Dangerous and Costly Traffic Diversions

The goal of private toll operators is to find the right balance of toll rates and traffic to produce the maximum amount of rev-enue.52 Private toll operators can generally increase revenues by raising toll rates, even though the higher rates will cause some truck and car drivers to choose alternative routes. For the private operator, the additional toll rates may more than make up for income lost from diverted vehicles. But from the public perspective, the diverted traffic may clog local roads, increasing congestion and pollution in local communities. There was substantial traffic diversion, particularly of trucks, after the 1991 New Jersey Turnpike toll hike. New Jersey responded by rolling back some of the toll hike for trucks to entice them back onto the Turnpike, a move that would not have been possible under privatization, at least not without paying the private firm for the lost projected revenue. From a private toll road operator's perspective, gridlock and pollution on local roads may actually be desirable because drivers will be more likely to pay still-higher tolls. A study by researchers at Penn State University and Wayne State University found that the private operation of toll roads could lead to increased accidents and maintenance on nearby public roads and lower quality of life for residents on parallel roadways. The study also found large economic losses to nearby communities associated with diversion of truck traffc.53

It is important to recognize just how much control over transportation policy is granted to private operators through toll hike schedules for private operators. If the rules for increasing toll rates under the Chicago Skyway toll road deal had applied to New York's Holland Tunnel since its inception, that roadway could presently charge a one-way toll of more than $180.54 As a practical matter, an operator would be unlikely to charge that price because nearly all drivers would instead take alternate routes. But the operator would be free to charge whatever the market would bear to maximize profits. Most agreements allow toll increases to match inflation or GDP, whichever is higher. This may not sound excessive. But according to Professors Peter Swan and Michael Belzer, nominal GDP has increased an average of over 7 percent for the past 50 years. Thus, with this average GDP growth, truck tolls could increase 3,976 percent over the life of the roadway under the terms of the Indiana Toll Road agreement.55 Moreover, in order to maximize profits, the toll operator can also offer discounts to particular types of motorists and encourage traffic between certain exits or at certain times. Together, these provisions enable the operator to dictate who drives on the toll roads and at what times.