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The Big Transportation Funding Debate: To Toll or Not to Toll

Just about everybody wants to revitalize the nation's crumbling transportation infrastructure. Too bad we can't agree on how to pay for it.

High on the list of unresolved details is the issue of tolls. Groups are lining up on both sides of the question, with scant middle ground. The debate has become elevated to a philosophical discussion about the role of government in funding vital public projects.

There was plenty to argue about at the end of April, when President Obama released a proposal for authorizing surface transportation projects over the next four years. It called for a dedicated, one-time infusion of $150bn from “pro-growth business tax reform.” The money would boost surface transportation investment by nearly $90bn over current projected spending levels. Another $600m would come from competitive grants through the Transportation Investments Generating Economic Recovery (TIGER) program. In all, the proposal would result in an investment of $302bn over four years.

Given that the President had previously failed to specify where the funds for new investment might come from, the proposal can be seen as a step toward restoration of the nation’s infrastructure. But it also opens the door to the use of tolls to pay for interstate highway reconstruction. Subject to approval of the U.S. Secretary of Transportation, states would be given the right to impose variable tolls “on existing highways, bridges or tunnels for purposes of congestion management.”

Not surprisingly, that language was strongly endorsed by the International Bridge, Tunnel and Turnpike Association, an 82-year-old group of owners and operators of toll facilities and related businesses. IBTTA executive director and chief executive officer Patrick Jones applauded the White House for affording states “the maximum amount of flexibility to use all appropriate funding and financing tools to meet their 21st Century funding challenges.”

Given that the federal gas tax has remained at 18.4 cents per gallon since 1993, with little chance of being raised anytime soon, the expanded use of tolls “makes a lot of sense,” Jones says. “We see it as a very powerful and proven tool.” Of the nearly 48,000 miles that make up the interstate highway system, some 3,000 are already tolled, he says, thanks to pilot programs in a handful of states.

Tolling doesn’t make sense in all instances, says Jones, but should be considered one option for funding infrastructure. Technology has made it more feasible, with electronic sensors eliminating the need for vehicles to stop and pay at booths.

The means of collection could take a variety of forms. Next year, Oregon will begin experimenting with a road usage charge system, whereby 5,000 volunteers will pay 1.5 cents for each mile they drive on every road in the state. Some will rely on a built-in mechanism that records mileage, while others will choose a GPS-enabled tag that automatically calculates distance. Elsewhere in the country, tolls might be tied to peak traffic periods, offering drivers a faster travel option in the most congested areas.

Taking the other side of the debate is the Alliance for Toll-Free Interstates, a group of businesses and transportation interests that came together earlier this year. It argues that toll collection is inefficient, even with the use of electronic systems, which can be evaded and are expensive to maintain, according to ATFI.

What’s more, the group argues, tolling amounts to double taxation because it occurs on top of taxes that are already assessed for use by the interstates. ATFI says the fuel tax is a fairer and more efficient means of collecting revenues for road usage than a patchwork of tolls.

Pro-tolling interests refute the double-taxation argument, saying that money collected through tolls goes directly into paying for the roads for which they are assessed, and that fuel taxes are frequently diverted to non-transportation purposes, such as balancing the federal budget. In any case, with Congress in an anti-tax mood, the fuel tax is quickly losing ground as a viable means of propping up the Highway Trust Fund.

Adding fuel to the fire, the U.S. Senate Environment and Public Works Committee has unveiled its own surface transportation funding proposal, the six-year MAP-21 (Moving Ahead for Progress in the 21st Century) Reauthorization measure. It re-ups the federal aid highway program at current levels plus inflation. What it doesn’t include, at least for now, is a tolling option – a move praised by ATFI. So score one for the anti-tollers.

But that’s just one battle. In the war over transportation funding, there appears to be no end in sight. At some point, though, lawmakers and the Administration are going to have to address the funding issue head on. Either they agree to a rise in the fuel tax, indexed to inflation, or they scrap the Highway Trust Fund altogether and draw from the general treasury for infrastructure improvements, as is done in many other countries. Whether transportation has enough of a constituency in Washington to vie with other funding priorities remains to be seen.

In the meantime, infrastructure suffers. In its current form, the Highway Account of the Highway Trust Fund is slated to go broke sometime this summer, despite a $9.7bn transfer from the general fund at the start of the current fiscal year.

Unfortunately, as we drawer nearer to the next presidential election, Washington’s appetite for substantive action on transportation funding falls off sharply. Right now, the window of opportunity looks alarmingly small. But we can pass the time arguing about tolls.

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