system” with campaign finance reform charade? And probably a bunch of other proposals he tries to take credit for with sketchy details before he eventually abandons them or has them rejected? Guess that means we’ll never see the tollways leased.

    Btw, does he realize he is not a TV show and in fact, as The Daily Show demonstrated, doesn’t always play all that well on TV?

  18. - DOWNSTATE - Tuesday, Apr 25, 06 @ 10:42 am:

    I imagine that this is being given a lot of consideration in the governor’s circle.This would be a way of additional funds for his free programs that they need to get him re-elected.Borrowing more money is out because the state is on it’s butt now and the voters know it.

  19. - Blah, Blah, Blah - Tuesday, Apr 25, 06 @ 11:05 am:

    This is a bad idea. Read the stories about how the Indiane GA & Gov. really screwed this up. Blinded by dollar signs … but if you look at the lease at the minimum increase in 75 years in will increase $40 to drive from Illinois to Ohio. Couple that with the $18 a gallon we will be paying in gas and it is not worth the return.

  20. - Anonymous - Tuesday, Apr 25, 06 @ 1:26 pm:

    If the money is used to reduce structural debts and not increase spending programs, then it might make sense.

    Many governments gave up control of water supplies and water is much more critical than roads.

    Maybe counties and towns could start leasing local roads?

  21. - steve schnorf - Tuesday, Apr 25, 06 @ 1:29 pm:

    I’m neutral about the idea itself, though I agree with earlier comments that we should be thoughtful about disposing of the State’s assets. To me the far more critical question is whether we should be disposing of fixed assets to pay for day to day operations, and generally we shouldn’t. If we sell/lease, the proceeds from disposing of the asset should mainly be transferred into some other king of asset; rainy day fund, pay down unfunded pension liability, etc.

    That’s very hard to make happen because the Governor needs the money for operations, and the GA doesn’t want to make a vote involving billions of dollars and not get to spend it.

  22. - PJS - Tuesday, Apr 25, 06 @ 2:06 pm:

    I think Public Private Partnerships are another tool that can help Illinois meet our capital infrastructure needs in the future. Whether its leasing existing assetts or using the method to finance new ones, its definately worth looking at. Its not the only solution, just another tool in the arsenal.

    As for the revenue from leased tollways, it should be treated as bond revenue. Afterall, its a long term obligation. As such, it should be reinvested in capital, not programs.

  23. - Papa Legba - Tuesday, Apr 25, 06 @ 2:14 pm:

    Sounds OK to me. Really, how much worse can it be operated? I have been spending more time than usual recently on the Tri-State. Especially where it becomes 80-94. The countless hours sitting in immoble traffic is a joy. The open road tolling, an OK idea, has almost got my car plowed into numerous times by out-of-towners swerving to find the right toll booth. The Rod R. Blagojevich signs don’t really offer much information on where/how to pay if you don’t use the tollway on a regular basis. Now I see that the Tri-State is being ripped up near Cermak Road. What’s with all the work? Doesn’t that cost big money? Or is Rod making sure his contributors are getting their piece in case he gets voted out?

  24. - GREASYLAKE - Tuesday, Apr 25, 06 @ 4:05 pm:

    sounds fine is there were limits on toll increases.

  25. - cermak_rd - Tuesday, Apr 25, 06 @ 5:22 pm:

    I don’t know of a section of tollway anywhere in the system that it is mandatory to take to get from point A to point B. I take 88 to Naperville from the west side every day, but I could just as easily take Cermak Rd to 22nd to 53 to Ogden to work. I figure the cost of the toll is worth it to me to save the time. If the cost of the toll goes up sufficiently, then I’ll take the alternate.

    So I don’t really get all that passionate about toll increases.

  26. - angry and outraged - Tuesday, Apr 25, 06 @ 6:16 pm:

    My questions are how can they do it Illinois does not own the Tollway as does Indiana? While the state does get some revenue from the toll money most of it goes towards the upkeep of the system, will that be the case if a private company leases it? How many of you prefer the Tollway during snow storms than IDOT roads? Will we end up with roads in the same condition that IDOT roads are in and we pay for that through our taxes? What sense does spending $5.3 billion dollars for “Open Road Tolling” make without a return on investment?

    And yes a private investor would raise the tolls just to keep up with the East Coast! Are any of you aware of how much they charge on the East Coast?

  27. - Anon - Tuesday, Apr 25, 06 @ 6:49 pm:

    If the current toll system is counting on revenue from tolls to pay for the massive infrastructure improvements that are ongoing, where will the funds come from to pay off that debt once the system is leased to a private entity?

  28. - anon - Tuesday, Apr 25, 06 @ 7:40 pm:

    Indiana’s Gov. Mitch Daniels, W’s liliputian first budget director, badly bungled the pr/partisan aspect of the lease, which helps explain why his approval rating is worse than Blago’s

    Indiana now is try to quash a lawsuit against the lease.

  29. - Six Degrees of Separation - Tuesday, Apr 25, 06 @ 7:50 pm:

    Privatization of toll roads is a snowball rolling down the hill in these times. An easy, one time cash influx, or an annual cash cow, depending on how you structure the lease. Actually, I’m not too worried that the tolls would go too high, as a private operator will have incentive to maximize their profits by finding the point at which tolls are just low enough not to deter potential traffic, and just high enough that all the maintenance can be done.

    Want to make this deal even more enticing for the public and the operator? Give the successful bidder rights on extending the system north (IL 53 north and IL 120 parallel tollway in Lake & McHenry counties) and south (I-355 to IL 394 in Will County or even I-65 in Indiana) and maybe even throw in Prairie Parkway as a tollway from I-90 to the I-355 extension.

    Absent an unlikely massive public works program like the New Deal WPA program in the 1930’s or the building of the Interstate system in the 1950’s, privatization is the only thing on the horizon that can attract the massive capital to get these type of projects done.

  30. - DOWNSTATE - Wednesday, Apr 26, 06 @ 6:57 am:

    So now we find out that this sale will pay Meeks off and keep him out of the Governor’s race.It has nothing to do with the people of Illinois just another way to keep Blago in office.

  31. - Leroy - Wednesday, Apr 26, 06 @ 8:07 am:

    Gotta agree with downstate….Selling the tollway isa good deal for the politicians.

    The fact that it may help the taxpayer is a nice side effect.

  32. - independent - Wednesday, Apr 26, 06 @ 8:15 am:

    What a great opportunity. I think someone like Ken Lay has free time he would be perfect to buy our tollways. After all look what he did for California’s electricity.

  33. - Republican Politician - Thursday, Apr 27, 06 @ 11:09 am:

    I am a Republican but when it comes to my pension,I’m
    independent. I’m depressed when I see the governor propose new spending with my pension money. I am glad to see someone is thinking “out of the box” to address the problem. It may not leed to a solution, but it looks like a good faith effort. Good luck, I wish Senator Schoenburg well.

Sorry, comments for this post are now closed.

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