Daniels' Bridge Deal Gives Away $1.7 Billion To Kentucky

Respected urban affairs analyst Aaron Renn has uncovered an astonishing give-away the Daniels' administration negotiated with the state of Kentucky for a pair of new bridges across the Ohio River at Louisville that he finds will cost Indiana taxpayers a whopping $1.7 billion. When Gov. Mitch Daniels first announced the plan, he touted $1.5 billion in savings from the original $4.1 billion the projects were projected to cost. At first blush, the 50-50 sharing of the $2.6 billion cost of the projects may seem fair; however, Renn notes that 73% of the cost of the projects falls on the Kentucky side of the border compared to just 27% of the costs for the Indiana side of the border. That equates to giving all of the savings touted by Daniels to Kentucky, while increasing Indiana's share of the costs by at least $200 million. Indiana's share of the costs could actually be higher if the projects wind up costing more than the deal anticipates, which would not be at all surprising for massive public works projects of this nature. Renn summarizes the implications of the deal to Indiana:

But while the total project cost declined by $1.5 billion because of these changes, Indiana’s cost actually went up by almost $200 million. That’s right, while taking $1.5 billion in total cost out of the project, Indiana managed to make its share of the project actually go up in cost. Kentucky’s cost, by contrast, declined by almost $1.7 billion. Indiana gave away more than 100% of the cost savings achieved by the project design changes . . .

This is truly stunning. We’re talking huge money here – more than INDOT is spending on I-69 under Major Moves, the state’s flagship project . . .

Because there were two major pieces of construction exclusively in Kentucky – the reconstruction of Spaghetti Junction and a dubious $261 million tunnel on the East End approach (more on that later) – Kentucky’s share of the cost, as it should have been under any reasonable scenario, was higher than Indiana’s – 73% vs. 27%.

Renn calculates that INDOT will have to divert $432 million in state highway funds from other projects to cover the funding gap. Renn has published the first in a 4-part series, entitled "Indiana's Bridge Deal Boondoggle A Financial Fiasco", which he is publishing at his Urbanophile blog. I highly encourage you to follow his reporting. In one fell swoop, Daniels has nearly wiped out the financial windfall the state received from his toll road lease agreement, which Renn has described as a "stroke of genius." It is absolutely astonishing that it takes an out-of-state urban analyst to report on something that should have been uncovered by reporters within our own state. Hats off to Renn for his great public service reporting on this important matter.