Top Priorities for Interstate Tolling

Where will tolling give America's highway users the greatest bang for the buck?

On March 30, I addressed the International Bridge, Tunnel & Turnpike Association’s annual Washington Briefing. The topic they asked me to address was where tolling should fit in as part of America’s future transportation policy.

While I am on record favoring the long-term replacement of per-gallon fuel taxes with per-mile road-use charges, the association’s question forced me to do something politicians and planners don’t do enough of: prioritization. So I reframed the question as: Where will tolling give America’s highway users the greatest bang for the buck?

In my view, the two greatest problems in surface transportation are (1) the aging and increasingly inadequate Interstate highway system and (2) chronic urban freeway congestion, with direct costs to highway users exceeding $120 billion per year (and indirect economic costs to metro areas at least double that). Tolling excels at both generating revenue to finance the creation of new highway capacity and, when implemented on a variable basis, providing the best available means of reducing freeway congestion on a long-term, sustainable basis.

Since the federal MAP-21 surface transportation legislation expired September 30, 2014, Congress is under serious pressure this year to reauthorize the program. What Congress does about tolling can either encourage or stymie efforts by state departments of transportation (DOTs) and local metropolitan planning organizations (MPOs) to pursue toll-based policies for Interstate reconstruction/modernization and building out metro-area managed lane networks.

In MAP-21 Congress revised federal tolling policy in some helpful ways, including the mainstreaming of toll finance and managed lanes in general. But when it comes to Interstates, the liberalized tolling policy only permits toll financing for the addition of new lanes and for the replacement of existing bridges and tunnels. But the reality is that tolling only newly added lanes will not generate the revenue needed to reconstruct existing lanes.

Therefore, I think the entire highway community needs to rethink the terminology used to discuss what we seek for the Interstates. When an Interstate’s existing lanes are so old and worn-out that they need to be reconstructed-as will increasingly be the case for most corridors over the next two decades-what we are really talking about is replacing those aging lanes. Federal policy should not forbid a state DOT from using toll financing to replace its worn-out Interstate lanes, which in many cases would make sense to do at the same time as adding additional lanes, if warranted by long-term traffic projections.

In addition to changing the terminology, as a practical matter it is also up to us to take very seriously the concerns of highway user groups, such as AAA and the American Trucking Associations. Despite those groups’ official positions against Interstate tolling, both groups’ leadership know that their preferred solution of federal fuel tax increases is highly uncertain in the current political environment. They know the inadequacies of today’s Interstates, and they also know that without major investment in replacement and additions, their members are going to suffer. The user-friendly tolling policies that Reason Foundation has developed (called Value-Added Tolling) have already made a positive impression on highway user groups.

What we should urge Congress to do in the current reauthorization is to provide states with the option to use toll financing to replace and widen their current Interstates, by mainstreaming the existing three-state Interstate System Reconstruction and Rehabilitation Pilot Program with more explicit highway-user protections.

On managed lane networks, there is good progress nationwide, with networks of this kind in the long-range plans of at least nine major metro areas and being discussed in a number of others, including Chicago, Denver, Jacksonville, Orlando, Tampa, and Washington, DC. But Congress could help DOTs and MPOs overcome opposition by making some modest tweaks to existing highway and transit policies.

First, when it comes to enforcing Federal Highway Administration (FHA) performance requirements for high occupancy vehicle (HOV) lanes, the remedy for those operating as HOV-2 that fail to maintain 45 mph or higher 90 percent of the time should be to increase the occupancy level to at least HOV-3. It is very difficult for local agencies to take this sensible and much-needed step, so it would be a big help if they could tell their elected officials and carpoolers that “Washington made us do it.” That change would open up those carpool lanes to conversion into viable high occupancy toll (HOT) lanes, in many cases filling in key parts of a planned network and likely generating revenues in excess of operating costs to help pay for the portions of the network requiring new construction.

A second set of changes would aim at making the network more transit-friendly. Currently the FTA supports both bus rapid transit (BRT) and conversion of HOV lanes to HOT lanes. But it only counts as “fixed guideway miles” those HOT lanes that are created by converting carpool lanes. Any HOT lanes that are created by new construction do not count toward that total. This matters, because FTA formula funds for transit agencies are based in part on its total of fixed guideway miles. A HOT lane is just as much an uncongested BRT corridor, no matter how it was created. This change would provide a stronger incentive for transit agencies to support the creation of managed lane networks.

A more radical change would be to open up FTA’s New Starts and Small Starts grants programs to the construction of HOT lanes that would be part of a network used by BRT vehicles in addition to cars. Any variably priced lane can provide an uncongested guideway for express bus service that is the virtual equivalent of a bus-only lane. The idea researched several years ago in Tampa for “Bus Toll Lanes” envisioned FTA capital grants being used by a transit agency to help pay for new HOT lanes, alongside either a state DOT or a local toll agency. To the extent that such a lane generated net revenue after annual debt service and operations/maintenance costs, the sponsoring agencies would share proportionally in that net revenue.

Neither increased Interstate tolling flexibility nor tweaks to FTA’s HOT/BRT policies would involve any new federal spending. But both would foster increased toll financing of much-needed surface transportation infrastructure, creating additional opportunities for long-term public-private partnership concession projects as well.

Robert Poole is director of transportation policy at Reason Foundation. This article originally appeared in Public Works Financing.