INDIANAPOLIS | The Illiana Expressway failed to make the final cut for the federal Corridors of the Future program, a setback that chokes off both instant planning cash and long-term financial perks for the long-stalled Northwest Indiana highway.

The U.S. Department of Transportation has pledged $66 million in planning funds for a half-dozen multistate projects, including a pair that would run through Indiana. But the Illiana, which would connect Interstate 57 in Illinois with Interstate 65 in Lake County, was left out in the cold.

"We were disappointed, obviously," said John Swanson, executive director of the Northwestern Indiana Regional Planning Commission. "We would have hoped that the significance of the increase in freight traffic on our road systems would have been reflected in that final decision."

The Corridors of the Future program aims to accelerate projects designed to ease congestion in more than one state and take advantage of private financing, typically through long-term lease agreements linked to future toll revenues.

The Illiana was among 14 corridors finalists announced earlier this year. But its ultimate exclusion from the program means both a loss of federal planning dollars and a missed opportunity to secure federal approval for tax-free bonds, a powerful lure for private investors.

"I don't think it was a disappointment," said Andy Dietrick, a spokesman for the Indiana Department of Transportation. "Indiana was involved with two other Corridors of the Future. And you can't always get everything, so we're thrilled to have the funding for the I-70 project."

The Interstate 70 initiative, which proposes installing dedicated commercial truck lanes through Illinois, Indiana, Missouri and Ohio, will receive $5 million of the federal planning funds announced last week. The U.S. DOT also allocated $800,000 to study extending Interstate 69 from Indianapolis to Mexico.

"Those are multistate corridors, which I think attributes to why they were chosen over (the Illiana)," Swanson said. "Those are really national freight corridors and ours was considered more of a bypass around the Chicago metropolitan area."

Republican Gov. Mitch Daniels this spring proposed building the Illiana Expressway as a privately financed tollway stretching from I-57 in Illinois to Interstate 94 in LaPorte County. But he backed down amid a torrent of public opposition centered in Porter County.

Dietrick said the Corridors of the Future setback is not a fatal blow.

"This does not make the Illiana go away at all," he said.