Tollroads: their past & their future
Ways of the Future

Around the world there's an upsurge in toll roads because tax financing is not producing good enough highways. Voters reject tax hikes because they don't get highway value for the tax dollar. And they are frustrated by congestion on inadequate overloaded roads & tie-ups which cost tens of billions in wasted fuel, missed meetings, downtime from work, and unnecessary pollution and accidents.

Tolling is a way to build and rebuild roads without having to resort to taxes. Toll roads dip into the capital markets for their funds, not into taxpayers' pockets. It's the fairest system and the most efficient, and variable toll rates will allow flexible and responsive pricing of a commodity that is especially scarce in certain times and places. And the prospective toll revenues will often allow special measures such as the complete undergrounding of roads in environmentally sensitive areas, special services such as separate cars-only roadways, and electronic guideways for hands-off, feet-off driving (the 'automated highway') to make roads safer. Modern electronics now allow tolls to be collected at highway speed, which is cheaper, cleaner and more convenient than stopping at an old-style toll plaza.

Because of the logic in favor of tolling, major new road projects around the world will mostly be built as toll facilities. And increasingly as old highways need rebuilding private sector funds and management will be needed. Tolls will be the way people pay.

It is happening all over the world and we tell the story as it unfolds month by month. Toll roads can be built in different ways with all kinds of pragmatic compromises, reflecting local circumstances. There are for-profit toll roads, not-for-profit toll roads, state-owned toll roads, national and county-owned toll roads, investor-owned toll roads, some state-owned but independently financed and operated. Some will charge regular tolls, others shadow tolls...with all kinds of permutations. The important thing is they all bring highway service into the market economy.

Change is difficult. The automobile is an intensely ideological contrivance and its associated infrastructure is equally controversial. An important part of elite opinion dreams of a return to rail transit and bicycles, and opposes most new provision for motor vehicles. Populists denounce tolls as "taxes" and assert that "we have already paid for roads" in gas taxes.

In fact a road is never paid for. From the very day it opens the pavement begins deteriorating from the stresses of the weather and the pounding of vehicles. Cracks need filling, surfaces painted, signs and lighting maintained, debris removed, grass mowed, drains unclogged, policing conducted - all the time. Long before bonds are retired bridge decks need to be replaced, and often major pavement rebuilds done, under traffic, which can cost more than the original construction.

Tolls are not taxes but the price for a service. Now that service may be well or poorly provided. It may, or may not, be considered value for money. But the user-pays principle of tolls - that those who benefit from a road pay directly for its use - is good.

Being a much scarcer resource in peak hours roadspace should in theory cost more then. Gas taxes can't reflect that scarcity. Only flexible tolls can.

P Samuel 1996.
Why tolls?

Roads have been paid for different ways. Governments have often taken a major interest in road building because of the military importance of efficient movement of troops and their equipment and supplies & the famous Roman roads are an early example of military inspired road building. So army engineers have built roads and general taxes have been used to finance them, but in the early days of the industrial revolution the most common method was the corvee, or forced labor. Each able-bodied citizen was required to present himself with pick, shovel or other tools to work for several days per year fixing the local roads & or else send a substitute. 'Pitching in' for the common good worked when the people doing the work were the ones who benefitted so the corvee sometimes worked on a very small scale, but most roads are used by outsiders and the people doing the work then resent it.

"Why should we slave away, take time off from our income-producing job when the guy who benefits is that merchant passing through or those sightseers going by?" they ask. The 'corvee' was described in the late 18th century in England as a "ridiculous farce" because of evasion, favoritism, loitering and general ineffectiveness (p101) In Virginia citizens eligible for statute labor were described as "working out the road tax" and taxed the equivalent hourly wage rate if they failed to show up for statutory road work. Like other kinds of taxation the corvee was seen as unfair and oppressive and enlightened thinkers argued for the user-pays principle.

"When the carriages which pass over a highway or bridge...pay toll in proportion to their weight or tonnage, they pay for the maintenance of those public works exactly in proportion to the wear and tear which they occasion of them. It seems scarcely possible to determine a more equitable way of maintaining such works." So wrote the famous thinker Adam Smith in his "Wealth of nations."

The prospective stream of future toll revenues also allows the capital markets to be tapped for loans and equity to finance the construction of highways and their bridges and tunnels. At a time when Americans (and many other peoples) are skeptical about the value they get back for taxes paid seeking loans and investment secured against toll revenues is often the only practical way to finance needed new roads. At the beginning of construction of the US interstate highway system in the late 1950s the federal gas tax was an accepted user-pays mechanism for financing highways but since the late 1960s it has been increasingly diverted to other purposes and by now is little more than a general revenue raiser for the many purposes of the federal government. Federal highway spending is now much smaller than and quite independent of the gas tax. A few states (for example North Carolina) have been able to use state gas taxes to raise money for new highways but many more states, and often counties within states, are using developer contributions and tolls instead. Outside the US toll-financing has become the norm for almost all major highway works.

Another driving force is that the actual payment of a toll has become less onerous. Advances in radio communications and electronics allow tolls to be taken 'on the fly' so that motorists equipped with a CD-jewel box or pocket calculator-sized 'transponder' in their car or truck are able to have a toll account debited without stopping at a toll plaza. While most existing toll facilities are moving incrementally towards automation, adding special electronic lanes (with names like EZ-Pass and FasTrak) to their plazas, new toll roads are being built without any traditional toll plaza at all. Only overhead gantries such as those used for signage are needed for the electronic toll 'readers' and for video license plate recognition cameras. In this way electronic tolls can be collected more economically than road taxes and are less likely to be squandered by politicians and bureaucrats!

A further major advantage of tolls in the era of microcircuitry and electronic communications is that toll rates can be varied by time-of-day to help combat traffic congestion and guarantee a swift trip through to those who really need it, as measured by their willingness to pay a premium for that privelege. As the stop-&-go traffic on the urban highways of America and Europe make painfully clear, highway space is a scarce and highly valued commodity, especially during rush hours. The prices of food, telephone calls, fuel, airline seats, metals and many other items vary according to supply and demand to the benefit of consumers and suppliers alike and there is every reason why urban highwayspace should do the same. It will provide revenues to improve transportation facilities, help transit compete, and persuade those who can reorganize their movement to leave the scarce roadspace to those motorists who need it most. Best of all it will offer people choices & spend less, get less or pay a premium for premium road service. It's the way the rest of the market economy works.

Electronic tolling is being used in the middle 4-lanes of the 12-lane SR-91 highway in Orange County California for motorists in a hurry and willing to pay for "express" service. Investors forked out $126m to build the "91-Express" facility in return for the right to levy tolls. While traffic in the 'free' lanes makes an average 20 to 30mph during rush hours, those willing to pay for the privelege (currently $2.75 for a 10 mile trip) go through at 65mph or so. Almost all over the US special lanes reserved for high occupancy vehicles (HOV lanes) are being underutilized and the federal, California and Texas governments are encouraging toll 'buy-in' schemes. On I-15 north of San Diego permits are being sold for solo drivers to use HOV lanes (and make them 'express lanes') with the proviso that only enough permits will be sold to allow current free flow conditions to be sustained. In other words the tolling system will be used to prevent congestion but ensure full use, something that old HOV lanes have rarely been able to accomplish. Later this year a similar scheme will begin on the Katy Freeway in Houston TX, and others are being investigated, for example for commuters to Silicon Valley on I-680 in the San Francisco Bay area.

Such toll projects if properly implemented will be win-win reforms. Obviously those who chose to pay the toll and travel via such 'express lanes' think they are better off or they wouldn't be spending their money. And by departing the 'free' lanes the tollpayers leave more space for the non-tollpayers who will get a slightly smoother quicker ride at no cost. Everyone benefits from the extra choice and more efficient utilization.

These projects, and their accomplishments and problems, are described in detail in Toll Roads Newsletter. P Samuel 1996. (TOLL ROADS NEWSLETTER went from April 1996 to the 2002-2003 Winter and involved 61 issues, mostly 32-pages. It is replaced in 2003 by this web-based service.)
Quips & quotes

"There's a simple solution to this traffic problem. We'll have business build the roads. And government build the cars."

- Will Rogers quoted Bay Area Council

"Holding out our tin-cup to Congress and begging for funding is simply not going to work. The days of standing in the congressional budget line pleading..are over."

- Darrell Rensink, new President of American Association of State Highway & Transport Officials 1996

"There's no such thing as a free road. There's a toll road, or there's a taxing road, or there's no road." Our adaptation of an IBTTA (the tollsters trade association) slogan. 1996

"Road building is not a government monopoly any more. Those days are over."

- Federico Pena, US Secretary of Transportation, Transportation Research Board address, Washington DC, January 8, 1996. TRnews 2003-10-23