States Look to Tolling to Fund Transportation, Relieve Congestion, Speed Commerce

A new report says Chicago could reduce congestion and increase mobility by building a $12 billion, 275-mile regional network of high-occupancy toll (HOT) lanes among other infrastructure projects. The report comes just as several HOT lane projects prepare to come online in other parts of the country, as some toll road projects suffer growing pains, and as new data shows all-electronic tolling may now cost less to collect than fuel taxes. Here are some updates on recent developments.

  • Sam Staley of the Reason Foundation looks at Chicago’s traffic problems and some toll-heavy solutions in his report “Practical Strategies for Reducing Congestion and Increasing Mobility for Chicago.” Staley writes that “A missing component in the region’s transportation investment strategies is an aggressive approach to re-examining the road network.” He says such an approach would incorporate: the addition of new capacity in key areas of the traffic network; better management of the existing network, through Intelligent Transportation System technologies; the addition of new roadways to create critical north-south routes that more efficiently address suburban Chicago travel needs; and integrating transit into regional roadway network planning and programming. The report recommends 11 specific infrastructure projects, including three tunnels, a bus rapid transit network, and 2,401 new lane-miles of expressways, which would require an investment of $52 billion over the next several decades. Staley estimates that user fees (tolls) could be used to generate $58 billion in new revenues, with the 275-mile HOT lanes network mentioned above generating nearly two-thirds of those revenues. Tollroads News has an analysis of Staley’s report here.
  • Express Lanes are scheduled to open on I-495, the Capital Beltway in northern Virginia later this year. The Virginia Department of Transportation also last month went to financial close on a toll concession that will bring Express Lanes to I-95 in the next couple of years (read more from Tollroads News and The Washington Post). The Express Lanes projects are designed to encourage more carpooling (since those in vehicles with three or more people will ride free) and reduce congestion (by also giving motorists in cars with fewer passengers the option of paying a premium toll to ride in the new lanes). The lanes will use dynamic pricing so the more commuters that use the toll lanes at a given time, the higher the toll will be. But transportation consultant Rachel Weinberger is warning that expanding these two busy interstates near the Nation’s Capital could actually bring more congestion in the long term. “The biggest potential problem is that we’re building more roads that will provide very short-term congestion relief and will cause other kinds of traffic and travel problems,” Weinberger told Martin Di Caro of the TransportationNation blog. “All of the research shows that when you add capacity to highways, rather than relieving congestion in the long run, you actually create more congestion in other parts of the system.”
  • Di Caro also blogged recently about the risks at stake in the Express Lanes projects for both the state of Virginia and Fluor-Transurban, the private sector venture responsible for construction and operation of both projects. Emil Frankel of the Bipartisan Policy Center tells Di Caro, “The private sector is putting a lot of money into this only with the assurance that they will get a return on their investment to service the debt that they have incurred to construct it.” Frankel believes the I-495 Express Lanes will ultimately be successful because the new lanes were built directly adjacent to congested travel lanes on the Beltway. But toll roads don’t always live up to expectations for their public and private sector benefactors. The Pocahontas Parkway, a tolled freeway near Richmond that was one of Virginia’s earlier forays into public-private partnerships, is not meeting traffic projections (it sees barely 15,000 cars a day), may require another financial restructuring and has reportedly prompted a shakeup of top execs at Transurban, which was also the private sector investor on that project. Also, HOT lanes in Houston have met with some confusion from drivers and the city is now considering new signage to get more people using the lanes, Di Caro points out.
  • Tollroads News reported last month that veteran toll industry consultant Daryl Fleming recently told an International Bridge, Tunnel and Turnpike Association conference that all-electronic toll collection has allowed some tollers to reduce toll collection costs below five percent of revenue. That would put collection costs below those for fuel taxes, which are normally seven percent of total revenue. In the past, toll collection costs have almost always been over 10 percent of revenues. Fleming said the policy implications of the new data are that: all-electronic tolling needs to be recognized as a more cost-effective means for collecting revenue than motor fuel taxes; revenues from user fees (tolls) are usually committed to a specific facility (toll road) and less likely to be raided for other, non-highway purposes (as gas tax revenues sometimes are); they are collected over a long period of time, providing stability and predictability to the revenue stream; and are more acceptable to the public because they can see where their money is going.
  • Even a more lightly populated state is considering how a toll road might benefit it, The New York Times reported recently. Peter Vigue, the CEO of the Maine-based engineering and construction firm the Cianbro Corporation has proposed a $2 billion private toll road that would run 220 miles across the state. Most of Maine’s major roads run North-South and Vigue believes an East-West route is desperately needed to not only revitalize local economies but help speed the flow of global commerce across the Northeast to markets in the Midwest. Such a route could become more urgent in the years ahead as bigger container ships call at East Coast ports such as Maine’s Eastport. But, as the Times reported, opponents of the toll road worry that it could destroy some of the very characteristics Maine is known for, including its natural beauty and remoteness. Vigue said he is in discussions with other potential private sector investors and believes the $2 billion toll road project is achievable without state or federal participation. The state legislature did approve $300,000 for a financial feasibility study due to its interest in the economics of the project. It will be reimbursed by the builders if the project goes forward.