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Public Works Financing

Reconstructing the Interstates

Why the best way forward for Interstate reconstruction is to remove the caps on the existing Interstate tolling program while maintaining restrictions on the uses of toll revenues.

Robert Poole
February 7, 2012

In the debates over reauthorizing the federal surface transportation program, the mantra we hear from public officials of both parties is "It's fine to toll new capacity, but we won't support tolling existing capacity." This sharp dichotomy blurs over a third category that is a vastly greater opportunity for tolling and public private partnerships (PPPs): reconstruction of aging and obsolescent highways, especially the Interstate system.

Highways don't last forever (which is one of the beliefs underlying the "we've already paid for it" rationale against tolling and/or fuel tax increases). Highways built to typical U.S. standards have a design life of about 50 years-and often less, if states have not done rigorous and timely preventive maintenance. With the first-built Interstates now exceeding 50 years, an enormous backlog of reconstruction is starting to appear. Detailed cost estimates don't exist, but plausible ballpark numbers are in the $2-3 trillion range.

Using toll finance to completely rebuild a worn-out Interstate is not "tolling existing capacity." In addition to simply rebuilding what was there before, such projects will involve upgrading from 1950s standards to today's design and safety standards, plus current environmental mitigations. In many cases, there is also the need to add capacity, especially on (a) urban Interstates, and (b) truck-heavy long-distance Interstates.

A good example of the latter is the proposed reconstruction of 800 miles of I-70, from Kansas City on the west to the eastern border of Ohio. A several-year feasibility study, funded by United States Department of Transportation (U.S. DOT) via a Corridors of the Future grant, selected as the preferred alternative a new I-70 configuration that includes adding two dedicated truck lanes in each direction, in addition to reconstructing the existing general-purpose lanes. The study also concluded that, realistically, the only way this mega-project could be paid for is via tolling, most likely of all lanes. And they also had the good sense to realize that a tolled megaproject like this is an excellent candidate for a long-term toll concession. (www.i70dtl.org)

Under current federal law, this ambitious project cannot be done. The tiny federal pilot program for toll-financed Interstate reconstruction allows only three states to do such a project. Virginia and Missouri already hold two of the three slots, and a number of states (Arizona, North Carolina, and Rhode Island, so far) are vying for the third one. So of the four I-70 states, only Missouri has the legal authority to proceed, even though all four state DOTs (including Illinois, Indiana, and Ohio) want to move forward.

Hence, there is an urgent need to liberalize existing federal law so that more such projects can be planned with a realistic chance of going forward. But so far, neither the Senate nor the House reauthorization bills addresses this issue. The Senate Environmental and Public Works (EPW) draft doesn't mention tolling at all, though it might leave the existing toll pilot programs unchanged. In the House, Transportation and Infrastructure Chairman Mica has repeated "tolls for new capacity, not existing capacity" on many occasions. And like his Senate EPW counterparts, he wants to streamline the myriad transportation programs to a much smaller number, which might wipe out the small tolling and pricing pilot programs.

All is not lost, however. There's a bipartisan move afoot in the Senate drafting an amendment that would retain the pilot programs while removing the caps on the numbers of states and projects. That would be a home run. Groups like the recently formed Tolling Coalition (including many state affiliates of The American Road and Transportation Builders Association and some state DOT and toll agencies) are hoping to interest Chairman Mica in something similar. If such amendments get into one or both bills, would they survive the legislative process?

That may depend critically on what the toll revenue can be used for. The current Interstate construction and reconstruction toll pilot programs restrict the revenue to being used for the construction or reconstruction, operation, and maintenance of the toll-financed Interstate. Period. That makes the toll a pure user fee. And those using the reconstructed, modernized Interstate would be paying for real value that they would otherwise not get (since there is close to zero chance of large increases in federal or state fuel taxes for Interstate reconstruction). That provision has been battle-tested-twice-in Pennsylvania. That state applied under the reconstruction pilot program to toll I-80, but planned to use the majority of the revenue as a statewide transportation funding source-transit, 2-lane highways, sidewalks, etc. The U.S. DOT, citing the very clear wording approved by Congress, twice turned them down.

I think it's critically important that any liberalization of Interstate tolling retain that restriction on the use of the toll revenues. The trucking industry has fought every effort to toll "existing" (i.e., unimproved) capacity, describing it as "putting up toll booths on the Interstate" and repeating the "we've already paid for it" mantra. They will likely oppose expanding the pilot program, as well, just as they are now supporting a bill by Sen. Frank Lautenberg (D-NJ) to impose federal regulation on toll bridges and tunnels (in response to the Port Authority of New York & New Jersey's recent huge toll rate increase, in part to pay for reconstructing its World Trade Center).

Simply removing the current federal ban on Interstate tolling would likely face all-out opposition from highway user groups-not just truckers but very possibly AAA, as well. They are right to be concerned about tolls being turned into taxes, just as federal fuel taxes have evolved into an all-purpose funding source for just about anything that can be remotely connected to "transportation." In the great majority of cases nationwide, tolls are a true user fee, like utility bills. Americans understand utility bills, whether for electricity, gas, cable, or mobile phones. "Value-added" Interstate tolling-where you are only asked to pay a toll if you get a much better highway in exchange-is understandable and supportable, even in today's generally anti-tax climate.

That's why the best way forward for Interstate reconstruction is to remove the caps on the existing Interstate tolling program, while retaining the wise restrictions on uses of the toll revenues.

Robert Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation.


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


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