Are Tolls the Right Way to Pay for Infrastructure?

In President Trump’s six-page fact sheet relating to infrastructure improvements, there is language suggesting that Washington should get rid of the federal prohibition on interstate tolls while at the same time opening up state-funded rest stops to more privatization. The president’s plan relies on increased revenues from both components to fund a major portion of his proposed infrastructure spending. The question is, will it work?

The idea of privatizing rest stops is likely a non-issue here because private ownership almost always results in a better selection of rest stops and better maintenance and upkeep that is so lacking under the current system of state run stops. The real question is whether interstate tolls are a good idea or not.

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Truckers and Carriers Would Be Hurt

Eliminating the federal prohibition on interstate tolls would give states the flexibility they need to use tolls to raise revenues for infrastructure spending. What critics of the plan fear most is that truckers and carriers would be disproportionately affected by new tolls. Their fears are quite justified.

In states that have already placed tolls on some of their roads, it is common for legislatures to target truckers and carriers with higher tolls based on the notion that they are causing most of the wear and tear on our roadways. Some states have singled out truckers exclusively by raising tolls on them but not on drivers of passenger vehicles.

C.R. England, one of the nation’s largest refrigerated trucking carriers, says increased tolls would affect everyone in the trucking industry. Larger companies could more easily absorb the tolls and pass some the expense on to customers, but independent operators would suffer considerably. Higher tolls on them come right out of their paychecks.

The Risk of Misspent Funding

Another strike against the idea of interstate tolls is the very real fear that revenues generated by new tolls would be misspent. One need only look at the New York State Thruway to understand this concept.

When the limited access highway was proposed in the late 1940s, the idea was to collect tolls and operate rest stops only for as long as it took to pay off the original amount needed to construct the roadway. Once that bill was paid, maintenance would be funded through the rest stops while the tolls would be officially eliminated. The tolls remain despite the state of New York having paid off the bonds in the 1990s.

Surplus money taken from the New York State Thruway is now used to fund other aspects of New York’s budget. Even while the state was still paying off bonds, all the money collected from the Thruway was not put back into it. Some of that money was being redirected to other portions of the state budget.

It has been estimated that for every dollar collected in highway tolls intended for infrastructure projects, as much as 20% goes to pay administrative costs. When infrastructure projects are bonded in order to get the financing upfront, another portion of tolls has to go toward satisfying the interest on those bonds. And, of course, states cannot resist the temptation to spend annual surpluses on other things rather than dedicating those funds to the infrastructure projects they are intended for.

A Better Way

It seems that giving states greater flexibility to raise revenues through interstate tolls is not the best way to go. There are other ways to generate the funding necessary to improve our infrastructure without implementing what amounts to yet another tax on the driving public, a tax that would disproportionately affect truck drivers and carriers.