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Release: February 5, 2004 : Hoosier Environmental Council, Environmental
Law and Policy Center, Association of Monroe County Taxpayers, Marion
County Alliance of Neighborhood Associations, and Citizens for
Appropriate Rural Roads
Costs Clearly Outweigh Benefits
Project’s High Cost Threatens Road Projects Statewide
Five citizen groups
released a report today that shows the costs of the proposed new-terrain
I-69 outweigh the purported benefits of the nearly $2 billion project.
The report comes at a key time in the debate over the project as
lawmakers have expressed skepticism over funding the enormous cost of
The report corrects two
major flaws in INDOT’s cost-benefit analysis for I-69.
When corrected, the project’s costs would be $499 million more
than the purported benefits of the highway.
The report’s conclusions would translate to a negative
cost benefit ratio of 1:0.66, meaning that for every dollar spent on the
highway, only 66 cents would be returned in benefits.
INDOT had projected a positive cost-benefit ratio for the project
commissioned Smart Mobility, a highly respected transportation and
economic consulting firm, to review INDOT’s cost-benefit analysis,”
said John Moore, senior attorney for the Environmental Law and Policy
Center. “Smart Mobility
found at least two glaring flaws, and confirmed our suspicion that the
highway simply doesn’t pay for itself.”
Smart Mobility easily
identified two major weaknesses in INDOT’s user cost-benefit report.
The first flaw concerned the value of the project’s safety
benefits. Most of INDOT’s
asserted benefits in the cost-benefit analysis result from safety
however, INDOT assumed that accident rates
would remain constant from 1991 through 2036, a period of 45 years.
In fact, accident rates have fallen for over the past ten years due
to continuous safety improvements in vehicle and road design.
Smart Mobility more realistically assumed that, as in the past,
accident rates would continue to decline.
Since accident rate’s will drop in the future regardless of
whether I-69 is built, the safety benefit is much less than INDOT’s
"From the outset, the I-69 project has
been marked by fiscal irresponsibility, ignorance of diminishing returns,
and misallocation of scarce government investment opportunities,"
said Greg Travis, executive director of the Association of Monroe County
Taxpayers. "The smell of special interests grubbing down at the
public pork buffet is almost overwhelming and Hoosier taxpayers have had
Smart Mobility also
rejected INDOT’s insistence on using an arbitrary 4% “discount rate”
when calculating the project’s future costs and benefits.
The U.S. Office of Management and Budget recommends a 7% discount
rate for most federally-funded projects, as does the Federal Highway
Administration, and INDOT even used a 7% discount rate in its 1996 user
cost-benefit analysis. (A
discount rate reflects both the future value of money and the alternative
uses for the money.)
- garbage out,” said Pat Andrews, vice president of the Marion
County Alliance of Neighborhood Associations. “When one input
number is changed from a figure dictated by the feds and another
input number is a dozen years old, of course the result will be
wrong. How fortunate for INDOT it was wrong in favor of building
The groups also
presented cost information from INDOT’s long-range plan that shows that
the I-69 project threatens other planned highway expansion projects across
the state. The $1.9 billion
cost of I-69 dwarfs INDOT’s annual highway expansion budget of roughly
$200 million per year, as well as planned expansion projects in every
major metropolitan area of Indiana. Expansion
projects include new and widened highways.
pointed to an analysis by Senate Finance Chair Lawrence Borst that
indicated that in order to fund I-69, INDOT would have to forego all
expansion projects statewide for 14 years, or raise the gas tax by 5 cents
and dedicate the increase to I-69 for 14 years.
“Since it is
unlikely that INDOT will be allowed to stop projects across the state in
order to build I-69, the state would have to raise the gas tax to fund
this boondoggle,” said Tom Tokarski, president of Citizens for
Appropriate Rural Roads. “It
is time to stop this fiscal recklessness.”
mirrored a 1997 report by a then-Indiana University professor who is an
expert in cost-benefit analysis. That
report corrected flaws in INDOT’s 1996 cost-benefit analysis and found
that the project’s costs would exceed benefits by $115 million.
The only other cost-benefit analysis conducted by INDOT was in
1990, which found the highway would not be cost effective to build.
project has never passed a credible cost-benefit analysis,” said Andy
Knott, air and energy policy director for the Hoosier Environmental
Council. “It’s time for Gov. Kernan to stop fooling the public and
pull the plug on this boondoggle.”
Mobility report is available online at www.commonsensei69.org
(click on “reality check” under “Latest News”), or by sending an
e-mail to email@example.com. The
section correcting INDOT’s cost-benefit analysis starts on page 6 of the
click here to view report (pdf - Acrobat Reader will be required to view).
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