A Conservative Case for Highway Tolling

As of today, using toll finance to rebuild part or all of a state’s Interstate highways is under discussion in 14 states that I know of. In some states, these discussions are bipartisan, but in other states, some conservative legislators have become outspoken opponents of tolling. Current examples include Connecticut (where Republican legislators are fighting hard against tolls), South Florida (where Miami Republicans have gotten anti-toll measures through the legislature), and Texas (where the governor and conservative legislators have forbidden TxDOT from putting any state funds into new toll projects).
I’m concerned about this for two main reasons. First, I think increased use of tolling is essential if we are going to fix the major shortcomings of our highways and freeways. And second, I think tolling can and should be consistent with basic conservative principles, as I explain in a new Reason policy brief, “A Conservative Case for Tolling,”.
In that brief, I discuss five of the main reasons conservatives give for opposing tolls, as follows:

  1. Tolls seem, to them, to be no different from taxes;
  2. They say it’s unfair to have to pay tolls and gas taxes on the same road or bridge;
  3. Governments (e.g. Pennsylvania) divert toll revenue to other uses, making toll rates higher than they should be;
  4. Many see governments as slapping tolls on existing highways, with only vague statements about improving those highways (maybe, someday); and,
  5. A lot of the revenue is consumed in the costs of collecting tolls (compared with the low cost of collecting gas taxes).

Some of these points have merit, as I discuss in the policy brief (which I hope you will read). Tolls ought to be, but today often are not, pure charges for service, like your electric bill or phone bill. You pay for what you get, you know who the provider is, and you can hold them accountable. That’s how traditional toll roads operated, including the thousands of private toll roads in 19th century America and Britain.
Nobel Prize-winning economist Milton Friedman wrote a paper about the poor management of U.S. highways, which I quote in the policy brief. He concluded that tax-funded U.S. highways are inefficient state-owned enterprises that aren’t accountable to their customers. “When the state goes into business, nobody worries much whether people are getting what they are willing to pay for, or whether the people doing the paying are those who are receiving the services,” Friedman noted. I cite a number of other conservative thinkers and policymakers who see tolls as far better than gas taxes.
My conclusion is that America needs to re-think tolling as it evolved in the 20th century, to come up with a new approach, which I call value-added tolling. It would have five key features:

  1. Charge a toll or a fuel tax for a highway, but not both (no double-charging);
  2. Build a better facility first, and only then start charging (no user costs until there are user benefits);
  3. Dedicate all toll revenues to the tolled facilities (no revenue diversion);
  4. Guarantee proper maintenance for the useful life of the facility; and
  5. Reduce the cost of toll collection to the lowest possible extent.

The policy brief explains each of these features.
The point of these provisions is to create a genuine value proposition for all cases where tolls are used to finance reconstruction or replacement of aging facilities. Perhaps eventually they could also be applied to existing tolled facilities, but that’s a longer-term objective. I contend that if these principles were followed, it would open the door to enough new funding to deal with the large backlog of needed projects that are mostly not being built these days. I also argue that this kind of funding would be more sustainable long-term, and would be fairer than gas taxes because people who use major (costly to build) highways would pay more per mile than those who only use inexpensive two-lane highways and local streets, which today’s fuel taxes can pay for.
I hope you will read the full policy brief (.pdf) and let me know what you think.
This commentary originally appeared in the December 2019 edition of Surface Transportation Newsletter #194.
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