Major Moves: A Governor's Gift to Indiana that Keeps on Giving
Teddian Jackson is a Year 1, Class VII MDLF Fellow. He is a husband, proud father of four, small business owner, and a twice university graduate. Teddian serves as President of Hobart Holdings LLC and is the owner of Montego Bay Grille in northwest Indiana.
The Mitch Daniels Leadership Foundation Class VII Fellows participated in a ‘State of the Economy’ session on Friday, August 17 in Kokomo, IN.
We heard from some of the architects of the Major Moves (the Indiana Toll Road Lease) deal - one of Governor Mitch Daniels’ signature accomplishments during his time in office. Ryan Kitchell, Randy Borror and Neil Pickett joined us to give us an insider’s perspective as to how the deal came about.
After peeling away the layers of what made up Major Moves and learning more about the political challenges it faced along the way, this is my take.
I moved to northern Indiana at the end of 2009, after immigrating from Jamaica. Mitch Daniels was governor, and the perception of some Hoosiers of “Mitch sold our toll road” was a hot topic then. Of course, I was new to Indiana and was still becoming acclimated to everyday life, therefore this topic was not the most important on my agenda. I can’t forget, however, that even with the little I overheard and knew about Major Moves, I couldn’t at that time understand the big hoopla that it was causing and recall questioning: why were people so outspoken about the state government relinquishing full control of the toll road considering the positive benefits to the state’s budget deficit that would result?
I remember thinking then that I would have been happy if the government gave up maintenance of this monstrosity for free and rendered itself to a regulatory role; given the fact that by the government’s own admission, it was costing the taxpayers approximately 34 cents for every 15 cents it collected in tolls. I would be ecstatic if I further found out that my government not only recognized its shortcomings, and proactively fired itself as manager of these toll roads, but in doing so got almost $4 Billion in the process - when they were expecting and probably would have accepted $2 Billion. But what could I possibly have known? I had just moved to the United States, and knew very little about Indiana’s politics or policies; therefore I was in no position to offer an alternate view to what appeared then to be the widely accepted opinion - “we shouldn’t have sold the toll road!”
As it turns out, that which was my greatest disadvantage, being new to the state, being new to the country, gave me a vantage point that (fortunately for them), some Hoosiers didn’t have. Meaning, I grew up in a developing country, one where the economic structure was based on democratic socialism. Democratic socialism is defined as “having a socialist economy in which the means of production are socially and collectively owned or controlled alongside a democratic political system of government.” This is an experience that whilst I can pull valuable life lessons from it, as in what not to do, Hoosiers and Americans as a whole can count their blessings that they don’t share this experience.
Democratic Socialism meant that the government of our tiny developing country owned (and as some believe, mismanaged) almost every means of production and every major asset within our country. You will find that this is a recurring theme within most developing countries as nepotism and political hook-ups take the place of meritocracy, efficiency, and common sense. There’s not much debate anymore between correlation and causation.
It was not until the second half of the twentieth century when the government of my native country realized that this position was untenable - we came to the realization that in certain scenarios, the government (by itself) was not the best entity to manage public assets. As such, not by choice, but as a means of survival, to maintain solvency, massive divestment of government-controlled assets, and Public Private Partnerships started to take shape. In other words, the country shifted towards a Capitalist economy. A huge tranche of these divestments and Public Private Partnerships occurred in the 1990’s. I was a boy then, I couldn’t fully appreciate what was happening, but everyone in our society could feel and see this massive shift - for the better.
The Jamaican government went about this by seeking foreign investment to maximize the potential of industries we had at our disposal. These investments did not only come via the financial influx to take over these means of production, they also came with expertise that we were lacking. This expertise made way for increased levels of production while utilizing less resources. The government was then able to redirect the funds generated from these agreements into other areas of great need; namely, healthcare, education, and so many others. Not to mention, these investments brought about improved infrastructure as factories for example, not only modernized their properties but upgraded their surroundings as well. In most cases, these improvements were requirements of the deals. Lastly, these investments brought jobs.
The Jamaican government was then placed to do what it does best, and should have been doing all along - regulate these industries and simply call balls and strikes. It was not until these industries were transformed into Public Private Partnerships that we realized how inefficient, bogged down, and bloated our pseudo-private sector was. Keep in mind, until then there was no real distinction between the public and private sectors. We had simply lived with below-par performances for so long that we didn’t realize, or even expected anything else.
While my summary cannot capture the entirety of the impact Public Private Partnerships made on the economy of a developing country; and I cannot realistically equate the outcomes it experienced to that of the world’s premiere economic super-power, the fact is, the principles remain constant. It is more beneficial for governments and the people they serve when certain industries or assets are managed by the private sector. Emphasis on the term ‘certain’. The private sector is better equipped to innovate, pivot, and be efficient as opposed to the public sector. For clarity, I strongly believe there are public goods that history has shown can best be managed by the government; our local fire departments are one such, but as clarified in our recent Case Study, a toll road in many cases is not.
Armed with my experience of seeing an economy shed its dead weight of democratic socialism, and improved immensely as a result, I could better understand and appreciate Major Moves. What made this initiative special however was not just that the State of Indiana was able to pay off decades old debts with the proceeds from this agreement, including the bonds for the toll road; it also meant that we were better able to navigate the impact of the global economic downturn of 20008-09. The massive infrastructure undertaking put so many Hoosiers to work while the rest of the country, and the world for that matter, stood at a standstill. The funds we received from the deal were also able to go further since the cost of materials were lower as a result of the global economic downturn.
Indiana was also able to start and/or complete significant projects that were previously deemed pipe dreams. These projects were perpetually promised by leaders, election cycle after election cycle, with no path or plan on how to ever fund them.
The Major Moves case study authored by Neil Pickett shares that major infrastructure accomplishments of Major Moves include but are not limited to:
The I-69 to Evansville, the upgrading of US-31 to a limited access highway, the upgrading of US-24 highway aka the Fort to Port - which connects major highways across Indiana to Ohio.
The State of Indiana’s Department of Transportation website further lays out additional infrastructure accomplishments which encompass:
● 87 roadways completed and opened to traffic
● 480 new centerline miles completed – 3.4 percent of the state’s inventory
● 60 new or reconstructed interchanges completed
● 6,300 centerline miles of roadway preserved – 49 percent of the state’s inventory
● 1,400 bridges rehabilitated or replaced– 25 percent of the state’s inventory
● A modernized Indiana Toll Road with automated tolling and regular road repairs
In the grandeur of the infrastructural accomplishments of the deal, the peripheral, and in my opinion more impactful tentacles of Major Moves often get overshadowed. I am of the belief that the direct economic initiatives that Major Moves facilitated will prove to be exponentially impactful as the years go by.
To elaborate, a number of communities and statewide programs (outside of infrastructure) benefited directly as a result of Major Moves. “The Region” of Northwest Indiana for example, home of Lake County which I represent as an MDLF Fellow, benefited through a $120M fund, set aside to create the Regional Development Authority (RDA). This entity was intended to facilitate collaboration between the communities of Northwest Indiana in regards to economic development. Additional funds were earmarked to assist minority and disadvantaged youth of The Region.
Present day, while the advent of the RDA might not be recognized often, along with many other similar initiatives that were born out of Major Moves, the works of these entities cannot be overlooked. For example, one of the most recent undertakings of the RDA was the commissioning of a feasibility study for a convention center for “The Region”. An excerpt from a news release of the RDA’s initiative reads: “Consistently finding and supporting projects that support economic growth through the Region, the Northwest Indiana (NWI) Regional Development Authority (RDA) recently commissioned a feasibility study for a potential Lake County convention center.”
Once this convention center is started, and then completed, hotels, shopping, travel, restaurants, recreation, and other support mechanisms will follow; thereby multiplying its economic impact. All thanks to Major Moves.
In closing, Major Moves has proven to be one of the most impactful and far-reaching pieces of Public Policy in our state’s history. Accomplishing so much without raising a single cent in taxes, or incurring an ounce of debt, while giving up not much more than daily managerial duties of our toll road over a 75-year period. However, there is still a small pocket of society who will continually express dissatisfaction with this deal, regardless of its inarguable positive transformative effect. Just like in my native country, however, the dissatisfactions of innovation are often rooted in romanticized nostalgia of ownership. This Case Study reminds me and my peers that principles remain constant and we must be grounded in economic theory and pragmatic, rational approaches to our state’s next Major Move.
MDLF Class VII Fellows in Kokomo, IN for their Major Moves Case Study Class Day.