Trump Infrastructure Plan Amps Up the Dialogue on Value-Added Tolling

With the Trump Administration searching for pathways to deliver a trillion-dollar infrastructure program built largely on private investment, Robert Poole of the Reason Foundation is out with an op ed pointing to tolling as a key piece of the puzzle.

Poole, the Foundation’s director of transportation policy, is no stranger to anyone who attends IBTTA conferences and workshops. He’s been a tireless advocate for user financing and a dogged opponent of what he sees as the over-regulation of the nation’s highway system. In 2014, he published a framework for value-added tolling that has helped build wider consensus for the reconstruction that will be needed to make the country’s 47,000-mile interstate highway system serviceable for the next 50 or more years.

So it was no surprise to see his byline in the Orange County Register last week, arguing for a series of steps to rebuilding many of the state’s busiest highways.

“Just repaving them won’t be enough,” he warns. “Interstates are also strangled by obsolete interchanges and major bottlenecks that give southern California some of the nation’s worst traffic congestion. Many major truck route corridors involving southern California could benefit from dedicated truck lanes that would improve safety and handle projected increases in freight shipments in the coming decades.”

Finding the Dollars

With no dedicated funding available to support the president’s infrastructure plan, Poole states the obvious: “a major focus of a Trump infrastructure plan must be identifying how to fund the reconstruction and modernization of this vital infrastructure.” In southern California, he says, almost all the projects on the books “would lend themselves to long-term public-private partnership deals, financed by equity and toll revenue bonds instead of taxpayer money.”

That’s where Poole’s value-added tolling concept comes in. “Transportation officials should be able to make a positive case to legislators and voters that over the next 20 years, toll financing can successfully rebuild and modernize all Interstates in busy states like California,” he writes.

The op ed lays out three conditions to build a bigger base of support for tolling:

• Tolls should only be collected after a road has been rebuilt and reopened.

• States should ensure that all toll revenue is dedicated to reconstruction, maintenance, and operating costs for the road where it is collected.

• Tolls should be offset by gas tax rebates to mitigate supposed “double taxation” of tollway users.

Tying Tolling Agencies’ Hands

While Poole’s plan is a valuable discussion starter, some of the fine print makes it a less-than-perfect delivery model.

Restricting revenue collection until a new road opens can be counterproductive when a tolling agency is working to establish cash flow, demonstrate solid finances for lenders, and minimize costs for customers—all in the interest of delivering safe, reliable infrastructure in the public interest. Poole also calls on the Federal Highway Administration to eliminate needless regulation that inhibits project development and innovation. It follows that tolling agencies should be able to build the financing packages that work best for each project, rather than being hamstrung by one-size-fits-all rules or expectations.

It’s also a bit of a disappointment that Poole’s proposal incorporates the old canard that gas taxes and tolling are a form of double taxation. The reality is that while, gas taxes are essential revenue for general purpose roads, tolls are a user fee for customers who choose to use a toll road. Toll roads are paid for by tolls, not by federal or state gas tax dollars. The Virginia Supreme Court underscored the point in October 2013, concluding that tolls are a user fee, not a tax.

“In the present case, the tolls paid by users of the project facilities are user fees because: (1) the toll road users pay the tolls in exchange for a particularized benefit not shared by the general public, (2) drivers are not compelled by government to pay the tolls or accept the benefits of the project facilities, and (3) the tolls are collected solely to fund the project, not to raise general revenues," wrote Justice Leroy F. Millette Jr.,” in a decision upholding tolls on the Elizabeth River Crossings.

But apart from the specific details, the greater good in the Reason Foundation’s value-added tolling framework is that it contributes to a robust conversation, at just the moment when legislators are beginning to engage with the possibility of a big, audacious infrastructure plan. The tolling industry is grateful to Reason for helping to accelerate the dialogue on highway infrastructure financing, even if we don’t agree on all the details.

There’s never been a better year to participate in IBTTA’s annual finance and policy workshop. This year’s event takes place April 23-25 in Jersey City, NJ. Registrations in just two weeks, so check out the program today.