I’ve seen the first relatively comprehensive proposal on replacing current fuel taxes with tolls to finance highway construction, and I don’t think it’s going to get a warm reception from anyone, not from highway users, not from state legislators, not from voters and certainly not from trucking businesses. In fact, the American Trucking Assns. wasted no time issuing a public statement calling tolls “just another name for a tax” and “an extremely expensive way to fund highway improvements.”
The report comes from the Reason Foundation, a Washington think tank known for advancing free market conservative and libertarian ideas. It starts by pointing out that our current Interstate highway system is nearing the end of its 50-year design life and will need to be entirely reconstructed and expanded over the next two decades. And it puts the cost of that work at $983 billion, a number it says is well beyond our ability to cover with the fuel-tax mechanism currently used to fund highway construction.
I don’t think they’ll get an argument on the poor state of our highways, and while I have to wonder how they came up with such a specific number as $983 billion, we all know rebuilding and expanding our highways at this point is going to be expensive and require more than current fuel taxes provide.
At first glance, the Reason Foundation’s solution seems to have some merit, if for no other reason than its apparent simplicity. It envisions funding the entire project, dubbed Interstate 2.0, with an electronic toll system that would collect user fees for every mile driven on an Interstate. Again, not an unreasonable sounding idea.
Ah, but the devil is in the details. And once this think tank gets into those details, the full implication of its proposal should bring serious reservations for even the most ardent free-marketeer.
Here’s the model it sees for funding roads through tolls. It starts with a “baseline toll rate” of 3.5¢/mi. for cars and 14¢/mi. for trucks that would be indexed to inflation and adjusted annually. If you’re doing some quick math on what that would cost your fleet, wait a bit because that baseline rate wouldn’t be enough to cover full toll financing of highway work. In an article on the Reason Foundation’s website (reason.org), the report’s author says “all but five or six rural states” would require higher rates to fully toll-finance the required work, though he doesn’t specify what those higher rates would be beyond describing them as “comparable to those on recently financed toll roads.”
If you run trucks down the Boston/Washington, DC, corridor, you know that can be a lot more than 14¢/mi., but I see other problems beyond ill-defined costs. The report says a toll system would be fairer since heavy users would bear more of the cost. That might be a legitimate argument for automobiles (at least if you discount people commuting to work), but it completely misunderstands the role of trucks in our economy. A highly productive low-cost freight transportation network is essential to a healthy U.S. economic environment. The cost of tolls doesn’t stop at the trucking industry, but it directly impacts the efficient movement of goods throughout the entire economy. In other words, trucking businesses may use the publicly funded highways, but we all benefit from that use.
ATA raises a more practical objection to the complete toll approach. It points out that voters have consistently rejected tolls on even a single existing highway and calls it preposterous to assume they’d accept tolls on the entire system. From its perspective, ATA believes we need to focus on improving funding from traditional sources like the fuel tax. That sounds reasonable to me.