Transportation

Frank McCartney on Highway Financing, New Tolling Strategies

By Frank McCartney

Frank McCartney

Frank McCartney

More than 50 years ago, the US federal government created an interstate highway system that paved the way for a more mobile society, opening up new transportation alternatives that spurred tremendous economic growth.

The interstate system accomplished what was intended, though perhaps it did the job a bit too well. Few foresaw the amount of traffic that would eventually use those roads … not to mention the substantial shift from rail to rubber for interstate transport and commerce.

That has left the interstate system in need of upgrade and expansion. But the cost to upgrade far exceeds revenue, resulting in many highway and bridge projects being delayed or cancelled.

Finding viable funding alternatives remains an ongoing challenge, as there is often strong resistance to tax hikes or creation of new revenue streams.

We are witnessing some innovation, such as the emergence of public-private partnerships – or P3s – where government and business share the cost, risk, and subsequent revenue generation on new road projects.

Still, states by-and-large have been politically handcuffed to one method of raising additional revenue – gas tax hikes. But with fuel-efficient vehicles travelling farther on a tank of gas, it is becoming a less effective method of raising funds. Some states are considering mileage-based vehicle fees to offset declines in gas tax revenue, but that idea is in the early stages of development and meeting with similar resistance.

Taking Its Toll

Currently, states are not permitted to collect tolls on interstates within their borders. Changing federal law to allow states to do this is an idea that has met with resistance from the trucking industry, as well as elected government officials who wish to avoid the anticipated political fallout.

IBTTA

©2013 PHOTO COURTESY OF IBTTA

IBTTA held a summit on legislation, policy & infrastructure finance titled, "What Customers and Critics Think About Tolling ... and Why." The panel was moderated by Frank McCartney, Senior Vice President and Toll Market Leader (far right).

The argument, particularly from trucking associations and the travel industry, was essentially, “We paid for these highways once, why do we have to pay for them again?”

It seemed like a dead end. But many of us felt state-based tolling was an idea with merit – as a way to improve highways using funds generated by the people actually using those roads – and we pushed onward to keep the conversation alive and search for common ground. This year, we saw the first signs that persistence was paying off.

In March, I was a moderator at a panel discussion entitled, “What Customers and Critics Think About Tolling … and Why,” for the International Bridge, Tunnel, and Turnpike Association (IBTTA) in Washington, DC. We were looking for unvarnished opinions from all parties, so the forum included panelists from the US Travel Association, the American Automobile Association, American Highway Users Alliance, and UPS.

After years of resistance, it marked the first time I had heard anyone from the trucking industry acknowledge that tolling for reconstruction projects could be a viable option they would be willing to support. It was stunning how much we agreed on many key points. Through open dialogue we found some common ground, with a consensus that we somehow need to create a reliable, sustainable revenue stream, or risk substantial business losses.

It’s encouraging that the tone of the conversation is changing, but there’s still a long way to go.

Grow America

Just one month later, there was a substantial breakthrough when the Obama Administration introduced the Grow America Act. The administration picked up on the notion of allowing states to add tolls to interstate highways. It marked the first time the government acknowledged state-initiated tolling as a viable option for revenue generation.

The Grow America Act would also allow for “variable funding,” which permits states to change toll rates based on the time of day or traffic conditions as a way to encourage carpooling or use of public transportation. The Act would also allow for the creation of price-managed lanes, where vehicles pay a fee to use lanes that provide a reliable travelling speed.

None of this is designed to replace existing federal funding. State-based tolling would not be mandatory. States would still hold the option whether or not to introduce it as a way to provide additional funding for interstate roads within their borders beyond what federal funding would provide.

Heavy road users have expressed understandable objections, contending that they are already contributing their fair share through gas taxes and existing tolls. It is a fair argument, and the eventual solution will have to be balanced with those concerns in mind. By tracking improved accessibility, quicker trips, and better quality roads, companies will start to see the payback. That’s the bonus. That’s what will improve their business.

Enabling state-based tolling will likely take a long time, but we’ve made a stand. Beginning this conversation is very encouraging.

The tone is changing, and they’re listening.

Making Progress

NTTA, tool gantry, President George Bush, Turnpike Dallas, Texas

©2013 JAMES BLAND

A toll gantry, like this one along the President George Bush Turnpike in Dallas, Texas, eliminates toll plaza stoppage by allowing motorists to access the toll road without slowing down.

In the past, one of the objections to new tolling was the cost of adding tolling plazas, operational costs, and traffic stoppage causing additional congestion, delays, and air pollution. But that argument has been all but eliminated with the arrival of electronic tolling systems, like EZ Pass.

Today, motorists can just drive under a gantry and it automatically registers the toll. Because you’re not stopping, you’re getting home to your destination faster, and that creates a more acceptable value for the motorist.

When someone is looking to set up a tolling system, Parsons Brinckerhoff is one of the few firms that can help with the complete life cycle of process. That includes planning, toll rate setting, travel demand modeling and traffic projections, financial planning, organizational development, facility design and construction management, and supervision of tolling technology system development and implementation. Even when the project is completed, Parsons Brinckerhoff can provide the back office operation for the client through our subsidiary firm, ALLTECH, to maintain an efficient operation. This is what distinguishes us from other tolling service providers.

We’re making progress, and we’re making it a more viable option to consider. But it’s still a long road. Our first priority right now is to keep the conversation going. We’re in this for the long haul in the hopes that eventually, officials will see the value of creating this funding flexibility for states.

Of course, while tolling is a good tool to have in the toolbox, it is not a solution unto itself. It’s not a panacea. But most of the tools in the current toolbox – the gas tax, the vehicle mile tax, the federal trust fund – are pretty dull and need sharpening.

Sharpen those tools and add tolling flexibility to the mix, and it could go a long way toward funding roads and bridges we need.

Frank McCartney is a Senior Vice President and National Toll Market Leader in the Philadelphia office.