THE BIG ISSUE Tolling the Interstates

THE BIG ISSUE

Tolling the Interstates

The untolled Interstates represent a huge potential opportunity for tolling in the United States. They constitute some 66,000km of the most heavily trafficked highways in the country, generating some 880 billion vehicle-km of travel each year. Tolled at say an average 8c/veh-km they would yield some $70b/yr compared to total tolls currently collected of around $4b. But except on the 4,000km of toll road already in operation when the Interstate system was launched, from 1956 onward tolling has not been allowed on Interstates under the terms of the various federal highway aid laws. But March 12 the Clinton Administration proposed that in new legislation (known as NEXTEA) to start Oct 1 this year state governments should be free to allow tolling on interstates within their boundaries. Unfortunately the initiative was handled ineptly. It was not even mentioned in any of the briefings or prepared administration materials on the new legislation that were handed out at press conferences at the White House and USDoT. These papers showed tables of programatic categorizations and dollar numbers with rather small changes from present spending levels. And the stuff was replete with tiresome cliches about conveying America seamlessly into the intermodal 21st century and similar feel-good flimflam. The substantive let-’em-toll-the-interstates provision was buried deep in the proposed legislation and explanatory notes, the kind of treatment which invites sensationalistic reporting and aggressive questions.

Administration officials said defensively that the initiative was just a response to requests from states that they be given the right to impose tolls on Interstate highways (see Dep Sec Mort Downey below.) Trouble is the states have been asking rather quietly and so the Feds’ move was seen by the media as sensational. Neil Gray governmental affairs officer for the International Bridge Tunnel and Toll Association (IBTTA) told us he was concerned that the rationale for the move was not well explained and that many political leaders were responding without hearing the arguments fully. Speaker Newt Gingrich said (Mar 14) that the Administration was “keeping all the (gas tax) money hidden away” in highway trust funds and added: “The President called for toll roads on the interstate. Now this is double taxation.” His Senate colleague majority leader Trent Lott dismissed the idea saying “I don’t think that’s an idea that is going to go very far.”

You can’t blame Slick Willie for the Trust Fund mess: Now the Clinton administration deserves to be criticized for many things but not for the state of the highway trust fund, which has been accumulating surpluses for over a decade as a result, not of administration management, but of the whole budgetary process in which all the various US Congresses have fully shared. Gingrich and Lott and their colleagues have consistently voted for the federal budgets that caused highway grants to be much less than gas tax revenues, and for the provisions that divert gas tax revenues into transit and deficit reduction, and which still produce rising highway trust fund balances. Indeed the whole bipartisan drive to balance the federal budget over the past decade has relied quite heavily on reducing federal highway spending in order to generate net savings in the so-called trust funds. We say ‘so-called’ because the whole title Highway Trust Fund is a fraud. It is not a “fund” because there is no accumulated pool of money invested anywhere, just a nominal US Treasury “account” to which nominal interest is credited. It is not a “highway” trust fund because it is routinely and heavily used for non-highway purposes such as transit. And it is not a “trust” fund because there are no trustees to administer it — unless you call the members of the US Congress trustees! Any real trustees would long ago have been thrown in jail for massive misappropriations of funds in contravention of their trust. The whole thing is a political fiction.

There have long been moves in the Congress to put a little substance back into the highway trust fund by taking it “off-budget” and House Transportation Committee chairman Bud Shuster is leading the current version of that effort in the form of a bill HR4. And he is also trying to get a 4.3c/gal of gas tax used for deficit reduction put back in the fund. The fund he proposes should, we say, be called a Transportation Fund since Shuster wants a lot of it used for rail as well as for highways, so while less of a deception than present arrangements it would fall short of being a proper user-pays highway fund. But the bigger problem is that HR4 flies in the face of efforts to control overall federal spending and to reduce the US government deficit. So it has always failed to get Senate and Presidential backing.

Tolling as part of the larger food fight: The interstate tolling issue is now embroiled in the larger political foodfight over whether the so-called trust fund should be kept on-budget or taken off-budget. Since the Administration is resisting taking the trust fund off-budget, the proponents of the off-budget move HR4 are tempted to represent their interstate tolling idea as a duplicitous move to soak motorists.

We talked recently to Jack Schenendorf, chief of staff of the House Transportation Committee, Shuster’s lead staffer and pressed him on the interstate toll issue. “I don’t think it is going to fly” he said, because of the very strong opposition to it as it was presented by the Administration. Schenendorf said it would be seen as a way to pile more taxes on motorists in the context of resistance to opening up highway trust fund monies. If that trust fund issue could be satisfactorily resolved, then the interstate toll idea might have a chance, he suggested, because after all there is an “enormous need” for extra sources of revenue for funding highways. Schenendorf is not anti-toll, he emphasized. He said he thought NEXTEA might be able to accomodate not the Administration’s broad proposal to leave it to state discretion but perhaps a limited number of “pilot projects” in which tolls would be put on interstate highways and the results monitored. Presumably, and this is my reading, the states would have to work with the Feds outlining the interstate toll scheme to them beforehand and get FHWA approval. Maybe the pilot tolling would be imposed initially for a limited period to be discontinued, or renewed, according to joint state-federal review? At least there may be seeds for a compromise here!

There’s nice irony in the Clinton administration often criticized for wanting to centralize power in Washington DC being the one advancing the bolder policy of devolving power over tolling to the states, while the Republicans hold the line to maintain federal oversight and control! As we go to press Chairman Shuster himself has avoided commiting himself on the issue, his press secretary telling me he has nothing to say on the issue. He’s obviously torn. His state governor Tom Ridge in what was a big story in Pennsylvania in February said he wanted to impose tolls on I-80, the interstate that spans the state 450km east-to-west. Gov Ridge made the splash Feb 25 on a visit to Washington when he asked the state delegation for their support. Tim Reeves, Ridge’s press sec told me that Ridge was in Washington urging the Congressmen to allow the states to impose tolls on the interstates in NEXTEA. 1982 to 1994 Ridge represented far northwest PA in the US House of Reps before winning the governorship and is close to Shuster, who represents central PA.

PA/I-80 to toll: I-80 in Pennsylvania is a perfect interstate to start tolling. It traverses the less populated northern part of the state, mostly forest, and is truly an interstate route, being heavily used by vehicles just passing through on the long haul between the Mid-West and the northeast Atlantic coast states. By contrast Pennyslvanians wanting to travel intrastate between the major cities of Philadelphia, Harrisburg and Pittsburgh take I-76, the main Pennyslvania Turnpike, and pay tolls. And they also pay gas taxes to support a truck route in the north of the state that is of little importance to them! About $60m a year is spent by the state maintaining I-80 and its lack of tolls probably attracts some traffic away from the state Turnpike, reducing its revenues and increasing I-80’s maintenance costs. The I-76 vs I-80 setup in Pennsylvania is both political and economic nonsense!

Interstates they could toll: Other likely interstate toll prospects will be roadways with large established traffic flows (that will promise large toll revenues) on deteriorating structures that need large capital expenditures to renovate and sometimes enhance capacity — such as (1) I-278, the Gowanus and Brooklyn-Queens Expwys in Brooklyn and Queens New York (2) I-95 through Philadelphia (3) I-80/94 in northwest Indiana and in the Chicago area, I-290 (4) Milwaukee’s crumbling expressways esp I-94 (5) Salt Lake City’s I-15. In the Washington DC area the Wilson bridge which needs $1.6b for replacement and enlargement will almost certainly have tolls which are already legal, because since 1991 there has been no restriction on the tolling of bridges and tunnels on the interstate system — a logically indefensible distinction. [Question for Newt: How is it an unacceptable double taxation to toll a highway but OK to toll the bridge or tunnel? Reminder: you voted for allowing the states to toll the interstate bridges and tunnels in 1991.] Whether a highway pavement is built (1) directly on fill on the ground, or (2) on bridging, or in a tunnel structure it involves expense to build and to maintain, and provides a service (accessibility for rubber tired motor vehicles) that is similar in character, so there is no logical rationale for financing the one type with taxes and the other type with tolls.

And there are scores of other less spectacular interstates where communities do not have the political muscle to work the government funding system to get federal grants for enhancements. Near state or national borders a highway often benefits outsiders and so doesn’t generate local constituent support — though it may be warranted as a toll project. The missing link in I-95 in the Philadelphia-Trenton NJ area is an example. The so-called NAFTA Highway improving the road connections Toronto-Detroit-Indianapolis-Memphis-Shreveport-Houston-Laredo-Monterrey (sometimes called I-69 in the US) is a project that Wilbur Smith Assoc (its consultant) says could be about half new-build, half re-build, the rebuild sections being largely Interstates. If the road is built to take Mexican-Canadian weighted trucks and long combination vehicles normal truck fees and fuel taxes could be rebated against economically optimized toll charges making this whole corridor financeable as a “tolled Interstate.”

I-76, I-87, I-80, I-90 pikes: The biggest nonsense of all this is that the interstate system was originally built around toll roads — like I-76 (the Pennsylvania Turnpike), I-95 in NJ (the New Jersey Turnpike), I-80/90 state turnpikes in Ohio, Indiana, I-90 in Massachusetts, I-87/90 in New York (the Thruway) etc — and as toll roads they remain integral parts of the interstate system in the northeast quarter of the country. Indeed the oldtimers say that it was the Penna’ pike and these other early automobile era toll roads built by state government toll agencies which excited the national imagination in motoring on “super-highways” and established the political constituency for an Interstate highway system in the first place. Indeed the whole Interstate system was first conceived by President Franklin Roosevelt as a grid of national toll roads, an idea which was stymied not because of controversy over tolls but over FRD’s scheme for exacting large ‘betterment’ taxes from landowners on either side of wide toll road corridors.

Practicality: But neither history nor political philosphy may in the end be as powerful as the simple cry: “Where is the money to rebuild the interstates coming from if we don’t allow tolls?” The arguments on NEXTEA and the highway trust fund are about whether the Feds will be handing out $20b or $22b or $25b annually for highways. Whichever it is there is wide agreement that $40b could be economically justified, so it follows that there will be a $15b to $20b ‘gap.’ Whatever grant level the current jockeying in Washington produces the ability of toll revenues to command borrowing and investment funds could productively supplement the federal grants and help with needed interstate rebuilds.

The American Association of State Highway & Transp Officials (AASHTO) in Oct 96 revised its official policies to call for discretion in imposing tolls on interstates: “Tolls should be allowed on all Interstate roads so long as revenues are used in that corridor...” (AASHTO Transp Policy Book, Jan 97, par H30) In addition AASHTO in its proposals for NEXTEA called for the right of states to toll Interstates.

Of course cheap shots about tolls being “highway robbery” can always grab a soundbite for a politician out to demagogue the issue. But for those who want to solve problems, the Administration’s proposal should hardly be controversial — it is not forcing an interstate toll policy on any state. It does not even demand that federal legislators take a position for or against tolls. It simply says that any state government that wants to toll an Interstate should be free to do so. The state politicians are the ones who would have to justify the toll to the electors. However the USDoT proposal won’t go far unless some state and local leaders start saying out loud that they want the toll option. (Contact USDoT Dep Sec M Downey 202 366 2222)

USDoT Dep Sec Mortimer Downey on interstate tolls at White House press conference 3/12/97

Q: We understand that the President’s proposal lifts the restrictions on states putting tolls on interstate roads. Can you tell us how that works and explain some of the logic behind it?

Downey: That’s one of the things we heard as we went around the country, that state and local governments are looking for ways to increase the amount of investment that they can make in new and expanded and safer transportation systems. They are now not permitted to put tolls other interstate highways. They can put tolls on bridges and tunnels that are on the interstate system, but not the highway sections themselves. So under the President’s proposal, the states would have that option. We don’t mandate it, we don’t tell them they have to do it, there are legal restrictions as to how high those tolls could be, but we would give them that flexibility if that’s a way they want to serve their public by increasing the amount of construction they can do.

Q: Doesn’t that increase the price of travel and every other thing? I mean, why are you doing that?

Downey: We want to see better, safer transportation systems with greater capacity. Those need to be paid for in one way or another, and tolls would actually allocate those costs to the users.

Q: And they would be able to keep the money?

Downey: The states or local governments could keep the money, but only if it’s reinvested into transportation — and it would be their judgment, not ours.

Q: The federal government would keep none of it?

Downey: The federal government would not. The federal government paid for 90 percent of the original highway construction, but the state and local governments would get the benefit if they chose to put tolls on those systems.

Q: What about the restriction, you said there was a legal restriction — what is that?

Downey: In 1991 the law was changed to take it out of the jurisdiction of the U.S. Department of Transportation and turn it over to the courts. As I recall, the standard is just and reasonable. So anyone who was putting tolls in place would have to show that they were just and reasonable.

Q: Do you have any estimates at all about how much —

Downey: I don’t know that even a single state will do this. But we believe that in some parts of the country, especially in congested metropolitan areas where the interstate system is not just the way to link cities together, but is really their travel pattern to and from downtown, they would consider it.

Q: You said you heard this from around the states. So which states are the most interested?

Downey: We don’t have any specific applications at this time.

Q: What was the impetus, then, if there isn’t a groundswell for it?

Downey: We want to give a lot of flexibility, as this bill provides for choice of transportation modes, choice of ways to

finance it.

Q: You’re really encouraging it, though, aren’t you?

Downey: We would like to see states have the ability to make these decisions; we’re not saying they should or shouldn’t put tolls on the roads.

The Administration proposal as described in the NEXTEA bill

SEC. 1013. TOLLS ROADS, BRIDGES, TUNNELS, AND FERRIES.

[Analysis] (a) TOLLS ON THE INTERSTATE SYSTEM.—Section 129(a)(1) of title 23, United States Code, is amended—(1) in subparagraph (A) by striking “(other than a highway, bridge, or tunnel on the Interstate System)”; and (2) in subparagraph (D) by striking “(other than a highway on the Interstate System)”

Sec. 1013. Toll Roads, Bridges, Tunnels, and Ferries [Legislation Text] Subsection (a) of this section amends paragraph 129(a)(1) of title 23, United States Code, to remove the prohibitions against Federal participation in the initial construction of a toll highway, bridge, or tunnel on the Interstate System or in the reconstruction of a toll-free Interstate highway and its conversion to a toll facility. Such initial Interstate construction or Interstate reconstruction\conversion would be eligible for Federal-aid highway funds to the same extent and under the same terms as such projects on non-Interstate highways, bridges, and tunnels currently are eligible... For those States that choose to toll Interstate routes under this provision, the Department encourages the use of electronic tolling. Electronic tolling shortens delays at toll facilities, thereby shortening trip times and reducing vehicle emissions.