Industry watchers have been sitting on the edges of their seats waiting to see how the administration plans to fund the huge infrastructure investment the president has promised; and the fiscal 2018 budget request has given us some insight into their plans. And it comes as no surprise that the White House and DOT see tolling the interstate highways as one of the cornerstones of the public/private funding that has been discussed for several years and resurrected in the new budget. The new budget would allow individual states to levy tolls on interstate highways.

Congress banned tolls on all interstates when the 46,000-mile system was created in 1956, although a few exceptions have been made in the last few years. North Carolina, Missouri, and Virginia, for example, have been granted an exemption under a pilot program. Generally speaking however, only those highways that already had tolls were allowed to keep them. This latest idea of the administration will be a major cause of concern for many, and already the “fors” and “againsts” have begun to solidify their positions.

Several influential firms and organizations, such as the membership of the Alliance for Toll Free Interstates (AFTI) which includes FedEx, ATA, UPS, and others are opposed to tolling. The ATA in particular, has long held the position that the fuel tax should be the primary source of funds for the highways. AFTI cites the failure of several attempts at tolling interstates, as well as a number of other perceived inefficiencies. According to the Transportation Research Board of the National Academy of Sciences, a typical toll facility spends 33.5% of its revenue on administration, collection, and enforcement. The administrative cost of collecting a fuel tax is about 1% of revenue. Another I believe, legitimate concern is that we would be exposed to double taxation in that drivers would pay tolls, state taxes, and some federal taxes on fuel. This concern is being reinforced as many states are increasing their own fuel taxes to fund improvements that the federal government has failed to make.

On the other side, we have the International Bridge, Tunnel, and Turnpike Association (IBTTA).

IBTTA cites the ability of toll ways to generate revenues to support their operations and investment needs. The country’s 5000 miles of tolled highways, tunnels, and bridges generate over $12 billion in annual revenues. In testimony before House Committee on Transportation and Infrastructure, the organization took a clear and strong position, stating, “While MAP-21 allows for tolling of new Interstate capacity, IBTTA strongly encourages the committee to consider allowing the expansion of this funding tool to include existing mileage on the Interstate System.”

Personally, I cast my lot with ATA, the U.S. Chamber, and the other proponents of an increased fuel tax, and believe that some reasonable increase  would be a much more fair and equitable solution. Admittedly, the resulting revenue would not be enough to completely solve the problem, but it would be a good start. Whatever the result, the issue is surely to generate a contentious debate within the Congressional walls when it comes up for discussion. The ranking member of the House transportation panel already has warned that there is no way the expansion of nationwide tolling will gain support, particularly from those who live in rural areas. If he is correct, it is difficult to see how an investor would gain a return on building highways and repairing bridges.

Written By: Clifford F. Lynch