Rebuilding and Modernizing Wisconsin Interstates With Toll Financing

Policy Study

Rebuilding and Modernizing Wisconsin Interstates With Toll Financing

Using tolls to ensure the timely reconstruction of the Interstates and Wisconsin's freeway system

This study has identified and quantified the major investment needed over the next 30 years to rebuild and modernize the Interstate highways in Wisconsin, including the southeastern freeway system. In build-year dollars, the rural Interstate program is estimated to cost $12.5 billion and the southeastern freeway system reconstruction another $13.7 billion, for a total of $26.2 billion between now and 2040. Funding of this magnitude almost certainly will not be available from existing state and federal transportation sources.

In recent years, the total state highway construction budget has been between $1 billion and $1.5 billion per year. A large fraction of this money is spent on the 11,000 miles of the state highway system other than the 743 miles of the Interstates. Federal and state fuel tax revenues have been declining in real terms in recent years and are projected to keep doing so. Vehicle registration fee revenue is, in part, committed to debt service on highway revenue bonds issued since 2003 to make up for shortfalls in transportation revenue, including transfers from the transportation fund to the state’s general fund.

What is needed to ensure the timely reconstruction of the Interstates and southeastern freeway system is a net new revenue source. This study finds that value-added tolling could be that new revenue source. Using up-to-date estimates of construction costs and moderate levels of toll rates for cars and trucks, the rural Interstate reconstruction program appears to be fundable based solely on toll revenue. The southeastern freeway system reconstruction, based on the implementation of the new lanes as express toll lanes, could be assisted meaningfully by the toll revenue derived from those new lanes. If the alternative approach of using congestion pricing on all lanes is judged politically acceptable, then nearly three-quarters of the cost of the southeastern freeway system reconstruction could be recovered from tolling.

An added benefit for southeastern Wisconsin commuters, in either case, would be reduced congestion and faster and more reliable express bus transit during peak periods, thanks to the pricing system.

Rebuilding aging facilities with toll financing is not unprecedented. Washington state has two such projects under way in the Seattle area: replacing the seismically damaged Alaskan Way Viaduct (State Route 99) with a toll tunnel and replacing the State Route 520 floating bridge with a new toll bridge. Maine and New Hampshire are likewise considering tolling to finance replacements of existing bridges.