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'Cash-Cowification' and the Future of U.S. Tolling

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At the annual meeting of the International Bridge, Tunnel, & Turnpike Association (IBTTA) in Austin last month, Ed Regan of CDM Smith gave a dazzling presentation on the potential future of tolling in the United States. Scanning the country and extrapolating recent trends, he predicted a bright future for networks of express toll lanes in urban areas and some new toll roads. But by far the greatest potential was reconstruction and modernization of the Interstate highway system, via toll finance. My presentation followed Ed’s, and stressed that large-scale Interstate tolling will only come about if it can be done in a manner that is truly customer-friendly. Among other things, that would mean jettisoning the idea that tolled highways should be cash cows for a whole array of other transportation funding needs.

Unfortunately, treating existing toll roads as cash cows—while hardly ubiquitous—serves as a huge stop sign for the trucking industry and other highway user groups when they hear proposals for Interstate toll financing. And who can blame them? For example, reported in March that the Atlantic City Council had made a formal request to the toll agency that runs the Atlantic City Expressway to double the toll at a nearby toll booth and “dedicate the new revenue to the city’s use” as an ongoing revenue stream. One of the highest-profile examples in recent years was the Pennsylvania legislature’s enactment of Act 44 in 2007, under which the Pennsylvania Turnpike is required to generate an extra $450 million a year to be turned over to PennDOT for statewide highway and transit projects. That has forced the Turnpike to increase its debt level to $10 billion and increase toll rates every year since then. That $450 million a year is a tax on Turnpike users, not a toll, and highway users are right to object to it as such.

And then there is Virginia. To pay for the $5.7 billion extension of the Washington Metro heavy rail system to Tyson’s Corner and Dulles Airport, the legislature transferred the Dulles Toll Road from Virginia DOT to the Metropolitan Washington Airports Authority, which they put in charge of developing the new line. The explicit purpose was to milk Toll Road customers for $2.8 billion of the project’s cost. As in Pennsylvania, this change is causing annual toll rate increases that are de-facto taxes on the hapless toll-payers, and in coming years are projected to increase so high as to cause significant traffic diversion to parallel roadways. Yet former Transportation Secretary Ray LaHood in 2012 lauded this scheme as “a model for the country.”

There are a few signs of rethinking these cash cow policies. This year, the Pennsylvania legislature voted to phase out Act 44; instead of continuing to 2057, it will sunset in 2022, after which the $450 million tax on Turnpike customers will cease. And legislators in both New Jersey and Pennsylvania are working to prohibit the bi-state Delaware River Port Authority from diverting any more toll revenue to “economic development” projects such as concert halls, museums, and stadiums, on which DRPA has spent $500 million over the past 14 years. There is a comparable backlash going on over the politically selected “economic development” projects of the Port Authority of New York & New Jersey, all funded by diverted toll revenues.

I’m convinced, as I told the IBTTA audience, that we will only get to yes on toll-financed Interstate reconstruction and modernization if the new tolls are structured as pure user fees, with no revenues spent on anything other than improving and maintaining a participating state’s Interstates.

(This article first ran in Surface Transportation Innovations in October 2014)

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