With congestion pressuring most urban and suburban areas in the country and the federal government unable to properly fund normal repairs, no less highway expansion, states and cities recognize that they need to generate new funds for infrastructure. Not only are fuel taxes inadequate for the size of the problem, but as an indirect funding mechanism they also help foster the idea that highway use is “free” and contribute to the congestion problem by hiding the true cost of driving on our roadways.
In theory, tolls are a good way to directly connect road use with the cost of maintaining and improving those roads, and to let all users share the burden of paying for that use. In theory…
The problem is that tolls may be too good at generating revenue, making them irresistible to cash-strapped local and state governments looking to increase general tax revenues without appearing to increase taxes. The result has been some fairly inventive ways to unlock the revenue potential sitting untapped in our tollbooths. Unfortunately, most of these plans are shortsighted quick fixes for budget shortfalls and do little to address our infrastructure problems.
Take efforts to sell or lease long-term highways to private investors in return for an up-front lump sum payment. The pioneer in this country may be Indiana, which in 2006 agreed to lease the Indiana Toll Road to a private Australian-Spanish company for $3.8 billion. It wasn't alone for long as Ohio and Illinois quickly proposed similar sales, Virginia signed a 99-year lease for a parkway, and Texas officials agreed to let a Spanish-American partnership build and run a toll road for 50 years.
The brass ring, though, for selling off public infrastructure goes to Pennsylvania, which just last month accepted a $12.8 billion bid to lease the historic Pennsylvania Turnpike to private interests for 75 years.
Then we have congestion pricing plans like the one recently defeated in New York City and the four-year “experiment” on Washington State's Valley Freeway that bases tolls on time of day.
Whether it's private investors or public agencies collecting the tolls, the bigger question is what happens to all the money collected. New toll-based revenues are usually positioned as funding for road upkeep and improvements, but how that actually works out is still to be seen. After all, state lotteries were created to fund education, yet somehow legislators quickly found ways to siphon much of that money into the general funds. And New Jersey Gov. Jon Corzine didn't even pretend that his proposal to broadly expand tolls in that state was anything other than a way to close a budget gap.
Given all the odd taxes created by our elected officials over the years, I'm afraid that toll dollars are just too enticing to ignore. In the first quarter of this year alone, approximately 50 existing tolls were hiked or new collection plazas put in place. I only expect that number to keep climbing as states face growing budgets.
I can only hope that all this interest in tolls may also finally start a public discussion about effective traffic congestion solutions and realistic funding goals for maintaining our highways.
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