The trucking industry is the strongest opponent of expanded tolling. It funds the Alliance for Toll-Free Interstates, which lobbies aggressively against just about any new toll proposal. Yet the trucking industry depends on a modern highway system that keeps pace with economic growth and societal trends, such as the ongoing increase in online shopping.
For highways and bridges, the public-private partnership (P3) industry depends on toll financing for revenue-risk projects (and few states are willing to take on multi-billion-dollar liabilities for availability-payment projects such as rebuilding long-distance Interstates). It would greatly benefit P3s if the trucking industry were persuaded that some form of customer-friendly tolling would open the door to an improved and expanded 21st-century Interstate highway system.
The first step in that direction is to understand and address the trucking industry’s concerns that are based on evidence and to promote tolling policies that would truly be customer-friendly. After many years of transportation policy work, including discussions with trucking industry leaders, I’ve identified four main trucking concerns about tolling. They are:
- Toll roads being used as cash cows to fund other projects;
- Little-to-no value-added for users paying tolls;
- Double taxation with tolls and gas taxes; and
- The high cost of toll collection compared to the current collection of fuel taxes.
How valid are these concerns, and what changes would effectively address them for truckers?
Truckers’ concerns about toll roads being cash-cows concern are based on the fact that a number of toll roads generate a lot more revenue than is required to cover their capital and operating costs. A high-profile example is the Pennsylvania Turnpike, where, for the past decade, a legislative mandate has required the Turnpike to give the state Department of Transportation (DOT) $500 million each year that is used for mass transit subsidies. Other examples include the New Jersey Turnpike, the Port Authority of New York & New Jersey, the Dulles Airport Toll Road, and the San Francisco Bay Area Toll Authority.
States desiring truck-friendly tolling policies would need to enact legislation limiting toll rates to what is required in order to cover the capital and operating cost of new tolled facilities.
The value-added concern reflects several occasions in which state governments have proposed tolling plans that called for equipping existing highways, mostly Interstates, with toll gantries but without the revenues being dedicated to rebuilding or expanding the corridors being tolled. Trucking companies have legitimate concerns that such tolling plans are primarily about generating revenue increases for states rather than increasing highway investment in ways that would improve the Interstates truckers drive on. To address this, state legislation could ensure that any new tolling would have to be directly linked to investing the proceeds in the corridors being tolled.
The double taxation concern is true of all existing U.S. tolling. Toll customers, in nearly every case, pay tolls that cover the costs of the tolled facility while also paying state and federal fuel taxes for those miles. Only two U.S. toll roads provide refunds of transportation use taxes to truck operators: The Massachusetts Turnpike and the New York Thruway. Yet, with today’s electronic tolling systems, fuel-tax rebates are easy to do—and Bestpass, a toll payment platform provider, is already offering this to its trucking customers.
Only on the final concern—the high cost of toll collection—is the trucking industry presenting false, misleading claims. Its Alliance for Toll-Free Interstates claims that 33.5% of toll revenue is eaten up by administrative, collection, and enforcement costs. That might have been true in the era of cash tolling, but the Congressional Research Service found that, due to the phasing in of electronic toll collection, collection costs had already dropped to between 7% and 13% of revenue by 2017. Full-fledged, all-electronic tolling with a streamlined back-office can bring that cost down to 5% of revenue for passenger vehicles. And since truck toll rates are about four times as much as passenger-car rates, collection costs as a fraction of revenue should be about one-fourth as much as that for passenger cars: 1.25%. That’s a far cry from the claimed 33.5%.
Three of trucking’s four main concerns about tolling are valid—and fixable by legislation. But their cost-of-collection argument is bogus and needs to be countered.
Last year, I wrote a research paper, “Tolling Value Proposition for Trucking and State Departments of Transportation,” published in January 2023 in a special goods-movement issue of the Transportation Research Board’s journal Transportation Research Record. The paper describes a spreadsheet model in which I incorporated the above customer-friendly tolling principles. The model estimates the cost of rebuilding four long-distance Interstates in a mid-size state and uses toll rates that cover the estimated capital and operation and maintenance costs of each rebuilt highway. Tolling does not begin until a corridor has been rebuilt and opened to traffic; the per-mile toll rate for heavy trucks is four times as much as the personal vehicle rate; all-electronic tolling was assumed; and fuel-tax rebates were also included.
The spreadsheet estimated the net present value, over 30 years, of the toll revenue and of the fuel-tax revenue expended on rebates for toll-road users. The good news for truckers is that they would get timely modernization of key Interstates, with tolls dedicated solely to the capital and operating costs of the tolled lanes—and without also paying the diesel tax for those miles. And the good news for state transportation departments is that the amount of fuel taxes needed for the rebates is a small fraction of the toll revenue—and the tolling frees up the rest of their fuel tax revenue for other projects statewide.
A potential test case for this model is Michigan, whose two-year tolling study released in January proposed something close to this model, with $18.5 billion worth of toll-financed modernization of nine Interstate/freeway corridors, with tolling implemented only as each corridor is rebuilt. The Michigan study, conducted by HNTB/CDMSmith, mentioned fuel-tax rebates but did not include that in the model. Thus far, the trucking industry has not raised objections, but neither the state legislature nor the governor has decided on going forward in Michigan
Next month, in part two of this series for Public Works Financing, I will explain how recent participation by trucking companies in pilot projects testing mileage-based user fees shows additional promise for mileage-based truck tolling.
A version of this column first appeared in Public Works Financing.