Limits of Tolling as an Answer to Highway Funding Problems

Making users pay directly for the highways they use is an idea whose time has come. One aspect of this is recent efforts to impose tolls on selected portions of interstate highways. Tolling express lanes on congested highways, such as the Capital Beltway around Washington, DC, has been a very effective way to earn revenue while providing lanes that are almost always free of congestion. By providing a source of revenue to finance construction of additional lanes, this arrangement can reduce overall congestion. General and widespread tolling of interstate highways, however, will not work well unless drivers get superior service in exchange for the tolls they pay or can be required, through some means, such as mileage based user fees, to pay for the miles they travel on competing highways.

Mileage based used fees are preferable to tolling selected highways. With mileage based user fees, technology, such as GPS, could be used to record miles driven by each car. Drivers would pay directly for the miles they drive, whether those miles were on Interstate highways, arterial highways, or local roads and streets.  Prices could vary depending upon the highway and time of day with drivers paying more for premium services, such as congestion free express lanes or bridges across major rivers.

Implementing a system of mileage based user fees would require that vehicles be equipped with a device that would record mileage driven including some information about the location of each mile, even if just the state. Some, such as Robert Poole, advocate tolling interstate highways as part of a transition to direct user fees until a system of mileage based user fees could be implemented. But carrying out a transition to tolls would be difficult politically. Many drivers oppose tolls for interstate highways because they already pay for the construction and maintenance of those highways via fuel taxes.  Another problem with tolls is that drivers could avoid them by using a parallel road or highway that does not have limited access. This will increase maintenance costs, the number of accidents and the amount of congestion on those parallel roads and highways.

With existing technology, it is easy to collect tolls for limited access highways, but much more difficult to charge direct user fees for other roads and highways. Yet interstate highways have a dedicated source of funding that, depending on the state, may not be available to fund local streets and roads.  States often give priority to interstate highways over local streets and roads in decisions about allocating revenue from federal fuel taxes. When drivers use alternate routes to avoid tolls on limited access highways, they may be using roads funded by cash strapped local governments through property taxes rather than by fuel taxes.

It is best to limit tolls to those highways for which comparable un-tolled alternate routes do not exist for most drivers.  Furthermore, it is inequitable to impose tolls on some interstate highways, but not others, as a source of additional revenue to fund all highways or transit within a given jurisdiction.  Beginning in 2007, the state of Pennsylvania tried to toll interstate 80 and use the revenue to fund other highways and public transportation in the state.  Local citizen groups objected strongly, and the Federal Highway Administration rejected the proposal on three separate occasions.

As a long-term solution to highway funding problems, mileage based user fees are equitable and offer the promise of more efficient funding and management of highways, particularly if the fees can be used to cover the cost of the particular roads and highways for which they are collected. As an intermediate step on the way to mileage based user fees, tolls are problematic because they can only be used on selected highways, leading to traffic diversion and an inequitable distribution of the costs of funding highways.  Tolls can and should be used selectively to allocate space on congested highways. But rather than trying to impose tolls on rural interstate highways, it may be better for the federal and state governments to continue using fuel taxes, while promoting a gradual replacement of fuel taxes with mileage based user fees.