Privatize the South Shore Line?

The state should consider selling off or leasing out the South Shore Line, advisers have told Republican Gov. Mitch Daniels.

And the state already has begun to explore privatization of the South Bend-to-Chicago commuter railroad, the South Shore's top executive told The Times on Tuesday.

"We've had a very preliminary conversation (about a month ago) with (state Transportation Commissioner) Tom Sharp," said Gerald Hanas, general manager of the Northern Indiana Commuter Transportation District -- the state entity that owns and operates the South Shore Line.

"I think he wanted us to kind of just do a general scoping to see if there's anything similar to the toll road that we could do -- in terms of leveraging a long-term lease," Hanas said. "We certainly are looking at it. There are certain models in Europe where certain parts of railroad have been privatized, but, in all cases, we find that there's still a significant public involvement in all the railroad, whether they be commuter or national railroads."

Hanas says he plans to report back to Sharp. But the Indiana Department of Transportation denies any talk of selling or leasing the South Shore Line.

"A privatization conversation never took place," said INDOT spokesman Gary Abell. "Their discussion dealt with trying to find more federal funds to purchase additional passenger cars."

INDOT established an office to handle privatization projects last December. An extension of Interstate 69 from Indianapolis to Evansville is the chief concern, though Daniels has said the state will pursue any opportunity.

While INDOT denies that discussions already have taken place, the South Shore Line was identified as a candidate for sale or lease by the Government Efficiency Commission, a group of public-sector advisors that Daniels empaneled last year. The commission was charged with evaluating the dozens of boards and commissions that populate state government.

"We question if the Northern Indiana Commuter Transportation District is a candidate for sale or lease," the commission said in its report, which The Times obtained through a public records request.

The prospect of South Shore privatization comes barely a month before an election in which some Republican candidates are distancing themselves from Daniels' decision to lease the Indiana Toll Road to a foreign consortium. Democrats opposed the 75-year, $3.8-billion deal, and they were livid when told that the South Shore Line might be on the auction block.

"I can't imagine he'd do that, unless he wants to ensure that every Democrat up here gets elected," said state Rep. Duane Cheney, D-Portage. "I'm just stunned. I hadn't heard any of this, and I'm on the (Legislature's) transportation study committee. We're supposed to be in the loop on these things, and I just can't believe (Daniels) has the gall to put this out there."

It appears that the Daniels administration would need legislative approval to sell or lease the South Shore Line. The governor's office asked for the power to privatize ports, airports and rail facilities in January, but legislators limited his authority to the toll road and I-69 projects.

Hanas said the South Shore Line could be an improbable privatization candidate because it doesn't break even on ticket sales, relying on the state to fund about a third of its $30 million annual operating budget. Plus, he said, the federal government has frowned on such transactions.

Jane Jankowski, the governor's press secretary, was asked about the South Shore suggestion but offered only a general statement on the findings the Government Efficiency Commission delivered on Monday.

"Gov. Daniels has given the report an initial read to get a feel for what it says. As you know, the governor believes the state has far too many boards and commissions," she said. "The governor and staff will take a closer look at the report in the days and weeks ahead."