To Toll or Not to Toll: Weighing the Tradeoffs
In recent years, state and local agencies have increasingly studied the pros and cons of tolling their currently untolled roads. Their interest is driven by shrinking budgets, growing infrastructure needs, some easing of federal tolling restrictions and multiple pilot-project opportunities. Escalating that curiosity, the Trump administration released its infrastructure plan in February 2017, which called for giving states more flexibility in tolling existing interstates to generate revenue for reinvestment in their transportation networks. Whether or not that plan comes to fruition, many transportation funding and financing experts expect continued easing of tolling restrictions in the future.
If your agency is waiting to see if those restrictions are lifted—or if you want to take advantage of existing opportunities through established pilot programs such as the Interstate System Reconstruction and Rehabilitation Pilot Program or Value Pricing Pilot Program—it is important to understand that not all tolling projects are created equal and that certain situational factors need to be evaluated first. In their paper, “The Tradeoffs of Tolling Untolled Roads” (to be published in the 2018 Transportation Research Record), CDM Smith’s Ronald Davis, PE, Yogesh Patel, AICP, Christopher Mwalwanda, P.Eng. and Ed Regan break down current policies and provide case studies of facilities in operation, in addition to discussing common tradeoffs associated with tolling untolled roads. Those tradeoffs are summarized here to help you understand the benefits and obstacles:
- Better fuel efficiency and the rise of alternative-powered vehicles will not affect toll revenues. While funding for projects today relies heavily on the gas tax, improvements in fuel efficiency and the advancement of electric vehicles have diminished fuel tax revenues. However, because tolling is based on roadway usage instead of fuel consumption, it is not affected by improvements in fuel systems technology.
- Tolling will accelerate project delivery and can provide dedicated funding. Though tolling is sometimes combined with other funding sources, its revenues can help pay for projects that could otherwise not be fully funded. There are examples of projects on a 30-plus-year implementation schedule without tolling that were accelerated to completion in five or 10 years with tolling. Tolling can also save agencies money over time if ongoing deferred maintenance will add costs to a project in the future.
Challenges and Critiques
- Toll collection costs more than conventional funding sources. Agencies should bear in mind that toll facility implementation and operational costs are higher than the costs of obtaining funding through sources such as fuel taxes or vehicle registration fees. Costs unique to tolling include the collection equipment, back-office software and staff and customer service systems. While the conventional costs are still lower, toll collection costs are steadily declining as all-electronic tolling is becoming more of a standard around the country.
- Opponents claim that our untolled roads are already paid for. They cite the original construction costs of a facility, maintaining that citizens should not have to pay to build a road or bridge twice. Lifecycle costs (e.g., maintenance, operations) and the eventual costs of reconstructing a road or bridge, however, do not always get taken into account. When added up, these costs can far surpass original price tags.
- Drivers say they are paying double with tolls. They point to the taxes paid at the pump when faced with a toll to use a particular road or to go over a bridge. A counterargument can be made that fuel taxes paid, especially on short facilities like bridges, are very small compared to project costs. Also, several recent tolling mega-projects have utilized significant funding from fuel taxes in addition to tolling.
Issues Caught in the Middle of the Road
- All-electronic tolling has its own set of tradeoffs. All-electronic tolling (AET) has become the standard for all new toll facilities in the United States and Canada, but it comes with its own pros and cons. On one hand, AET reduces emissions, eliminates traditional toll-booth congestion and is cheaper from a construction standpoint. On the other hand, collection and billing processes are more complicated, requiring agencies to significantly update their procedures.
- Traffic diversions can be looked at positively and negatively. By nature, tolls will cause some drivers to take alternate routes or not make trips at all. Alternate routes may add time to a traveler’s trip. Communities with popular alternative routes may also see increased car and truck traffic, which could raise concerns. For some agencies traffic diversions are not necessarily bad, though. They can be an objective; the aim of congestion-priced tolls, for example, is to encourage travel during less congested times or on other routes.
Other Considerations to Make
- Equity issues must be evaluated. Equity debates tend to center around geography and income. The question is, are those most likely to be tolled at a disadvantage due to their proximity as well as their socio-economic status? The case studies analyzed by Davis and Patel revealed that some agencies resolve this issue by offering discount programs for frequent users or residents of certain regions or states.
- Not all drivers are familiar with how to pay tolls. Education should not be undersold when planning a tolling project, especially in regions without existing toll facilities. Public outreach and ongoing customer service will add costs and take patience when educating drivers about the billing process and how AET systems function.
According to our experts, there is no one-size-fits-all approach to evaluating these tradeoffs, as agencies across the country have implemented the tolling of untolled roads with varying project characteristics. With increasing fuel efficiency and electric vehicle adoption, it is important to maintain the long view with tolling. In the era of plateauing fuel tax funding, tolling may offer a solution to accelerate critical infrastructure improvements and mega projects.