Why Highway Tolls Align With Conservative Principles
© Dreamstime.com


Why Highway Tolls Align With Conservative Principles

When some conservatives oppose tolls and investor-managed highways as contrary to conservative principles, in effect they prefer the existing model of tax-funded, state-owned enterprises.

Recently, Alabama Lt. Gov. Will Ainsworth (R), in opposing the toll-financed replacement of a major bridge on Interstate 10, said “tolling violates every conservative belief and principle that I hold.”

Having grown up in a conservative Republican household, worked as a student to try to get Barry Goldwater elected president, and advised multiple presidential administrations, including Ronald Reagan’s White House, on transportation policy, I see tolling as both sensible and in accord with conservative principles.

Most serious conservative thinkers, George F. Will is a current example, embrace the following as core principles of conservatism:

  • Limited government
  • Decentralization
  • Private property
  • Rule of law
  • Individual rights/liberty
  • Free markets
  • Private enterprise

What do these principles imply for highways?

The principles of limited government and decentralization call for a function to be provided at the lowest practical level of government. Accordingly, nearly all local streets and roads are, and should be the, province of local governments, while highways should be the province of state governments. And that is the general U.S. pattern—except when it comes to funding.

Highways enable travel and trade, which helps a free-market economy work productively. Highways are very similar to utilities such as electricity, natural gas, water supply, and telecommunications. In the United States, most utilities are investor-owned companies. Even government-owned utilities charge people directly for their services, based on how much they use. Those charges are not taxes; they are fees for service, paid directly to the utility provider. For investor-owned utilities that operate as franchised monopolies, the government regulates the rates charged to prevent monopoly exploitation.

Utilities’ user-fees revenues must cover their capital and operating/maintenance costs. Otherwise, investor-owned utilities would go bankrupt. In many cases, their shares trade on stock markets and their revenue bonds are purchased by investors of all sorts, including pension funds.

Toll roads operate in this way, also—as businesses providing customers with vital highway services, paid for directly by those customers. America’s earliest highways were private turnpikes (toll roads). Early presidents such as James Madison, James Monroe, and Andrew Jackson vetoed bills to have the federal government fund highways on grounds that the Constitution provided no authority for the federal government to be involved in such internal improvements within the various states—and it still does not.

By contrast, America’s 20th-century highways departed from the utility model. Instead of serving customers directly, highways became state-owned enterprises funded by taxes instead of direct charges for their services. Highway funding today comes from a mix of federal, state, and local taxes and fees, which are paid not to the highway provider but to a government treasury. Political bodies then decide what to spend and where to spend it, sometimes building projects whose costs far exceed their benefits.

Since 1956, Congress has become so wedded to spending federal dollars on highways and mass transit that it now spends about 20 percent more than comes in from federal taxes on transportation, with the rest borrowed from the treasury.

Devolving highways from the federal government to the state level accords with general, decentralist conservative principles. So does the users-pay/users-benefit principle, via direct fees charged to use highways rather than people paying large amounts of tax money to governments to later be allocated on political grounds to various projects.

Conservative principles, like those of Barry Goldwater and Ronald Reagan, would call for U.S. highways to be (1) the responsibility of state governments, not federal, (2) funded directly by those who use and benefit from them, and (3) operated as much as possible as businesses, like the other utilities.

These ideas have been revived in the United States over the past 20 years. Dozens of major highway and bridge projects have been financed, developed, and operated by investor-owned companies, operating on long-term franchises very much like those that apply to electric utilities. Nearly all are financed based on the user-fee revenues from all-electronic tolling. Those revenues also ensure proper long-term maintenance of the tolled highways, bridges, and tunnels. Some $36 billion has been invested so far in such projects in states, including California, Colorado, Georgia, Florida, Indiana, North Carolina, Texas, and Virginia.

When some conservatives oppose tolls and investor-managed highways as contrary to conservative principles, in effect they prefer the existing model of tax-funded, state-owned enterprises. In this model, no one knows how much they pay for highways, nor which entity of government is responsible for the conditions and performance of each roadway. These conservatives also reject direct, transparent pricing in favor of mostly hidden taxation. And they welcome the illusion that someone else (the federal government) is paying for a large share of the highways when that money comes from federal taxes on everyone via both fuel taxes and income taxes.

Milton Friedman, the great conservative economist who won the Nobel Prize in 1976, disagreed with that view of highways. In a 1952 paper, he wrote, “The provision of [U.S.] highways is a socialized industry removed from the test of the market.”

Except for the small number of toll-financed projects, America’s highways still are socialized, state-owned enterprises. Contrary to Lt. Gov. Ainsworth, I do not know of any conservative principles that toll roads violate. Neither did Milton Friedman.