The case for using toll revenues to fund Interstate improvements

High road toll increases threaten new regulation, but states should be free to use toll revenue for Interstate improvements. Bob Poole reports

Large toll rate increases have been implemented recently by the 1698 Port Authority of New York and New Jersey, justified in part to help pay for its World Trade Center project. In response, a bill was introduced in Congress that would allow the Secretary of Transportation to regulate tolls on every bridge on the country’s Interstates and other federally aided highways. Following this, soon after came news that Pennsylvania’s state auditor had found that the 774 Pennsylvania Turnpike faces default on its debt obligations, due to the legislature having converted part of its tolls into a general transportation tax.

This now causes the diversion of US$450M a year to non-turnpike purposes. The common theme in these cases is that political bodies have converted what is generally a pure user charge into a hybrid of user charge and tax.

The bill allowing the Secretary of Transportation to regulate tolls on the bridges on federal-aid highways has been criticised by the International Bridge, Tunnel & Turnpike Association (63 IBTTA).

This move would add a redundant layer of oversight that would deter needed investment and could damage the credit ratings of toll facility owner-operators, according to IBTTA. And given the repeated failure of 2018 US Congress to reauthorise the federal surface transportation program, IBTTA believes that Congress should not interfere with the efforts of local and regional toll agencies to enhance mobility and help states provide for their own funding needs.

Some have commented that the tolling industry has brought this bill this on itself, citing the high bridge and tunnel tolls in the New York metro area, a large fraction of which are diverted to transit (and to the World Trade Center). In Virginia there is the planned diversion of huge future sums from Dulles Toll Road toll-payers to build the rail line to Dulles airport, while Delaware has for decades used tolling from Interstate travellers to pay for state roads. And taxing of Pennsylvania Turnpike tollpayers is now being used to support other highways as well as transit systems in Philadelphia, Pittsburgh, and elsewhere in the state.

This is the sort of issue that drives highway users to oppose a blank cheque for expanded Interstate tolling, despite the several trillion dollar cost of reconstructing and modernising the aged and obsolescent Interstate system. AAA has ongoing litigation against the Port Authority over its toll diversion to the World Trade Center, while the 4626 American Trucking Association is supporting the bill allowing the Secretary of Transportation to regulate tolls on federal highway bridges. Surely the best way forward is to allow states to use toll finance to reconstruct and modernise their Interstates – but without giving them a blank cheque to use toll revenues for whatever strikes their fancy. An effective solution would be for Congress simply to remove the numerical limits on the various tolling and pricing programs that it has enacted in the last three reauthorisations (ISTEA, TEA-21, and SAFETEA-LU).

This position allows for the tighter legal framework negotiated previously to prevent the diversion of toll revenues. Both the pilot programme that allows for toll-financed construction of three new Interstates and the pilot programme allowing for three reconstructions of existing Interstates include specific language limiting the use of toll revenues to financing the construction or reconstruction, operation, and maintenance of the Interstate corridor in question. There would be no diversions to other highways, transit, or other state budgetary demands, so the tolls would be a pure user fee. This approach was debated and negotiated at the congressional staff level during the past two reauthorisations, with the participation of highway user groups. And when the provisions were enacted as part of TEA-21 (reconstruction) and SAFETEA-LU (new construction), there was no opposition from either AAA or ATA.

Limiting Interstate tolling just to the construction, reconstruction, operation and maintenance of the Interstates is surely the best way forward. And this offers a far better alternative than federal regulation of Interstate toll rates.

*Bob Poole directs the transportation program at the US-based think-tank The Reason Foundation.