The Sale Goes On

Indiana's governor still likes privatization--even if the voters don't.
by | February 2007

Mitch Daniels didn't have what you'd call a great year in 2006. As Indiana's first Republican governor since the 1980s, he took most of the blame in November when the GOP lost control of the state House of Representatives and three congressional seats. Those results traced in large part to two unpopular Daniels policies--pushing daylight savings time and highway privatization.

But you have to give Daniels credit for sticking to his principles. Since the election, he's pushed his privatization crusade as hard as ever. Undaunted by the derision that greeted his deal to lease a northern Indiana tollway to a foreign consortium, he's not only promoting two new private toll roads but also planning to privatize the state lottery and day-to-day management of the welfare caseload.

"I think he basically wants to say, 'See, you didn't knock me over,'"says Pat Bauer, the new Democratic House speaker. Bauer calls Daniels' ideas "terrible," and other Democrats have sponsored legislation that would create tougher oversight for contracts or slow the privatization process in general.

But even Bauer concedes that Daniels is sincere in his belief that certain things--including road management--can simply be done better by the private sector. The governor boasts of having converted a money-losing toll road into a $3.85 billion windfall whose proceeds will fully fund statewide road construction for the next decade. "In our administration, profit is not a bad word," says Charles Schalliol, Daniels' budget director. "We ran one toll road, and we ran it badly." The private companies that have taken it over, he says, have implemented improvements based on their experience elsewhere.

While standing firm on the value of privatization, Daniels is showing some sensitivity on the question of oversight. Learning lessons from places such as Florida and Texas, where state governments eager to parcel out functions to private companies failed to ride herd on them to make sure they performed, Daniels has brought people into his administration from the private sector with significant contract- management experience. The toll-road agreement came with 285 pages of instructions, covering minutiae such as how long the private operators could let roadkill sit on the road (answer: eight hours).

It's too soon to tell whether Daniels will succeed in preserving the public interest while turning to the private sector for help. But the fact that he keeps experimenting in the face of political opposition is worth applauding, even if it wins little love for him at home.

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