Interstate 2.0: Modernizing the Interstate Highway System Via Toll Finance

[cpzilliacus]

Reason.org: Interstate 2.0: Modernizing the Interstate Highway System Via Toll Finance - The 20th-century fuel tax cannot deliver a second-generation Interstate highway system, 21st-century all-electronic tolling can

The Interstate highway system is America's most important surface transportation system. With just 2.5% of the nation's lane-miles of highway, it handles some 25% of all vehicle miles of travel. It served to open the country to trade and travel, enabling the just-in-time logistics system at the heart of U.S. goods movement. Yet the first-generation Interstate system is wearing out. Most of the pavement has exceeded or is nearing its 50-year design life, meaning that nearly the entire system will need reconstruction over the next two decades. In addition, more than a hundred interchanges are major bottlenecks, needing redesign and reconstruction, and about 200 corridors need additional lanes to cope with current and projected traffic.

The need for massive investment to transform the first-generation Interstate into what this report calls Interstate 2.0 occurs just as our 20th-century highway funding system–based on fuel taxes and state and federal highway trust funds–is running out of gas. Steady increases in vehicle fuel economy, the lack of inflation indexing of fuel tax rates, and political gridlock over increasing fuel tax rates all make it very difficult even to maintain current pavement and bridge conditions and prevent congestion from getting even worse. The transportation community agrees that we need to phase out fuel taxes and replace them with a more sustainable funding source, generally agreed to be mileage-based user fees of some sort. But no consensus exists on how and when to do this.

Full disclosure:  I know Bob Poole, the author of this, somewhat.

[kkt]

The need for massive investment to transform the first-generation Interstate into what this report calls Interstate 2.0 occurs just as our 20th-century highway funding system–based on fuel taxes and state and federal highway trust funds–is running out of gas. Steady increases in vehicle fuel economy, the lack of inflation indexing of fuel tax rates, and political gridlock over increasing fuel tax rates all make it very difficult even to maintain current pavement and bridge conditions and prevent congestion from getting even worse. The transportation community agrees that we need to phase out fuel taxes and replace them with a more sustainable funding source, generally agreed to be mileage-based user fees of some sort. But no consensus exists on how and when to do this.

Of the reasons given for switching to tolling everywhere, none of them are very compelling:

Increases in vehicle fuel economy are true, but is equally an argument for increasing the fuel tax.  Now that climate change is a certainty, it's more important than ever to pressure consumers into using the most fuel-efficient vehicles possible .

Lack of inflation indexing is a problem, but inflation indexing could be introduced by legislation just as tolling everywhere would need to be introduced by legislation.  The political gridlock that prevents fuel tax increases also prevents tolling everywhere.

I don't agree that there's any general consensus that tolling everywhere is better than fuel taxes.

Furthermore, tolling everywhere has major disadvantages:

It's expensive to build tolling infrastructure and collections.  Fuel taxes are very efficient, they don't require a RFIDs on every vehicle, they don't require sensors throughout the roads, they don't require deposit accounts for every motorist, they don't require a web site, they don't require a customer service staff, they don't require lots of small transactions to every motorists' credit cards or bank accounts.

Tolling everywhere will build a terrific database for data miners, criminals, and overreaching government.  They may say they'll only use it for toll collections this week, but next week it'll be for terrorism cases, then felonies, then misdemeanors.  Then the failure of defense legal teams to introduce toll data that can prove an alibi will be taken as a sign of guilt.  The government is the least of the problem if toll collection continues to be outsourced; companies are generally not careful at all about data confidentiality.

Faking RFIDs is not that hard.  It's really hard to avoid gas taxes -- stealth gas stations?  Failure to report fuel sold?  Much harder than just complying with the law.

[J N Winkler]

I don't agree that there's any general consensus that tolling everywhere is better than fuel taxes.

I would go so far as to say that any claim that such a consensus exists is a dogwhistle to proponents of tolling.

Other coverage of this report has mentioned the author's proposal that motorists receive a rebate for taxes paid on fuel consumed on toll roads.  This strikes me as a rather disingenuous attempt to answer the double-charging objection.  Without tamperproof continuous monitoring of travel, a rebate system would be difficult to administer and readily susceptible to fraud (e.g. by exaggerating the amount of fuel actually consumed on Interstates).  It would also be wholly without recent precedent in the US or elsewhere.  If continuous monitoring is introduced to protect a rebate system from fraud, what prevents it from being used to assess and collect GPS-based mileage fees?

[ARMOURERERIC]

I always was a proponent of the idea that the Federal government should designate 3-5 E-W interstates corridors and 5-9 N-S interstate corridors as "corridors of national significance" and then work with he states to bring those corridors up to a 75 year design horizon via any financing means necessary over the next 20 years.

[Indyroads]

I am a proponent of removing tolls from all interstate branded roads over the next 99 years. Essentially effective when the exisiting leases expire on roads that have been leased to private consortiums for operations. All tolling, including bridge tolling should be effectively removed from the interstate system and a federal law needs to be passed to reinforce the free interstate system and prevention of tolling on all interstates with no grandfather clauses. Road improvements could be completed with redirection of funds that we are sending to pariah countries like Syria, Egypt and others that are killing Americans and engaging in civil rights violations that would make Hitler look like a saint by comparison. Our money could be better used here building a world class system of roads that will make China's road boom look like a drop in the bucket.  Our aging infrastructure needs a face-lift but tolling already taxed Americans is not the way to do it.

[froggie]

Indy, it's been argued (rightfully so) that pulling such funding to foreign countries should be used to reduce the national debt.  Furthermore, since such expenditures are often one-time or "as-Congress-feels-like-it" funds, it doesn't provide a sustaining revenue source to pay for maintenance, which is probably the biggest issue transportation funding in the US has currently.

[Indyroads]

Indy, it's been argued (rightfully so) that pulling such funding to foreign countries should be used to reduce the national debt.  Furthermore, since such expenditures are often one-time or "as-Congress-feels-like-it" funds, it doesn't provide a sustaining revenue source to pay for maintenance, which is probably the biggest issue transportation funding in the US has currently.

You've got a good point there. certainly we do have alot of fiscal problems in the US, and knowing about the massive amounts of waste fraud and abuse within our governmental structure, it just seems that Washington and many state houses don't have the right priorities in mind. Transportation infrastructure (especially roads) are vital for commerce, and I thannk God for the interstate system because it has improved us as a nation, but it needs a higher funding priority and we cannot depend on gasoline tax revenues alone to pay for the revamping of the system.

[froggie]

and we cannot depend on gasoline tax revenues alone to pay for the revamping of the system.

...which is exactly why you have several entities supporting increased use of tolls for the Interstates.  Whether that's the right move in the long term or not, I don't know.  But we barely pay a pittance for transportation in this country and it shows in the slow development, heavy traffic, and lackluster maintenance of the system.

[cpzilliacus]

I don't agree that there's any general consensus that tolling everywhere is better than fuel taxes.

Many politicians are terrified of raising or even indexing motor fuel tax rates.

I would go so far as to say that any claim that such a consensus exists is a dogwhistle to proponents of tolling.

Other coverage of this report has mentioned the author's proposal that motorists receive a rebate for taxes paid on fuel consumed on toll roads.  This strikes me as a rather disingenuous attempt to answer the double-charging objection.  Without tamperproof continuous monitoring of travel, a rebate system would be difficult to administer and readily susceptible to fraud (e.g. by exaggerating the amount of fuel actually consumed on Interstates).  It would also be wholly without recent precedent in the US or elsewhere.  If continuous monitoring is introduced to protect a rebate system from fraud, what prevents it from being used to assess and collect GPS-based mileage fees?

Dogwhistle?  Why? 

What is wrong with giving motorists a break on fuel taxes for fuel consumed on toll roads, where those taxes are not used?

Indy, it's been argued (rightfully so) that pulling such funding to foreign countries should be used to reduce the national debt.  Furthermore, since such expenditures are often one-time or "as-Congress-feels-like-it" funds, it doesn't provide a sustaining revenue source to pay for maintenance, which is probably the biggest issue transportation funding in the US has currently.

I agree with you when it comes to maintenance.  And that is the biggest item on the transportation shopping list these days.

Furthermore, tolling everywhere has major disadvantages:

It's expensive to build tolling infrastructure and collections.  Fuel taxes are very efficient, they don't require a RFIDs on every vehicle, they don't require sensors throughout the roads, they don't require deposit accounts for every motorist, they don't require a web site, they don't require a customer service staff, they don't require lots of small transactions to every motorists' credit cards or bank accounts.

RFIDs on every vehicle are probably coming sometime this decade anyway.  All-electronic tolling (as compared to cash toll collection) is relatively cheap to operate and maintain.  The customer service center requirement is a lot less than  cash  toll collection.

Tolling everywhere will build a terrific database for data miners, criminals, and overreaching government.  They may say they'll only use it for toll collections this week, but next week it'll be for terrorism cases, then felonies, then misdemeanors.  Then the failure of defense legal teams to introduce toll data that can prove an alibi will be taken as a sign of guilt.  The government is the least of the problem if toll collection continues to be outsourced; companies are generally not careful at all about data confidentiality.

This proposal was for tolling on the Interstate network only - a relatively small part of the U.S. highway network (though it serves a disproportionate amount of vehicle travel).

Faking RFIDs is not that hard.  It's really hard to avoid gas taxes -- stealth gas stations?  Failure to report fuel sold?  Much harder than just complying with the law.

Anything can be faked, but I would think that RFID fraud would pretty rapidly be detected.

As for fuel tax fraud, it is not a problem with gasoline, but it is a significant problem with Diesel fuel, since home heating oil is effectively the same thing as Diesel - and there is plenty of untaxable use for Diesel for construction equipment and railroad locomotives, all of which is considered non-taxable.

...which is exactly why you have several entities supporting increased use of tolls for the Interstates.  Whether that's the right move in the long term or not, I don't know.  But we barely pay a pittance for transportation in this country and it shows in the slow development, heavy traffic, and lackluster maintenance of the system.

Agreed!

[wxfree]

It's interesting how the people who are concerned about the national debt are the same ones who support tolling, even though it's the same thing: get something now; pay for it later.  We burden future generations with tolls, but feel better about it because we call it something other than taxes.  Future drivers won't know the difference; they'll still be the ones paying the bill.

I don't oppose all tolling of roads, but I oppose large-scale tolling for these reasons:

1.  Tolling adds extra costs (equipment, collection, administration, enforcement, credit card fees, etc.)
2.  Tolling is not more fair.  If I drive 100 miles on a two-lane highway at 75 mph and pay $1.5 in fuel taxes and you drive 100 miles on Interstates at 75 mph and pay $10 in tolls, how is that fair?
3.  The argument that it's a free-market transaction is ridiculous.  We don't have 7 different road systems run by 7 different companies with 7 different prices.  There's almost never a nearby competing toll facility trying to win your business with better service or better prices.
4.  Transportation should not be expected to pay for itself.  The purpose of transportation is economic development and quality of life.  I don't mean new subdivisions along new roads, I mean the whole economy, nearly every part of which depends on roads.  A strong road system supports a strong economy.  If the roads don't produce enough taxes and tolls to pay for themselves, they're still a good investment.  Paying for them is much better than the alternative.
5.  Worst, tolls distort traffic patterns.  Imposing tolls on long rural stretches of Interstates will push traffic to other roads that run almost as fast.  Back roads with light traffic now handling even a small fraction of Interstate traffic are suddenly congested, slower, and less safe.  Tolls push traffic away from the roads best suited to handle it, and toward lower classes of roads, resulting in more maintenance cost, more slow traffic, and more collisions.

We either increase debt, increase taxes, tolls and other costs, or suffer lower services.  Lower services is not the best option, because we'll still end up paying more for things like vehicle maintenance, fuel, and higher product costs.  More generally, we need to understand that our national destiny is collective.  The "user pays" principle is a good one, in moderation, but it should not be an excuse to fail to invest.  We're nation of citizens.  I dislike the idea that we're a nation of consumers and that our government is a store.  We can't prosper collectively if we exclude from receiving basic services those who are less able to pay.

Finally, not all government spending is waste.  Much of it, in fact, is investment.  Paying taxes to fund water, sewer lines, roads, and such should be seen as an investment.  We should aspire to build the best road system we can, without added costs and traffic pattern distortions caused by tolling, and without the idea that roads should be used as ATMs.

[Indyroads]

I honestly don't think we are going to come to a point of agreement here with regards to the pro-tolling and anti-tolling groups. I am rigidly anti-tolling when it comes to the interstate system. we have gas taxes for that... also some states have used a 1/2 cent tax to pay for key infrastructure upgrades to the system, There are other ways to raise revenue, and I still say that the government wastes billions of dollars every year that could be used to help pay for the problems caused by deferred maintenance as well as congestion. I do not support tolling, and I would vote against anyone that supports open tolling of the interstate system or a pay-by-mile odometer tax.

[wxfree]

I honestly don't think we are going to come to a point of agreement here with regards to the pro-tolling and anti-tolling groups. I am rigidly anti-tolling when it comes to the interstate system. we have gas taxes for that... also some states have used a 1/2 cent tax to pay for key infrastructure upgrades to the system, There are other ways to raise revenue, and I still say that the government wastes billions of dollars every year that could be used to help pay for the problems caused by deferred maintenance as well as congestion. I do not support tolling, and I would vote against anyone that supports open tolling of the interstate system or a pay-by-mile odometer tax.

We don't need philosophical agreement (I'd argue that would be a bad thing).  But we do need to find a compromise on solutions.  I'm generally, but not completely, anti-toll, for the reasons I explained.  I'd be less anti-toll if the authorities would charge the minimum possible rates and raise money just for the road.  This, in my view, would include transferring the (approximate) tax I paid on the fuel used on the toll road to the toll authority, so the rate could be a little lower.  That seems, to me, easier than millions of individual rebates.

Even then, tolls should be a last resort, not the first choice.  I really think the fuel tax is working pretty well, incentivizing efficiency, charging more for heavier vehicles, and not penalizing use of the best roads.  The rate just needs to keep up with the need.  Obviously, the fuel tax doesn't work with certain vehicles.  Drivers of those vehicles could be charged based on mileage.

I think the people are at fault for letting politicians feel safe building more toll roads that cost 20 cents per mile instead of raising taxes another 2 cents per mile.  That's silly.  It should be the pro-toll people who feel the wrath of the voters.  Politicians who fear raising fuel taxes should instead fear toll roads that cost people 10 times as much.  But most people seem to think that tolls mean the bill will be paid by someone else.  They fail to realize that tolls raise the prices of the goods they buy, and push traffic onto the roads they drive on, and disincentivize the improvement of nearby roads.

[J N Winkler]

I would go so far as to say that any claim that such a consensus exists is a dogwhistle to proponents of tolling.

Other coverage of this report has mentioned the author's proposal that motorists receive a rebate for taxes paid on fuel consumed on toll roads.  This strikes me as a rather disingenuous attempt to answer the double-charging objection.  Without tamperproof continuous monitoring of travel, a rebate system would be difficult to administer and readily susceptible to fraud (e.g. by exaggerating the amount of fuel actually consumed on Interstates).  It would also be wholly without recent precedent in the US or elsewhere.  If continuous monitoring is introduced to protect a rebate system from fraud, what prevents it from being used to assess and collect GPS-based mileage fees?

Dogwhistle?  Why?

This Wikipedia article explains in general terms the uses of dog-whistling:

http://en.wikipedia.org/wiki/Dog-whistle_politics

In this case, claiming that a consensus exists to the effect that tolling is better than the fuel tax (because it applies costs directly to the users, etc.) implies that toll finance is more strongly backed by expert opinion than is really the case, and encourages lay readers to ignore the significant disadvantages, such as the deadweight cost of toll collection, financing charges, etc.

What is wrong with giving motorists a break on fuel taxes for fuel consumed on toll roads, where those taxes are not used?

In principle, nothing at all.  But it has never been done before, and it is very difficult to set up a fraud-proof rebate system.  So urging the voters to support tolling previously tax-supported Interstates on the basis that the double-charging problem will be taken care of by rebates only sets them up for a bait-and-switch wherein the tolls are levied and the rebate program never materializes.

[Henry]

Looks like tolls won't be going away anytime soon. Bring on the shunpikers!

[cpzilliacus]

Poole and Reason deserve credit for thinking seriously about the issue and putting out a well-thought out plan for how to deal with the problems that nearly everyone else is ignoring.

Realistically, Poole's plan will never be enacted because there is so much knee jerk anti-tolling sentiment among the voting public. But there is an increasing use of toll roads, due to exactly the highway funding problems that Poole points out.

Overall an excellent study by Poole that helps educate the public and policy makers.

Bob Poole is a very smart guy, and while he has his point of view (which I do not always agree with), I think his work is intellectually honest.

[cpzilliacus]

Looks like tolls won't be going away anytime soon. Bring on the shunpikers!

Trucks, which end up paying a significantly higher percentage of tolls than other traffic (as they usually should) cannot always shunpike.

[Duke87]

Furthermore, tolls on individual facilities do not exist in a vacuum. In order to avoid unduly distorting traffic patterns, the tolls for two otherwise roughly equal alternatives must be roughly equal in order to maintain balance. One need only look at how the $7.50 each way Brooklyn Battery Tunnel never really backs up but nearby free bridges take on plenty of traffic to see this in action.

Now, if you decreed "no tolls on interstates", that tunnel toll (I-478) would have to be removed and that would rebalance the system there.

But the opposite can just as easily happen. For instance, the tolls would have to come off of the Goethals and Verazzano Bridges (both I-278) but could stay on the Outerbridge Crossing and Bayonne Bridge (both NY/NJ 440). This would result in traffic heading to Staten Island heavily favoring one of the former two when normally it shouldn't.

Likewise, the tolls would have to come off of the George Washington Bridge (I-95) and Holland Tunnel (I-78) but could stay on the Lincoln Tunnel (NY/NJ 495). That makes zero sense.

[NE2]

I wonder if there's any information on the remaining turnpikes that Pennsylvania didn't take over in the 1910s and if they were able to do anything to compete with the newly free state highways.

[Mr_Northside]

Likewise, the tolls would have to come off of the George Washington Bridge (I-95) and Holland Tunnel (I-78) but could stay on the Lincoln Tunnel (NY/NJ 495). That makes zero sense.

Without diving real deep into the topic at the moment, I'd have to agree with the whole statement in general, and I'd bet the farm that if such a plan came into action, any notion of the Holland Tunnel officially being I-78 would disappear very quickly (at least on paper) and the tolls would remain indefinitely.