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Reason Foundation

Public Works Financing

An Interstate Highway System for the 21st Century

Tolling, public-private partnerships in the equation

Robert Poole
December 1, 2005

The New Year will bring many celebrations of the 50th anniversary of the Interstate highway system. As a major contributor to both personal and freight mobility, it's well worth celebrating. But it's also worth having a serious national debate on what we should do next.

I share the growing concern that the federal funding system created to build the Interstates has outlived its usefulness. Thoughtful commentators like Tom Downs and Ken Orski have argued that once the program achieved its original objective of building the system, it has "lost its unifying national purpose" and "become a vast program of local public works" enmeshed in pork-barrel highway spending and diversion of large fractions of highway users' funds to non-highway purposes. There is also growing evidence from econometric studies that the rate of return on new capital investment in the highway system has steadily declined over the past 40 years, and has now reached the single-digit range.

That last point is ironic, at a time when the nation's highway system is woefully short of capacity, especially in urban areas. A huge imbalance of supply with demand is responsible for the $63 billion per year that individual motorists lose in wasted time and fuel, just in urban areas. And that number, from the Texas Transportation Institute, does not include the cost to goods movement (either local or long-haul) or to regional economies and economic productivity. Evidently, the heavily politicized status-quo funding system is directing the scores of billions in highway capital spending into low-productivity uses.

That, broadly speaking, is why I'm so enthusiastic about the role that tolling and public-private partnerships can play in 21st-century highways. Clearly, if we can carve out a large role for new highway investment that's directed by return-on-investment rather than by politics, Americans' mobility will benefit.

But how should these concepts be applied to the Interstate system, specifically? One position that's been advanced by conservatives is that the entire federal program did its original job and has been so transformed into public works and social engineering that the whole thing should be scrapped, with all highway responsibilities devolved to the states (which, after all, are the owners of all the highways in question).

While I've been generally in favor of devolution, when it comes to the Interstate system I think the case for continued federal involvement is stronger than most devolutionists will admit—for two reasons.

First, contrary to just about all the rhetoric we'll hear in anniversary celebrations, the Interstate system is not "finished." What is completed is a map of routes created in the early 1950s, based on what America looked like then. While those routes have certainly shaped travel and goods-movement patterns, they have left unmet a great many needs for direct, high-speed routes to and from places that were hick towns then but which are major metro areas today. For example, there is no Interstate route between Las Vegas and Phoenix. The large growth of NAFTA trade has created the need for more Interstate-quality north-south routes. And the huge growth in international trade means our global seaports and major cargo hubs need better truck access, on a scale never imagined at the time the Interstate system was planned.

Second, the Interstate system is as integral a part of interstate commerce as anything can be. And facilitating interstate commerce is a power the Constitution gives to the federal government. It is not just California that benefits from the massive trade flows through the ports of Los Angeles and Long Beach. The entire country does, and I have no problem with the feds making sure that this commerce can continue to flow, thanks to adequate infrastructure capacity.

This country faces an enormous challenge in coming decades, with truck vehicle miles traveled projected to increase 70% between 2000 and 2020—just 15 years from now. We are clearly going to need a lot more highway capacity to handle this increase, and it would also be hugely beneficial if the system could handle bigger truck payloads so that the growing volume of freight didn't need as many total vehicles to handle it. But it's also glaringly obvious that current fuel tax programs can't begin to provide the hundreds of billions of dollars that will be needed to build this new capacity.

The trucking industry rightly fears any moves to "erect toll booths on the Interstates," i.e., turning the existing lanes into a cash cow (at best) for other highways or (at worst) for general governmental purposes. But there are real opportunities for win-win solutions: using toll finance and public-private partnerships to add new truck-only capacity to key portions of the Interstate system, and to build entirely new links in the system. The trucking industry is interested in value-added tolling opportunities such as congestion-beating truck-only toll lanes to bypass Atlanta and triple-trailer toll truckways between the LA ports and the inland distribution centers. There are also intriguing possibilities for long-haul toll truckways involving multiple states; indeed, the truly promising corridors are nearly all multi-state.

For all these reasons, a continued federal role in a 21st-century Interstate system will be essential. But so will a major role for tolling and public-private partnerships.

Robert W. Poole Jr. is director of transportation studies and founder of the Reason Foundation.


Robert Poole is Searle Freedom Trust Transportation Fellow and Director of Transportation Policy


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