Commentary

Highways and Toll Roads: Which Are More Expensive and Better Maintained?

Over the next couple of weeks, my colleague Len Gilroy and I will take a look at some of the arguments against toll roads, especially those coming from conservatives and libertarians. Earlier this week, I examined whether toll roads are self-supporting or subsidized. Today, I want to delve into the claims that “toll roads are the most expensive type of road to build.”

It’s easy to see how someone could compare an ordinary four-lane state highway and a four-lane, limited-access toll road and show that the former cost less to build than the latter. But that would be comparing apples and oranges.

By definition, a toll road is a “limited-access” roadway. That means you can only get on and off at specially designated on-ramps and off-ramps. There are no cross-streets, traffic lights, or left-turn lanes. Like Interstates, toll roads are designed to provide a higher quality of service than ordinary highways. Their “limited access” design features permit faster travel and increased safety (no left turns, no red-light running, a central median barrier to prevent head-on collisions, etc.) So yes, in that sense limited-access highways do cost more to build than ordinary highways—but that’s true whether or not they are toll roads.

Then how about comparing a freeway and a toll road designed to the same limited-access standards? Foes of toll roads will point to elaborate toll plazas taking up costly real estate, staffed with salaried toll collectors. Those are clearly costs that a freeway does not have to bear. But that picture of toll roads is very 20th century. Today’s toll-collection technologies—windshield-mounted transponders and video tolling based on license-plate imaging—don’t require toll booths or toll plazas. Existing toll road systems are rapidly converting to “open road tolling” using these technologies. Within a decade, on-road cash toll collection will be a relic of the past. Already, urban toll road systems in Dallas, Denver, Miami, and Tampa are well along in conversions to cashless tolling, and most others are planning to do likewise.

Most comparisons of toll roads with non-toll roads focus only on the initial construction cost. But that ignores the ongoing cost of maintaining the road in good condition. What we want to minimize is not just the initial construction cost, but the life-cycle cost of a highway over, say, 50 years (generally considered its useful life; bridges are closer to 100 years). And there is a major difference in life-cycle costs between toll roads and non-toll roads, with toll roads generally having lower life-cycle costs. This is due to a combination of engineering, economic incentives, and politics.

Roads start wearing out practically from the day they open to traffic. Regular preventive maintenance (periodic overlays, not just pothole patching) keeps pavement from deteriorating prematurely. When that maintenance is skimped on, instead of lasting 50 years before needing complete reconstruction, a road may need to be rebuilt in 20 or 25 years. State highway agencies do the best that they can, but their budgets come from state legislatures. And those elected officials would much rather authorize spending for new roads and bridges on which they can hold ribbon-cutting ceremonies than authorize enough money year-in and year-out for proper preventive maintenance on existing roads. So “tax roads” end up wearing out prematurely and having to be rebuilt at great cost to taxpayers.

By contrast, toll roads are legally protected from inadequate maintenance. Those who buy toll road bonds insist that the first priority for use of toll revenues is proper maintenance. Why? Because they realize that the toll revenues they are counting on to pay the debt service on the bonds depend on the toll road offering high-quality service that makes people willing to pay tolls to use that road rather than non-tolled alternatives. So the “bond covenants”—legally enforceable agreements between the toll road owner and the bondholders—guarantee proper maintenance. And that means the toll road will last its full design life in good shape, at a lower life-cycle cost than the tax road that has to be reconstructed prematurely. It’s as if the toll road comes equipped with an endowment fund to pay for its maintenance. Unfortunately, there is nothing comparable for tax roads.

There are also national data showing that toll roads are safer and better maintained than comparable non-toll roads. So even if it ever turned out that toll roads cost a little more, remember the old saying; “You get what you pay for.” A toll road only succeeds if it offers its customers a driving experience whose value is greater than the toll.

Robert Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation. Poole, an MIT-trained engineer, has advised the Ronald Reagan, the George H.W. Bush, the Clinton, and the George W. Bush administrations.

Surface Transportation

In the field of surface transportation, Poole has advised the Federal Highway Administration, the Federal Transit Administration, the White House Office of Policy Development, National Economic Council, Government Accountability Office, and state DOTs in numerous states.

Poole's 1988 policy paper proposing privately financed toll lanes to relieve congestion directly inspired California's landmark private tollway law (AB 680), which authorized four pilot toll projects including the successful 91 Express Lanes in Orange County. More than 20 other states and the federal government have since enacted similar public-private partnership legislation. In 1993, Poole oversaw a study that coined the term HOT (high-occupancy toll) Lanes, a term which has become widely accepted since.

California Gov. Pete Wilson appointed Poole to the California's Commission on Transportation Investment and he also served on the Caltrans Privatization Advisory Steering Committee, where he helped oversee the implementation of AB 680.

From 2003 to 2005, he was a member of the Transportation Research Board's special committee on the long-term viability of the fuel tax for highway finance. In 2008 he served as a member of the Texas Study Committee on Private Participation in Toll Roads, appointed by Gov. Rick Perry. In 2009, he was a member of an Expert Review Panel for Washington State DOT, advising on a $1.5 billion toll mega-project. In 2010, he was a member of the transportation transition team for Florida's Governor-elect Rick Scott. He is a member of two TRB standing committees: Congestion Pricing and Managed Lanes.

Aviation

Poole is a member of the Government Accountability Office's National Aviation Studies Advisory Panel and he has testified before the House and Senate's aviation subcommittees on numerous occasions. Following the terrorist attacks of Sept. 11, 2001, Poole consulted the White House Domestic Policy Council and the leadership of the House Transportation & Infrastructure Committee.

He has also advised the Federal Aviation Administration, Office of the Secretary of Transportation, White House Office of Policy Development, National Performance Review, National Economic Council, and the National Civil Aviation Review Commission on aviation issues. Poole is a member of the Critical Infrastructure Council of the Los Angeles Economic Development Corporation and of the Air Traffic Control Association.

Poole was among the first to propose the commercialization of the U.S. air traffic control system, and his work in this field has helped shape proposals for a U.S. air traffic control corporation. A version of his corporation concept was implemented in Canada in 1996 and was more recently endorsed by several former top FAA administrators.

Poole's studies also launched a national debate on airport privatization in the United States. He advised both the FAA and local officials during the 1989-90 controversy over the proposed privatization of Albany (NY) Airport. His policy research on this issue helped inspire Congress' 1996 enactment of the Airport Privatization Pilot Program and the privatization of Indianapolis' airport management under Mayor Steve Goldsmith.

General Background

Robert Poole co-founded the Reason Foundation with Manny Klausner and Tibor Machan in 1978, and served as its president and CEO from then until the end of 2000. He was a member of the Bush-Cheney transition team in 2000. Over the years, he has advised the Reagan, George H.W. Bush, Clinton, and George W. Bush administrations on privatization and transportation policy.

Poole is credited as the first person to use the term "privatization" to refer to the contracting-out of public services and is the author of the first-ever book on privatization, Cutting Back City Hall, published by Universe Books in 1980. He is also editor of the books Instead of Regulation: Alternatives to Federal Regulatory Agencies (Lexington Books, 1981), Defending a Free Society (Lexington Books, 1984), and Unnatural Monopolies (Lexington Books, 1985). He also co-edited the book Free Minds & Free Markets: 25 Years of Reason (Pacific Research Institute, 1993).

Poole has written hundreds of articles, papers, and policy studies on privatization and transportation issues. His popular writings have appeared in national newspapers, including The New York Times, The Wall Street Journal, USA Today, Forbes, and numerous other publications. He has also been a guest on network television programs such as Good Morning America, NBC's Nightly News, ABC's World News Tonight, and the CBS Evening News. Poole writes a monthly column on transportation issues for Public Works Financing.

Poole earned his B.S. and M.S. in mechanical engineering at Massachusetts Institute of Technology (MIT) and did graduate work in operations research at New York University.