Report: Inflation may force changes to Major Moves

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Indianapolis -  Rising road construction costs may force the state to make changes to the governor's Major Moves road-construction plan that was funded by the $3.8 billion lease of the Indiana Toll Road, a published report Monday said.

Sen. Mike Delph, R-Carmel, told Eyewitness News partner The Indianapolis Star he was "cautiously optimistic" that the Indiana Department of Transportation would be able to pay for all of Major Moves.

However, rising costs could force lawmakers to make changes, said Delph, co-sponsor of a constitutional amendment that would bar using a lease-funded road improvement trust fund for other projects.

Gov. Mitch Daniels said toll road lease money would pay for more than 400 major new road or maintenance projects in Major Moves, including the extension of Interstate 69 from Indianapolis to Evansville, two new Ohio River bridges near Louisville, and the completion of the Hoosier Heartland Highway in north central Indiana.

However, rising fuel and commodity prices have significantly increased the cost of steel, bricks and asphalt, the Star reported, citing the Associated General Contractors of America. Road construction costs have risen 11 to 14 percent annually in each of the past three years, while Major Moves assumed just a 3.5 percent annual inflation rate after an initial bump of 11 percent during its first year.

The fast-rising costs could force an overhaul of the plan, the Star said.

State transportation officials say they believe construction costs, despite the recent rise in prices, will balance out during the 10-year life of the plan. For instance, costs remained relatively flat between 2001 and 2003.

"You're going to have anomalies," said INDOT spokesman Gary Abell.

An Australian-Spanish consortium, Macquarie-Cintra, gave Indiana a one-time payment of $3.8 billion in July to take over the 157-mile toll road in northern Indiana for 75 years. More than $500 million from the lease payment went toward paying existing toll road debt, financial fees, grants to toll road counties, and local road and street projects statewide.

Lawmakers earmarked an additional $500 million for the trust fund to pay for future road projects.

The state treasurer's office invested the remaining money, including about $2.1 billion with private money managers, the Star reported. The administration anticipates an annual return of 5.25 percent on the investments and has budgeted that money into Major Moves.

So far, the investments collectively are earning a 5.6 percent return, the Star reported.

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