Toll Roads Merit Closer Look

State can diversify away from taxes and politically-managed transportation networks

Like most states these days, New Mexico faces a serious shortage of funds to maintain, repair, and expand its highway system. The principal highway funding sources- state and federal fuel taxes- have not kept pace with inflation, with rising construction costs, or with the extent of driving. Scarce resources have also been spent on 19th century fixed-rail projects of questionable utility.

Recently-released polling data from the Greater Albuquerque Chamber of Commerce suggest that area residents oppose toll roads by a two-to-one margin. On the other hand, a majority of those polled indicated a willingness to pay a higher sales tax to fund regional transportation projects.

While I respect those opinions, I believe that if Albuquerque residents were to look more carefully at the issues, they might reconsider their opposition to tolls and their support for higher taxes.

While much of the opposition to tolling comes from those who believe it to be a source of “double-taxation,” a closer examination of the facts reveals tolling to be the superior method available for maintaining roads and adding necessary capacity. That’s because toll roads, if they are managed by private companies, are designed with profits in mind.

The single greatest problem in transportation today is the lack of price signals that can be used to determine where to allocate resources. The prime example of this is the now-infamous “Bridge to Nowhere” where hundreds-of-millions of our gas tax dollars were slated to be spent on a bridge taller than the Golden Gate to connect sparsely-populated areas in Alaska.

Because our gas taxes are managed politically and with little in the way of market forces to determine their allocation, the “Bridge to Nowhere” took precedence over bridges in Minnesota that were on the verge of collapse.

This is also true in New Mexico, although in a less stark manner, regarding the massive subsidies being poured into the Rail Runner instead of maintenance or congestion mitigation. Politicians love cutting ribbons on new projects, no matter their utility; maintaining existing infrastructure is far less enjoyable.

So why is tolling the answer? For starters, private investors, unlike politicians and bureaucrats, have tremendous incentives to only build projects that are necessary. That said, in most areas where tolling is viable, motorists will still be able to use existing “free” roads. This has been the case in places like Florida, Texas, and Virginia where such toll roads have been built.

It is important to note that these modern toll roads are not the same as the government-run roads now found in Oklahoma and several eastern states. New toll roads don’t require you to stop every few miles and throw change in a bucket or hand a few dollars to anyone. After all, unlike governments, investors have a financial incentive to keep you moving.

Toll roads can mitigate congestion by leveraging new revenue sources without higher taxes. So, what can New Mexico do to attract this kind of investment? First and foremost, the Legislature would need to adopt legislation to allow for public-private partnerships in road-building. This will allow highway officials to work with toll road investors to determine the best locations for these projects.

Once the enabling legislation becomes law, highway department officials can negotiate what are called “concession agreements” that essentially determine how the road will be built, a tolling schedule, and how the road will be managed.

Relying on private investors to pump money into road projects may seem like a radical idea, but the practice was used in the 20th century for a handful of U.S. toll bridges (e.g., Detroit’s Ambassador Bridge), and is the basis for most of the post-World War II toll motorway systems of France, Italy, Portugal and Spain. It was also used for the Channel Tunnel between Britain and France.

New Mexico currently has no toll roads, but far from being a “crisis,” the current shortfall in transportation funding should be seen as an opportunity to diversify away from taxes and politically-managed transportation networks.