Commentary

Time to Consider Tolling the Interstates

Tolls could play a critical role in reconstructing and modernizing Interstates

The prospect of a long recession, along with the continuing financial crisis, creates a problem for the many interest groups that were hoping for a large increase in fuel taxes as part of the 2009 surface transportation bill. State DOTs are even more strapped for funds than usual. At the same time, the need to rebuild and modernize our 50-year-old long-distance Interstate highway system becomes more acute with each passing year. Yet hitting taxpayers with any significant tax increase in a serious recession seems like a non-starter-and conflicts with the widespread desire to transition from petroleum as the basis for highway funding.

It’s in this context that I want to suggest removing federal barriers to tolling (and privatizing) these critical commerce corridors. All three major infrastructure reports-from the Policy & Revenue Commission, from DOT Secretary Mary Peters and company last summer (“Refocus, Reform, Renew”), and now the Finance Commission-call for removing the ban on tolling urban Interstates so as to allow congestion pricing of existing capacity. But all three would permit tolling only new capacity on the long-distance Interstates.

I will address the urban congestion pricing issue on another occasion. For now, let’s focus on the case for removing the ban on tolling long-haul Interstates. Assuming it were politically feasible, this approach has a number of merits. First, it would provide a large new source of funding for large-scale reconstruction, modernization, and widening (where needed) of these vital freight corridors. Second, existing federal and state highway revenues could then be used for a serious assault on the deferred maintenance and bridge repairs so badly needed on non-Interstate roads and highways. And of course, if privatization (via long-term build-operate-transfer concessions) were allowed, states could tap into the more than $100 billion that’s sitting in infrastructure equity funds, waiting for good projects.

Those are the obvious advantages, but let’s consider a few more. The main political obstacle to such a proposal in recent years has been the trucking industry’s view that removing the federal ban on tolling would open a Pandora’s box of “erecting toll booths on the Interstate.” That wording reflects the genuine fear that if all restraints on tolling were lifted, states might simply start charging monopolistic tolls on existing, unimproved Interstates, giving truckers (and shippers) all pain and no gain. But if an integral part of tolling for reconstruction were to create separate truck-only lanes designed for up to 150,000 lb. gross vehicle weight (vs. the current federal limit of 80,000 lbs.) and long “turnpike double” rigs, truckers and shippers would be getting very real value added for their tolls. And if all the lanes were tolled, there would be less resistance by truckers to being restricted to truck-only lanes, with the obvious safety benefits that would flow from that policy.

Phased-in tolling of long-haul Interstates would also be a major step toward phasing out fuel taxes and phasing in highway charges based on vehicle miles traveled (VMT), one of the strongest recommendations of the Infrastructure Finance Commission.

To win the support of truckers and other highway users, there would need to be strong federal conditions on such state-by-state conversions. It would need to be certain that tolling (and privatization, if a state opts to go that route) would be implemented only in connection with a major reconstruction and modernization of an Interstate corridor. And the toll revenues would have to be dedicated to the costs of rebuilding, operating, and maintaining that Interstate (including a reasonable return on investment), with any surplus revenues devoted 100% to other transportation (preferably highway) projects. And fuel tax monies-federal and state-freed up by no longer being needed to repair and maintain the tolled Interstate would need to remain dedicated to much-needed other highway and bridge projects in that state.

To avoid concerns over the “Balkanization” of the Interstate system, there would still need to be uniform federal standards for lane widths, overhead clearance heights, etc. And it would also be appropriate for the U.S. DOT to be charged with ensuring nationwide electronic tolling interoperability (both technically and financially) by a date certain, perhaps the end of the next reauthorization period.

A good starting point for this measure would be to expand the existing Interstate System Reconstruction and Rehabilitation Pilot Program, enacted in TEA-21 and continued in SAFETEA-LU. Critics may carp that since no such reconstruction project has actually gone forward under this pilot program, it has failed and should be either repealed or retained in its current form that permits only three projects. To which I respond that the confluence of circumstances set forth in the preceding paragraphs has not occurred until now, and that Congress should give states powerful self-help tools for modernizing the most critical portions of our infrastructure.

Nearly all the groups weighing in on reauthorization have identified goods movement as one of the most important federal transportation infrastructure priorities. And no matter how “green” one may be, and no matter how many incentives the feds may concoct to shift freight from truck to rail, the large majority (by value) of freight will continue to move by truck in coming decades, for structural, logistics, and demographic reasons. Moreover, moving more tons of freight per BTU of energy will be facilitated by shifting long-haul truck freight into larger and heavier rigs, as acknowledged by EPA’s SmartWay program.

Thus, the sooner we commence reconstructing and modernizing long-distance Interstates-especially with heavy-duty truck lanes-the better. This year’s reauthorization is the appropriate place to start.

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.