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.