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UPDATED: Report pushes “value-added” tolling

April 10, 2014

Seeking “to find common ground on a way forward” to fund the estimated trillion-dollar cost of modernizing the Interstate highway system, a 21-pg “policy brief” issued by the Reason Foundation nonprofit think tank puts forth a set of “value-added tolling” policy proposals.

Given that fuel taxation can no longer keep up with highway infrastructure spending, the brief’s author, Robert W. Poole Jr., director of transportation policy at the Reason Foundation, argues that there must be “a transition from per-gallon user taxes to per-mile user fees. And one of the most basic forms of per-mile user fee is tolling.”

He also contends that “the costs of building, maintaining and rebuilding highways are independent of the way motor vehicles are powered” and that “basic fairness demands that all vehicles pay their share of the costs.”

But recognizing that highway users “currently are not convinced” that per-mile tolling instead of fuel taxation would be in their interest, Poole’s brief addresses “the concerns of highway users and seeks to develop approaches that would be genuinely in the interest of those users.”

As Poole explains it, his value-added tolling proposals rest on the overriding principle that tolling should only be introduced “when and where it creates a better deal for highway users than the status quo.”

Accordingly, he places conditions on adding tolling:

  • Begin tolling only after major improvements (modernization/reconstruction) are completed
  • Limit the use of toll revenues to the specific highway or highway system where they are collected
  • Charge only enough to cover the cost to build (or rebuild) the highway, maintain it, and improve and eventually rebuild its facilities
  • Use tolls to replace existing user taxes-- not in addition to them
  • Provide a better level of service than what [now] prevails on the highways where tolling is introduced
  • Tolling only implemented on a per-mile basis using all-electronic tolling (AET)

A national group that opposes tolling Interstate highways has taken strong exception to the value-added tolling mechanism Poole proposes.

“The pro-toll report released by the Reason Foundation reinforces the many shortcomings of using tolls to generate revenue for construction and maintenance of existing federal interstate capacity,” said the Alliance for Toll-Free Interstates (ATFI) in a written statement.

Per ATFI, the proposals described in the policy brief “fail to dispel the myriad concerns held by highway users throughout the country. Tolling existing interstates is overwhelmingly unpopular, and public opposition will not be assuaged by poor policies like these, many of which are based on questionable or erroneous assumptions.”

Those assumptions, stated ATFI, include:

  • Continued reliance on overly optimistic revenue and traffic projections used to issue bonds, numbers that often do not materialize once a toll road is reconstructed or maintenance is completed
  • Future use of tolls as the singular funding source for all interstate construction and maintenance, while simultaneously relying on a universal vehicle-miles tax to fund construction and maintenance of all other roads
  • Increased dependence on the already bloated bureaucracies created by AET

For his part, Poole argues that a toll road operated with  full AET implementation removes the key disadvantages of traditional toll lanes/plazas— long lines, paying with cash and the risk of accidents as vehicles jockey to get thru quickly as well as the high cost of toll-collector staff, cash handling and enforcement.

Addressing the concerns of highway users typically opposed to adding tolling, Poole stresses that “per-mile tolls would apply to every trip on the facility, from point of entry to point of exit (which is not always the case on legacy toll roads that toll only at periodic barrier plazas).

“All users would pay a per-mile rate appropriate for their vehicle category (e.g. car, heavy truck, etc.) for all miles driven on the tolled highway,” he continues.

What’s more, Poole writes that “there would be no such phenomena as ‘border tolling’ aimed at exempting large numbers of from paying tolls. And vehicles would suffer no toll penalty for getting off at an exit to buy food or fuel, then getting back on the tolled Interstate, since the per-mile rate would be charged only for the miles actually driven on the tolled highway.”

It is Poole’s view that highway-user groups should “seriously consider” the benefits of value-added tolling “as a means to ensure the long-term viability of America’s limited-access highways.” He stresses, too, that they “should insist” on value-added principles being adopted as a condition for supporting tolling flexibility for states.

And he argues that State DOTs should also “embrace these principles as offering a user-friendly approach to replacing per-gallon fuel taxes with per-mile user charges for the major highways that carry one-third of all vehicle-miles of travel.”

In its statement criticizing the Reason Foundation policy brief, AFTI also stated that “placing tolls on existing Interstate capacity will cause traffic diversion, hurt the economy through increased shipping costs for goods, and negatively impact the communities located around toll facilities.  No recommendation made in this report eliminates these serious consequences.”

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