Despite, or perhaps because of, the ongoing increase in tolled U.S. lane miles, tolling is under new political attacks in 2024. Here are four disturbing tolling-related developments during the first half of 2024:
- After the Oregon Department of Transportation had gained approval from the Federal Highway Administration to implement variable tolls on a stretch of I-5 in Portland, Gov. Tina Kotek abruptly vetoed the program.
- In Southern California, the San Diego Association of Governments (SANDAG) announced the launch of a study on the feasibility of removing tolls on State Route 125 (which began as a long-term public-private partnership project that SANDAG bought out of bankruptcy).
- In Texas, the state with the second-highest number of tolled lane miles, House Speaker Dade Phelan announced plans to introduce “toll reforms” in the 2025 legislative session, citing an assortment of providers and significant disparities in toll rates.
- In Florida, a frequent-user tolls rebate program for SunPass transponder users statewide was renewed for a second year and was proudly announced by the Florida Department of Transportation.
Those were the most dramatic developments, but there were also other danger signs.
In Arizona, a group typically favorable to free markets announced a proposed state constitutional amendment to forbid any form of per-mile road use charge, which they characterized as “an Orwellian vehicle-miles tax.”
In Washington state, the possibility of a toll increase on the SR 520 floating bridge brought forth local opposition.
And in Massachusetts, the Department of Transportation (MASSDOT) grudgingly admitted that it “cannot rule out” tolls to help pay for the $4.2 billion project to replace the two 89-year-old Cape Cod bridges (for which only $350 million in government funds are currently available).
Any proposal to reduce or eliminate tolls in an environment of declining gas-tax revenues means that the balance would have to be made up from general revenues. That is true of the Florida toll rebates ($500 million in general fund revenue last year and an estimated $450 million this year).
In San Diego, SANDAG would somehow have to get the California general fund revenue to pay off its SR-125 bonds.
And short of a multi-billion-dollar windfall of federal (borrowed) general fund revenue, Massachusetts would have to find some kind of general fund money for its much-needed Cape Cod bridge replacements.
Opposing the replacement of per-gallon gas taxes with per-mile charges would leave highways and bridges without a dedicated users-pay funding source, leaving their future dependent on state and federal general-fund revenue.
Comparing the quality of U.S. highways with the non-tolled highways in Europe offers an object lesson in depending on general revenues. In most European countries, gas taxes are four times or more higher per gallon than fuel taxes in the United States, but their gas taxes are all deposited in the national treasury. Highways get whatever parliaments decide to spend, which is why Europe’s non-tolled highways are far below ours in capacity and condition. Europe’s toll roads, by contrast, are well-run and expand in response to demand.
The two U.S. trade associations with the most at stake in the future of tolling are the American Road and Transportation Builders Association (ARTBA) and the International Bridge, Tunnel and Turnpike Association (IBTTA). Neither group has spoken out about these attacks on tolling, which I think is an unwise strategy in the long-term.
Between explaining toll-financed public-private partnerships (ARTBA) and the future need for replacing gas taxes with per-mile charging as fuel taxes decline (IBTTA), both organizations could play essential roles in helping show legislatures and state transportation officials paths toward sustainable funding sources for highways and bridges.
For example, long-term financing offers substantial benefits, which are typically seen with tolled projects but not with projects funded out of annual appropriations. Both a toll agency and a long-term design-build-finance-operate-maintain (DBFOM) P3 contractually ensure long-term maintenance, which is otherwise subject to the uncertainties of annual legislative allocations. This often leads to large amounts of deferred maintenance in many states.
There is also much to be said for a direct customer-provider relationship that generally exists with tolled highways and bridges but which we seldom see in gas-tax-funded facilities. Decades ago, when I began to do serious work on transportation policy, I was shocked to learn that state DOTs refer to those on their roads as “users,” but toll operators call theirs “customers.” That’s not mere semantics. In most cases, the use of a tolled facility is an option, given our ubiquitous roadway network. Toll providers need to attract and keep customers. A political science colleague explained to me that the state DOT’s customers, whom it must please, are often viewed as the legislators who provide its budget, not the motorists and truckers who use its roads and bridges.
So what should the toll road and public-private partnership industry do in response to populist attacks from all sides of the political aisle?
I think tolling needs to be repositioned, not as a last resort, but as the best, most sustainable dedicated user fee for the future of our infrastructure. Toll-friendly organizations should ally with the state transportation departments and other organizations that are serious about replacing per-gallon gas taxes with per-mile charges. This is still a controversial proposition for many Americans, as the Arizona proposal mentioned earlier highlights, but in one form or another, tolling is the future of highway funding.
My view of the best way forward is not a big bang in which a state immediately shifts all its roadways to per-mile charges at the same time. Rather, this transition should be phased in carefully in a way that clearly replaces state fuel taxes, not adds to them.
The best way to begin this transition is on limited-access highways, some of which are already tolled. Those tolls could be restated and shown to drivers in per-mile terms, with some kind of annual inflation adjustment built in. As each non-tolled Interstate or freeway is converted, to avoid double taxation, the state would agree to provide refunds for state fuel taxes paid by the vehicles driving on them and paying the tolls. Any Interstates needing major reconstruction or widening would be allowed to increase their per-mile toll rates to finance the improvements.
Since limited-access highways handle about one-third of all U.S. vehicle miles of travel, converting them first makes sense for three reasons: (1) it would convert a large fraction of total vehicle-miles traveled in a relatively short period, (2) it could use widely-accepted all-electronic tolling (so no new vehicle technology would be needed), and (3) the refunds of state gas taxes for those paying the new per-mile charges would refute the claim that per-mile-charges would be in addition to gas taxes.
In short, tolling must be repositioned as key to the transition to a more sustainable system of per-mile charging that will replace gas taxes.
Success in a state that has already completed a detailed Interstate tolling feasibility study (e.g., Indiana or Michigan) would show the way for other states to follow. We need one or two states to demonstrate the viability of this approach. Numerous groups involved in highways, public-private partnerships, and tolling should help them lead the way.
A version of this column first appeared in Public Works Financing.