News and Tribune

March 26, 2013

Could Indiana cash nix tolls?

Councilman pitches plan for Indiana to pay $560M of Kentucky’s bridges funding gap

By BRADEN LAMMERS
braden.lammers@newsandtribune.com

CLARKSVILLE — To keep tolls off of the downtown portion of the Ohio River Bridges Project, a business owner and Clarksville town councilman is proposing that Indiana pay for Kentucky’s gap in funding construction.

While a formal written plan has not been proposed, Paul Fetter, a leader of the No 2 Bridge Tolls group, is basing his idea on an economic impact study released by the Indiana Finance Authority in April that cited a $78 billion positive impact will result from the construction of the bridges project. He says Indiana should use a portion of the positive impact expected to pay for a $560 million shortfall on the Interstate 65 corridor — Kentucky’s portion of the bridges project.

This would mitigate a negative effect on some Jeffersonville and Clarksville businesses that would come from tolling, Fetter said.

While the study cited a $78 billion positive impact on the region overall from the construction of two new bridges and the reworking of Spaghetti Junction in Louisville, it did acknowledge that tolls are expected to negatively impact businesses along the Interstate 65 corridor by $5.58 billion over the same 30-year time period.

Indiana is responsible for financing and constructing the east-end portion of the bridges project, which includes building a new east-end bridge and its approaches, which will connect Interstate 265 in Utica to Prospect, Ky. Kentucky is responsible for financing and constructing a new downtown I-65 bridge, converting the Kennedy Bridge into a southbound span and reconstructing Spaghetti Junction.

“If the project is as good, and as great as it seems, why wouldn’t Indiana pay $560 million to avoid the negative impact [of tolls]?” Fetter asked. “Attracting Kentucky consumer dollars has always been an issue for Southern Indiana. It’s like trying to get them to go out of town.”

Fetter — who is also the owner of Clark County Auto Auction on 10th Street in Jeffersonville — along with several downtown Jeffersonville and Clarksville business owners have repeatedly said that tolling will substantially affect their businesses. Input from 29 businesses through interviews and 81 respondents through surveys in the affected area were collected as input for the study. Fetter has previously said his business will face an additional $100,000 annually in transportation costs with tolls and will face a $7 million to $10 million reduction in sales.

But according to the study, “the adverse impact of tolling can be seen as the ‘price paid’ for the positive impacts of the project.”

When asked if he thought Hoosiers would be willing to pay a $560 million funding gap on Kentucky’s portion of the project, Fetter said they already are. He said Indiana residents will pay for a bulk of the project through tolls, citing a four-to-one usage rate of the bridges by Indiana residents.

“It’s got the potential to save billions in economic impact for $560 million,” he added.

However, to-date, there has been no word from the state on the proposal offered.

Sen. Ron Grooms, R-Jeffersonville, was among several local representatives that recently met with Fetter and said the plan has not been ruled out, but it is one that will not be addressed during this two-year budget cycle.

“It is a concept I consider worthy of thought,” he said. “It’s certainly an option.”

With the opening of the bridges project not set until 2016, Grooms said it will not be something addressed in preparing the state’s budget. 

Another issue for the Indiana Department of Transportation is covering other transportation costs. According to a report from the Evansville Courier and Press, the sales tax collected on gasoline in Indiana is worth more than $500 million per year, but the state spends about $14.5 billion annually on projects.

Grooms said the revenues for INDOT have continually dropped and localities are clamoring for that money to complete basic paving projects. He added that the rate for the gas tax has remained the same for the last eight years, while project costs have continued to increase.

However, Fetter said any means of avoiding tolls on area bridges must be explored.

“Until they actually open the bridge, anything we can do to mitigate the rate, we have to try,” he said.