Reason Foundation Promotes Toll-Financed Interstate Replacement

Los Angeles — A new Reason Foundation study finds Congress and states need to utilize toll financing and transition from per-gallon gas taxes to per-mile user fees in order to fund the needed reconstruction of America’s Interstate highways. The report also explains why toll-financed Interstate modernization is the most realistic and politically feasible option to pay for needed repairs and upgrades, and details how to make tolling and per-mile charges fair and customer-friendly for motorists and truckers.

“Policymakers and drivers must face up to the real cost of building a better-performing Interstate System than the aging, outdated system we have now,” said Robert Poole, author of the report and director of transportation at Reason Foundation. “But if we expect highway users to pay for a trillion-dollar modernization program, they will need to get real value for the per-mile charges they will pay.”

The study finds the key to repairing highways and funding Interstates with a sustainable funding stream is to “use per-mile all-electronic toll revenues to underwrite revenue bonds for reconstruction and selective widening of the existing system — and its possible extension to metro areas that have developed since the 1950s but have no nearby Interstate access.”

The Reason Foundation report recommends Congress create a voluntary program offering to exempt any state from the 1956 bans on tolling and commercial rest areas if the state agrees to the following conditions:

1. Tolls must be collected electronically and charged per mile traveled. (This begins the transition from per-gallon taxes to per-mile fees.)
2. Tolls on a segment would be charged instead of fuel taxes, meaning fuel-tax rebates would be required. (This reinforces the transition from per-gallon to per-mile.)
3. Toll revenues would be used only for the capital and operating costs of the state’s Interstate highways, bridges, and tunnels. (This prevents tolled corridors from being used as cash cows.)
4. Tolls on a segment would begin only after that segment is reconstructed or replaced and opened to traffic. (This ensures users pay only for something better than the status quo.)
5. Tolls must apply to all vehicles using the rebuilt Interstate. (This prevents discrimination against trucks, and is fair since all vehicles will benefit from the rebuilt Interstates.)
6. For a given category of vehicle, tolls must be the same, for in-state and out-of-state Interstate users. (This ensures no economic constraints on or discrimination in interstate travel and commerce.)

“The primary highway funding sources — federal and state fuel taxes — are running out of steam due to ever-higher federal fuel-economy regulations and the increasing market penetration of hybrids and all-electric vehicles. A major step toward addressing both of these challenges would be federal authorization for willing states to use toll financing to rebuild and modernize their aging Interstates,” Poole writes. “This would require no new federal funding—and indeed, as states took advantage of this option, it would free up a large portion of existing federal and state fuel taxes for a backlog of unmet transportation needs on non-Interstate facilities.”

The study also examines the findings and flaws in the Transportation Research Board’s major report, “Renewing the National Commitment to the Interstate Highway System: A Foundation for the Future.”

The full Reason Foundation study is available at https://reason.org/policy-study/the-case-for-toll-financed-interstate-replacement/?utm_medium=email.