Interstate Tolling: New Support—and Old Misconceptions

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After hinting at it for several months, the White House made it clear last month: the Administration wants states to have the option of using toll financing to modernize their aging Interstate highways. Having a toll revenue stream would also make it feasible for states to enter into long-term P3 concessions to carry out these mega-projects, which should include redesigning and replacing upwards of 100 interchange bottlenecks that snarl traffic in major metro areas.

There was predictable opposition from some in Congress. The ranking member of the House Transportation & Infrastructure Committee, Rep. Peter DeFazio (D, OR) was fairly typical, saying “The American people have already paid for the Interstate system through their gas taxes, and they’re continuing to pay for its upkeep through gas and diesel taxes.” Sam Graves, (R, MO) echoed DeFazio’s point, saying “I’m not a big fan of tolling. I don’t like paying for a road twice.” Their point is true but irrelevant. What we need today is to replace the aging and often obsolete first-generation Interstate system with a second-generation version, at a cost upwards of $1 trillion over the next several decades. No conceivable increase in our declining fuel tax revenue is capable of doing that.

The good news is that there is growing support for Interstate tolling flexibility in a number of states, among them Indiana, Wisconsin, Missouri, Connecticut, and even Oregon, Rep. DeFazio notwithstanding. Fairly detailed tolling studies have been carried out in recent years in Connecticut, Missouri, and Wisconsin, and the Indiana legislature this spring passed transportation legislation that includes authorizing their governor to apply for federal permission to do Interstate tolling, with a similar measure pending in Oregon. Both are also planning new studies of Interstate tolling’s potential.

But along with that growing interest is an array of misconceptions about what is either legal or politically viable. Much of the political discussion in Connecticut has been of the “cash cow” variety: how much revenue could be produced if tolls were slapped on existing Interstates (and quickly), with of course the idea that some of the revenues would be used for reconstruction and widening of those Interstates. That is neither legal nor politically wise.

Another bad idea that keeps popping up (most recently in Wisconsin) is “border tolling”—putting toll collection at the state line (only) so that those who pay would not be the state’s voters but only those from elsewhere (especially Illinois, with its plethora of toll roads). A 2013 assessment by the Congressional Research Service found that border tolling could well violate the commerce clause of the U.S. Constitution.

A third misconception is that Interstate tolls should be charged in addition to the existing state gasoline and diesel taxes. That’s what highway users face on existing toll roads, and it does mean “paying twice” for the same road. Both the toll and the gas tax are supposed to pay for the capital and operating cost of the highways in question, and since tolls must cover the full costs of the toll road, also charging gas tax on them changes that tax from a user fee to a pure tax on mobility.

In the 20th century, when toll roads meant cash collection, giving toll-payers rebates on their gas taxes would have been a cumbersome, paperwork nightmare. Today, with all-electronic tolling (AET), it’s a simple modification to the tolling software. The customer’s vehicle is identified by its license-plate image. Hence, the make and model is known, and so is its EPA mpg rating for highway driving. Also known, if the tolls are charged from on-ramp to off-ramp, is the number of tolled miles driven. Simple math provides the fuel-tax rebate for each trip, and that file can be given to the state Motor Vehicles department monthly or quarterly, listing the amount of rebate owed to each customer.

When state DOT people look askance at this idea, I ask them to remember the growing number of mileage-based user fee pilot projects under way around the country. A basic premise of every one of them is that the MBUF is a substitute for, not in addition to, the state fuel tax. So it should be with 21st-century tolling introduced as a true user fee for delivering and maintaining the needed Interstate 2.0.

There are even signs of hope from the trucking industry, which has long opposed any further expansion of tolling, largely on grounds of “double taxation” and the “cash-cowification” of many toll roads in the Northeast. At an April Senate committee hearing on highways and freight, the president of FedEx Freight, Michael Ducker, “emphasized the importance of funding an improved highway system, with sources to include an increased fuel tax, a vehicle miles traveled fee, and congestion pricing.” Per-mile tolls are vehicle miles traveled fees, and variable tolls are congestion pricing.

The latest annual tally of the cost to truckers of interchange bottlenecks on urban Interstates found that big-rigs that travel 100,000 miles per year incur an average increased operating cost of $22,676 each. At an average big-rig toll of 14 cents per mile, the toll cost of that 100,000 miles would be $14,000/year. If paying such tolls led to an Interstate 2.0 with modernized urban interchanges, isn’t that a value proposition the trucking industry should consider?

(This article first ran in the June 2017 issue of Surface Transportation Innovations)

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About Bob Poole

Bob Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation. Poole, an MIT-trained engineer, has advised the previous four presidential administrations on transportation and policy issues.
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