States may apply toll revenues used for capital expenditures to build or improve public highway facilities to earn toll credits. Toll credits are earned when a State, a toll authority, or a private entity funds a capital highway investment with toll revenues from existing facilities. The amount of toll revenues spent on non-Federal highway capital improvement projects earns the State an equivalent dollar amount of credits. To earn toll credits, States must pass an annual maintenance of effort test. By using toll credits to substitute for the required non-Federal share on a Federal-aid project, Federal funding can effectively be increased to 100 percent.
Toll credits provide States with more flexibility in financing projects. For example, by using toll credits, (1) Federal-aid projects can be advanced when traditional-matching funds are not available, (2) State and local funds normally required for matching may then be directed to other transportation projects, or (3) project administration may be simplified when a single funding source is used. States wishing to take advantage of the toll credit provision must apply toll revenues to capital improvements and meet the maintenance of effort test.
Toll credits are being used extensively by States with toll facilities. As of November 24, 2003, 21 States had accumulated $13.2 billion in toll credits. The credits are being applied in a variety of ways, depending on the State's needs. Missouri reserves its toll credits for situations where project matching funds are unavailable in order to effectively increase Federal funding to 100 percent of project costs. Ohio uses toll credits as a match on GARVEE projects and also shares its toll credits with local government agencies for both highway and transit projects. The Florida DOT has been applying toll credits on a statewide basis since 1993. Today Florida is using toll credits on almost every new Federal-aid project, so that most of its Federal highway program is effectively 100 percent federally funded, freeing up State dollars for State-administered projects. However, toll credits do not increase the funding available for transportation.