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Interstate Tolling Stirs Controversy

There is a growing interest in tolling as part of the solution to under-investment in America’s highway system. But getting to “yes” on using this powerful financing tool will depend on a far more carefully drafted policy than most advocates are now talking about.

Brookings Institution analysts Joseph Kane, Patrick Sabol, and Robert Puentes posted a useful piece on April 6th, “Tolls on the Rise as Highway Funding Dries Up.” They cited federal statistics showing that over the decade from 2003 to 2013, the miles of tolled U.S. highway increased by more than 15% to 5,400 miles. By comparison, total highway miles grew only 3.6% over that same period. They also reminded readers that for the second year in a row, the Obama Administration’s transportation proposal includes lifting the long-standing federal ban on tolling “existing” Interstates.

Over the past year or so there has been growing interest in Connecticut in bringing back tolls, which were used originally to build much of I-95 in that state (known as the Connecticut Turnpike when I lived there in the late 1960s). Gov. Dannel Malloy has talked about toll-financed widening of I-95, which also needs major reconstruction and bridge replacement. Legislators in that state still seem enamored of the idea of border tolls, hoping to make out-of-staters pay tolls while locals would drive for free—an idea that almost certainly violates the Interstate Commerce clause of the Constitution.

And just last month Rhode Island Gov. Gina Raimondo announced a plan to issue $700 million in bonds for bridge repairs, paid for by tolls charged only to trucks using bridges on I-95, I-195, and I-295, as well as several state highways. The plan is aimed at reconstructing or replacing 150 structurally deficient bridges and improving another 500. Also last month, two West Virginia state senators proposed “adding tolls” to the state’s 23 miles of I-81, to raise new revenue for the state’s ailing transportation infrastructure.

All these state proposals—besides not being legal under current federal law—face fierce opposition from the American Trucking Associations, whose long-standing position is to prevent the spread of tolling, on several grounds: that it costs too much to collect tolls compared with fuel taxes, that charging both tolls and fuel taxes on the same road amounts to paying twice, and that tolls are often used as cash cows by legislatures and state DOTs.

ATA is the primary force behind a coalition called the Alliance for Toll-Free Interstates, which has denounced the Administration’s Interstate tolling proposal, pointing out that, “The plan would also let states redirect toll revenue to completely unrelated projects, abusing public trust and exploiting highway drivers with a tax on Interstates to pay for trolleys, public transit, and unspecified environmental projects, all without solving the transportation funding problem.” ATA was also quick to oppose the Rhode Island proposal, in that case for singling out trucks as the only highway users required to pay tolls.

I’m sympathetic to the truckers’ arguments, despite being convinced that tolls as a pure user fee are far superior to fuel taxes for highway funding. It is almost certain that open-ended Interstate tolling, along the lines of the Administration proposal, will not pass muster with Congress. But that said, what might it take to gain the support of highway user groups such as AAA and ATA?

The challenge is to create a genuine value proposition, not merely for state DOTs and their transportation budgets but for the highway users expected to pay the bills. That could involve a number of provisions that take seriously those users’ concerns. For example:

Don’t ever “add tolls” to an existing highway simply as a means to capture revenue. Use tolls only to reconstruct an aging highway or bridge and properly maintain it thereafter.

Don’t start charging tolls until the replacement pavement or bridge is finished and ready to accept traffic.

Don’t play games by trying to make only some users pay tolls. All highway users benefit from the highway, so all should be paying for it.

Provide rebates of the fuel taxes paid by those using the newly tolled highway or bridge. (This was cumbersome to do in the era of cash tolling, but is simple to do with today’s all-electronic tolling.)

Use only all-electronic tolling, where the cost of collection via transponders can be less than 5% of the revenue generated, vastly below the 20-25% in the cash tolling era.

Guarantee that the toll revenues are used only for the capital and operating costs of the newly tolled highways (or set of highways within a state—e.g., all its long-distance Interstates).

Provisions such as these should be added to the existing three-state pilot program for reconstructing/replacing aging, worn-out Interstate highways. Other revisions should include increasing the number of states to at least 10, and adding a use-it-or-lose-it provision to prevent a state sitting on its slot without using it.

I’ll close by refuting a very common misconception. TheWall Street Journal‘s Capital Account columnist Greg Ip, in a May 21st column on infrastructure spending, matter-of-factly wrote, “The Interstate highway system, for example, only needs to be built once,” so infrastructure priorities can and should be elsewhere. Wrong! Originally built with a 50-year design life, the aging Interstates are wearing out, and nearly all will have to be replaced with modern pavement and bridges over the next two decades. The cost will be at least $1 trillion. And that is where toll financing offers a way out of an otherwise impossible funding dilemma.

(This article first ran in the June edition of Surface Transportation Innovations)

 

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