96.5 F
San Fernando
Thursday, Mar 28, 2024

Tolls That Can Pay Dividends

Aging highways need to be repaired and expanded or Southern California’s economy will suffer. The Obama administration’s unexpected proposal to lift the ban on tolling interstates to pay for their reconstruction has electrified many state departments of transportation, like Caltrans. The cost of rebuilding all existing interstates as they wear out over the next 20 years has been estimated at $1 trillion, for which no current funding source exists. Urban interstates in the Valley and other metro areas of California need $168 billion of reconstruction and expansion. California already has the highest state gas tax in the country and Congress isn’t going to raise federal fuel tax rates any time soon, so interstate tolling is the only realistic new funding source for reconstructing and modernizing California’s aging but vitally important interstate highways, such as the San Bernardino (10) and San Diego (405) freeways. But will Congress go along with this proposal?  Two years ago a bipartisan tolling-flexibility amendment to the Senate transportation reauthorization bill was withdrawn at the last minute due to intense lobbying from the trucking industry. Given past history, the truckers are rightly concerned that tolling flexibility could mean turning the interstates into “cash cows” to bail out state transportation budgets. Previous proposals for interstate tolling in Arkansas, Pennsylvania and Wyoming gave credence to trucking’s characterization of toll-financed reconstruction as “erecting toll booths on the interstates.” That wording implies charging a lot more to use the same unimproved highways, while also counting on uninformed people to assume that “tolling” means old-fashioned “toll booths” instead of today’s high-speed all-electronic tolling via FasTrak transponders. What might be able to pass Congress is a bill giving highway users a genuine value proposition, what I call value-added tolling. Briefly, that means charging tolls only to reconstruct and modernize aging interstates, and beginning the tolling only after the rebuilt highway is ready to accept traffic (which means the project must be financed, just like a brand new toll road). Ideally it would also mean eliminating the concern about “double taxation” by granting fuel-tax rebates for miles driven on the newly tolled sections. Massachusetts already operates such a rebate program for users of the Massachusetts Turnpike, but it’s paper-based and cumbersome. With all-electronic tolling, a rebate program is a simple software application. The toll operator knows the make and model of a customer’s vehicle and the number of miles driven on the tolled interstate. A table gives the fuel-economy rating of that vehicle, which produces the number of gallons consumed for that trip and hence the fuel tax paid. Periodically, that file is sent to Caltrans or to the DMV listing the rebate amounts owed to each customer. For simplicity, the annual total could be deducted from the motorist’s annual vehicle registration fee. My greatest fear during this debate about rebuilding aging highways is that state departments of transportation, including Caltrans, may inadvertently play into the truckers’ hands by pushing for unlimited interstate tolling as the answer to all of their budget problems. Pennsylvania did this in 2007, saddling the Pennsylvania Turnpike with a mandate to provide $450 million per year for other highway and transit projects statewide. That measure has led to a huge increase in turnpike debt and an endless stream of toll increases. Ultimately for Caltrans, the debate about using tolls to rebuild highways comes down to this: In exchange for having new revenues to help cover the huge capital and operating costs of their rebuilt interstates, Caltrans would have to give up a small portion of its overall fuel-tax revenues. In the Reason Foundation Interstate 2.0 study, we estimated that most states could toll-finance the reconstruction and selective widening of their rural interstates for an automobile toll of 3.5 cents per mile, adjusted for inflation. The average state fuel tax for cars works out to 1.25 cents per mile. So if the state had to rebate its 1.25 cents a mile in fuel tax to those paying 3.5 cents per mile on the tolled interstate, it would still be ahead by 2.25 cents per mile compared with the status quo. And the rebates would only apply to those driving on the newly rebuilt tolled interstates, not to all the other miles people drive. It’s clear that the interstates need to be rebuilt; many are at the end of their lifespans. If Caltrans and states insist trying to toll interstates as a general transportation revenue source, however, they will likely end up with nothing given the justified opposition of truckers and other groups. But if they focus on using tolls as a customer-friendly way to rebuild and modernize the interstates, we may actually get a workable program and revenues to revitalize our most important transportation infrastructure. Robert W. Poole Jr. is director of transportation at the Reason Foundation in Los Angeles.

Featured Articles

Related Articles