INDIANAPOLIS - The Interstate 69 extension will not be one of the highway construction projects delayed because of smaller than expected investment income in the Major Moves program, an Indiana Department of Transportation official said Wednesday.
Income from investment of Major Moves funds is $220 million less than projected two years ago. Originally expected to generate 6.25 percent interest by the end of the current fiscal year, the rate is expected to be about 4.5 percent because of the worsening economy, INDOT commissioner Karl Browning told legislators this week.
"It has certainly come in lower than what they were anticipating," State Treasurer Richard Mourdock said Wednesday. "The market was much lower on interest rates than it was previously."
INDOT's total shortfall is an estimated $416 million, including $196 million less in revenue from gasoline taxes, than had been projected, according to The Associated Press.
"People are driving less," Browning told legislators.
As a result, INDOT said some of its scheduled road projects might have to be delayed a few years.
INDOT has not decided what other projects to delay, but the ongoing Interstate 69 construction project in Southwestern Indiana is not one of them, INDOT spokeswoman Cher Goodwin said Wednesday.
"We have been told that this funding shortfall will not impact the I-69 corridor that has been identified as part of Major Moves," Goodwin said. "It is still secure and not affected by the issues of funding."
Construction of an initial segment from Interstate 64 north to State Road 68 in Gibson County began in July. Construction of the next segment, north of State Road 68 and including Pigeon Creek bridges, is scheduled to start in 2009.
Under a Daniels administration program called Major Moves, the state in 2006 leased the northern Indiana toll road to a foreign consortium in exchange for a $3.85 billion lease payment.
Of that, Mourdock said, about $2.6 billion in lease proceeds specifically went to the Major Moves construction fund, which pays for highway and bridge projects over 10 years. Among those is the section of I-69 construction from Evansville north to the Crane warfare center, estimated at $700 million.
Goodwin said INDOT planners still are examining what other road projects might have to be deferred and don't have a list yet. The I-69 corridor remains one of the highway projects INDOT is including in its proposed budget to the Legislature for the next two-year budget cycle, she said.
Mourdock, an Evansville native and former Vanderburgh County commissioner, became state treasurer in February 2007, after the Major Moves construction fund and the related Next Generation Highway fund already were invested. Through June 30 of this year, total interest earnings were $358 million, he said.
The state treasurer's office reviews the Major Moves portfolio quarterly and judges the performance of 22 investment management firms that handle the funds, reallocating the dollars as needed, Mourdock said. By law, none of the funds is invested in stock.
"The total risk portfolio that we can invest in is far more conservative than a person's typical retirement plan," he said.
The new Congress and incoming administration of President-elect Barack Obama have promised an economic stimulus package that would include lump-sum payments to states to invest in needed infrastructure projects.
The amount of the windfall Indiana might receive is unknown, but INDOT could use it to close the $416 million shortfall caused by the lower than expected investment income and gas tax revenue. "If we don't do anything else, we could fill that hole," Browning told legislators.
The state's new revenue forecast is due today.
The Associated Press contributed to this report.