Jefferson Policy Journal

Controversies over the performance of relatively new express toll lane (ETL) projects are still simmering on both coasts, with Seattle and northern Virginia as cases in point. In the first, the year-old ETLs on congested I-405 face possible legislative termination for not quite meeting promised performance improvements. And just about every reader of this newsletter has heard about last month’s outrage over $40 tolls on I-66 inside the Beltway in northern Virginia. In both cases, the outrage was far from justified.
The I-405 case involves the conversion of an existing HOV lane each way to an ETL, with an additional priced lane added for the majority of the corridor. In approving the project, legislators gave the project conditional approval: unless it met two key performance metrics in its first year, the tolls would be removed. Those were:

1. Generating enough revenue to pay all the ETL operating costs; and,
2. Maintaining the federal minimum of 45 mph at least 90% of the time during peak periods.

Demand for congestion relief has been so high that condition #1 has been easily met. But condition #2 has not quite been achieved. Though the lanes are doing much better than when they were HOV, the 45 mph target was met only 85% of the peak time northbound and 78% southbound. So opponents are calling for termination.
A report for the Washington Joint Transportation Committee, by University of Minnesota researchers (January 8, 2017), identifies the culprit. The legislature also put a $10 ceiling on the peak toll rate. As the report notes, “the toll algorithm and pricing is not controlling input traffic along the ETL effectively, which in turn can result in too many vehicles in the ETL, unmanageable congestion, and ETL breakdown.” The near-term fixes include a more-responsive dynamic toll algorithm, extending the AM peak to 10 AM (from the current 9 AM), and yes, increasing the maximum toll rate! It remains to be seen if these sensible recommendations will be accepted, saving the project from termination. [Disclosure: I was a member of the Washington State DOT Expert Review Panel that recommended implementation of this project back in 2010.]
In northern Virginia, by contrast, there was no ceiling on dynamic toll rates, and when motorists who had been forbidden to use I-66 during peak periods (only HOV-2s were allowed until now) finally had the option of paying to use it, so many tried to do so that the peak toll for a short period on the first day did reach $40. Politicians immediately cried foul, citing predictions by Virginia DOT that round-trip tolls would be about $17. Legislators and local officials of both parties denounced VDOT and the governor, and called for cutting back or eliminating the tolls.
Fortunately, cooler heads at VDOT and the governor’s office prevailed, and were supported by a strong editorial in the Washington Post (December 10th): “Virginia Should Stick with its I-66 Express Lanes—Tolls and All.” And once the first day’s frenzy passed, and drivers figured out how the system worked, VDOT put out actual data on first-day tolls. The average AM peak-period toll was $10.70, and the average PM peak period toll was only $3.80. Thus, the average round-trip toll was $14.50—which is lower than VDOT’s projected round-trip average of $17.00.
With the situation calmed down by early January, the Northern Virginia Transportation Commission rejected a motion by one of its members that would have mandated lower rates, and simply called for VDOT to evaluate the system’s performance and report to the board by late spring.
As the Washington Post‘s editorial board wrote, the tolling system “is doing exactly what it set out to do”—limiting the number of vehicles using I-66 during peak periods to an amount consistent with relatively uncongested travel. And in very high-demand corridors, an arbitrary cap on toll rates would undercut that powerful mechanism for congestion relief. Let’s hope Washington State legislators get this message on I-405.
(This article first ran in the January 2018 issue of Surface Transportation Innovations)
Email this author

A recent article on the forthcoming White House infrastructure plan quoted an Administration spokeswoman as saying it would address “rebuilding our nation’s crumbling infrastructure.” That frequent characterization is misleading, as pointed out in an excellent new report from the RAND Corporation, “Not Everything Is Broken: The Future of U.S. Transportation and Water Infrastructure Funding and Finance.” (https://www.rand.org/pubs/research_reports/RR1739.html)
To begin with, the report reminds us that the large majority of transportation and water infrastructure is owned and largely funded by state and local governments, not the feds. It also includes graphs showing that total infrastructure spending as a fraction of GDP since around 1980 has been largely flat. And it notes that “needs assessments”—such as those produced by the American Society of Civil Engineers—”offer an unreliable guide for policy and priority setting.” This is in part because some proposed infrastructure projects would cost far more than their benefits, which would make our economy poorer.
After setting the stage, the report goes on to offer guidelines for sound investment in transportation and water infrastructure. Since much of what is wrong with our infrastructure is the result of bad policy, rather than lack of money, “an across-the-board ramp-up of federal spending is unlikely to solve the infrastructure problems that need fixing.” In addition, focusing on “shovel-ready” projects is ill-advised; instead, Congress should focus on longer-term projects likely to produce significant national benefits. And where federal funding is involved, it should be made conditional on “regional sponsors securing matching funds from any combination of public and private sources, including user fees and [user] taxes when appropriate.” Congress should insist on life-cycle cost analysis, and require that state and local governments provide for ongoing operating and maintenance of the new or rebuilt infrastructure.
Hence, public-private partnerships (P3s) are seen as important, and the RAND report recommends that Congress provide assistance to state and local governments to develop common standards for structuring P3s, to make it easier for infrastructure investors. And while the report stresses the importance of retaining tax-exemption for traditional municipal bonds, it neglects to mention the need to expand current federal tax exemption for Private Activity Bonds (PABs), which have been critically important in financing P3 transportation projects. It mentions pension fund investments in infrastructure, but only taxable Build America Bonds in this connection. Missed entirely is the recent U.S. trend of pension funds investing equity in P3 infrastructure projects.
The report also stresses that the federal government needs to do a much better job of investing in infrastructure that it actually owns, such as large dams, inland waterways, and the air traffic control system. It proposes merging the Army Corps of Engineers (waterways) and the Bureau of Reclamation (dams) into a single federal water resources agency. But it is silent on recent efforts to convert the ATC system into a self-funded nonprofit corporation, like those that exist in 60-odd other countries.
Whatever the White House proposes will be modified by Congress. The RAND report offers important guidelines for that endeavor.
(This article first ran in the January 2018 issue of Surface Transportation Innovations.)
Email this author