More Tolling Interest

In 1772, Pennsylvania chartered the first turnpike in America. The Philadelphia and Lancaster Turnpike Road, opened in 1774, was the first crushed stone and gravel surfaced road. In the late 18th and early 19th centuries, before rail transportation became widely available, many privately owned turnpikes were built and operated by private investors who charged tolls for vehicle passage. Today, more than 30 states collect toll revenue in some form, either through roadway or bridge tolls or ferry fares.22 In the last five years, as other revenue sources-particularly the gas tax-have declined in purchasing power, states have taken more interest in tolls as a way to finance transportation projects. Toll collecting often is viewed as the purest form of user-related revenue because the user pays directly for the services used.

Table 6 shows the growth in toll collection by the states from 1998 to 2004. Revenues grew by 36.6 percent, from $4.1 billion to $5.6 billion. By contrast, user fee revenues grew by less than half as much, 15.7 percent.23

Tolls are becoming more of a revenue factor nationally, although several states rely heavily on tolls to pay for transportation infrastructure. Delaware, Florida, Maine, New Hampshire, New Jersey, New York, Oklahoma and Pennsylvania rely on toll revenues for at least 10 percent of their total revenue for state-administered highways.24

In an age of political reluctance to increase motor fuel taxes, toll roads have become an attractive option. Several states have made tolling the centerpiece of the next wave of highway construction. The Texas legislation mentioned previously represents a major commitment to tolls as a source of transportation revenue. States that are considering new toll roads or tolling authorization in 2006 include California, Colorado, Indiana, Maryland, North Carolina, South Carolina, Texas, Utah, Washington and Virginia. A truck-only toll lane is under consideration in Georgia. Several states also are evaluating the use of different tolling mechanisms such as variable pricing toll lanes and high occupancy toll (HOT) lanes.

Typically, states establish separate agencies or arms of their state departments of transportation to oversee construction, operation and maintenance of toll facilities. A number of states have created new tolling agencies in recent years (Colorado, North Carolina and Texas) while other states (such as Kansas, Maine and Pennsylvania) have had turnpike authorities or commissions for years.

Creating public support for imposition of tolls on new facilities has been a struggle. It is difficult to overcome the perception that motorists who use toll facilities have paid twice is difficult to overcome. In addition, the negotiations to build toll facilities usually include non-compete clauses that prevent improvements and expansions of public roads in the vicinity of the toll road for a certain period of time, reducing the availability of free, comparable alternatives. This helps assure bondholders that the toll facility will produce the revenue needed to repay them.

SAFETEA-LU includes several provisions to boost tolling in the states. A new Interstate System Construction Toll Pilot Program allows for three projects in a state or compact of states to collect tolls on interstates for the purpose of constructing interstate highways. Virginia is considering tolls on I-81. A new Express Lanes Demonstration Program will allow 15 demonstration projects through 2009 to permit tolling to manage high levels of congestion, reduce emissions in a nonattainment or maintenance area, or finance added interstate lanes designed to reduce congestion. Automatic toll collection is required and, for HOV facilities, variable pricing must be employed. The Variable Pricing Pilot Program, funded at $59 million through 2009, and the Interstate System Reconstruction and Rehabilitation Toll Pilot Program were previously authorized and were carried forward. As of March 2006, 14 states were participating in the value pricing pilot project, including California, Colorado, Florida, Georgia, Illinois, Maryland, Minnesota, New Jersey, North Carolina, Oregon, Pennsylvania, Texas, Virginia and Washington.25

The December 2005 report of the Transportation Research Board (TRB), The Fuel Tax and Alternatives for Transportation Funding, noted that an " ... important opportunity exists today to create an extensive system of tolled expressways and expressway lanes employing existing electronic toll collection technology and variable pricing."26 This study envisions tolls as a key element of a staged movement toward transportation funding sources other than the fuel tax. Another analyst has stated that tolls may account for only 10 percent of the funding mix in the future.27 The degree to which tolls are used to fund transportation expenditures will depend on the particular needs and available financing methods of particular states. Since more than 30 states already collect toll revenue, the level of comfort seems high and the potential for future use will remain significant.

C. Kenneth Orski noted in Innovation Briefs that " ... fresh evidence exists that highway tolling and private financing are gaining new converts among governors and state transportation officials, in state legislatures and in the media. Growing transportation budget shortfalls, eroding value of highway tax revenues, and a supportive federal policy toward tolling and public-private partnerships have helped nurture the idea. Fanning its spread are visions of highway projects built entirely with private funds and prospects of multi-billion-dollar concessionary cash payments that could jump start ambitious transportation improvements years in advance of their planned execution."28