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.

Attachments

Robert Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation. Poole, an MIT-trained engineer, has advised the Ronald Reagan, the George H.W. Bush, the Clinton, and the George W. Bush administrations.

Surface Transportation

In the field of surface transportation, Poole has advised the Federal Highway Administration, the Federal Transit Administration, the White House Office of Policy Development, National Economic Council, Government Accountability Office, and state DOTs in numerous states.

Poole's 1988 policy paper proposing privately financed toll lanes to relieve congestion directly inspired California's landmark private tollway law (AB 680), which authorized four pilot toll projects including the successful 91 Express Lanes in Orange County. More than 20 other states and the federal government have since enacted similar public-private partnership legislation. In 1993, Poole oversaw a study that coined the term HOT (high-occupancy toll) Lanes, a term which has become widely accepted since.

California Gov. Pete Wilson appointed Poole to the California's Commission on Transportation Investment and he also served on the Caltrans Privatization Advisory Steering Committee, where he helped oversee the implementation of AB 680.

From 2003 to 2005, he was a member of the Transportation Research Board's special committee on the long-term viability of the fuel tax for highway finance. In 2008 he served as a member of the Texas Study Committee on Private Participation in Toll Roads, appointed by Gov. Rick Perry. In 2009, he was a member of an Expert Review Panel for Washington State DOT, advising on a $1.5 billion toll mega-project. In 2010, he was a member of the transportation transition team for Florida's Governor-elect Rick Scott. He is a member of two TRB standing committees: Congestion Pricing and Managed Lanes.

Aviation

Poole is a member of the Government Accountability Office's National Aviation Studies Advisory Panel and he has testified before the House and Senate's aviation subcommittees on numerous occasions. Following the terrorist attacks of Sept. 11, 2001, Poole consulted the White House Domestic Policy Council and the leadership of the House Transportation & Infrastructure Committee.

He has also advised the Federal Aviation Administration, Office of the Secretary of Transportation, White House Office of Policy Development, National Performance Review, National Economic Council, and the National Civil Aviation Review Commission on aviation issues. Poole is a member of the Critical Infrastructure Council of the Los Angeles Economic Development Corporation and of the Air Traffic Control Association.

Poole was among the first to propose the commercialization of the U.S. air traffic control system, and his work in this field has helped shape proposals for a U.S. air traffic control corporation. A version of his corporation concept was implemented in Canada in 1996 and was more recently endorsed by several former top FAA administrators.

Poole's studies also launched a national debate on airport privatization in the United States. He advised both the FAA and local officials during the 1989-90 controversy over the proposed privatization of Albany (NY) Airport. His policy research on this issue helped inspire Congress' 1996 enactment of the Airport Privatization Pilot Program and the privatization of Indianapolis' airport management under Mayor Steve Goldsmith.

General Background

Robert Poole co-founded the Reason Foundation with Manny Klausner and Tibor Machan in 1978, and served as its president and CEO from then until the end of 2000. He was a member of the Bush-Cheney transition team in 2000. Over the years, he has advised the Reagan, George H.W. Bush, Clinton, and George W. Bush administrations on privatization and transportation policy.

Poole is credited as the first person to use the term "privatization" to refer to the contracting-out of public services and is the author of the first-ever book on privatization, Cutting Back City Hall, published by Universe Books in 1980. He is also editor of the books Instead of Regulation: Alternatives to Federal Regulatory Agencies (Lexington Books, 1981), Defending a Free Society (Lexington Books, 1984), and Unnatural Monopolies (Lexington Books, 1985). He also co-edited the book Free Minds & Free Markets: 25 Years of Reason (Pacific Research Institute, 1993).

Poole has written hundreds of articles, papers, and policy studies on privatization and transportation issues. His popular writings have appeared in national newspapers, including The New York Times, The Wall Street Journal, USA Today, Forbes, and numerous other publications. He has also been a guest on network television programs such as Good Morning America, NBC's Nightly News, ABC's World News Tonight, and the CBS Evening News. Poole writes a monthly column on transportation issues for Public Works Financing.

Poole earned his B.S. and M.S. in mechanical engineering at Massachusetts Institute of Technology (MIT) and did graduate work in operations research at New York University.