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Tollway Successes Hard to Ignore

By August 19, 2016No Comments

Are toll roads the future of good pavement? The lessons from Colorado’s E-470 might provide us a clue on how to provide pothole-free roadways.

The first highway in the U.S. to use open road tolling – where drivers could skip human-staffed barriers and coin baskets, paying instead electronically – celebrated its 25th anniversary in 2016. It’s Colorado’s E-470 which links the eastern suburbs of Denver and which has successfully maintained its pay-back schedule to bondholders while becoming a preferred, well-maintained roadway.

Further evidence of the E-470 success story is how other cities and states look at this tollway as a solution to congestion. In most states, there are inadequate funds to so much as maintain the roads that already exist. So given how the E-470 Public Highway Authority has been operating and advancing technologically since it opened in 1991, why aren’t there more of them?

Historically speaking, toll roads have existed since antiquity. In the U.S., various versions of toll roads do not exist in 24 states. Of those, five states (Connecticut, Kentucky, Michigan, Georgia and Tennessee) have proposals to build new toll roads in the future. The other states have various versions allowed by their state governments and in agreement with the Federal Highway System, which has allowed tolling with provisions since 1956.

The issue of why such toll roads don’t exist in some places is illustrated by the state of Missouri, where the state constitution effective bars toll roads and bridges. Referenda to amend the Missouri constitution have twice been rejected. Arguments against charging cars and trucks to use any roadways claim it amounts to double taxation, given how construction and maintenance of those roads are paid for by other taxes. The states in the Federal Highway System are split on this issue: some do and some do not allow tolling.

The problem is the existing funding for maintaining or adding to the highway system is inadequate, particularly funds raised by gas taxes. The fuel taxes dedicated to the Highway Trust Fund were last set in 1993 at 18.3 cents per gallon of gasoline and 24.3 cents per gallon of diesel fuel. If the HTF were indexed to inflation, those amounts today would be 30 cents and 39 cents, respectively. Congress has transferred about $148 billion to the HTF since 2008 from general funds, during a time when per capita driving and car ownership have declined and vehicles have become much more fuel-efficient (i.e., fewer gallons of gas are being purchased relative to miles driven). Additional revenues are raised from multi-axel trucks according to vehicle weight, in addition to taxes on tires themselves. All that said, deferred maintenance on roadways amount to a net increase in costs because time, traffic, and temperature fluctuation (especially freeze-thaw cycles) lead to exponentially more expensive problems when allowed to worsen without repairs.

Given the economics of road building and maintenance, Missouri is in a bit of a pickle because it wants to collect tolls on Interstate 70, a federally built highway, to rebuild and expand the 70-year-old highway. The road currently handles twice as many cars as it was designed to receive, with slow-moving congestion being the result. Additionally, piecemeal resurfacing of its pothole-ridden pavement adds to traffic delays. The Feds granted a special allowance to Missouri, Virginia and North Carolina to implement a toll system, but that will expire at the end of 2016.

Transportation writers for the St. Louis Post-Dispatch, Leah Thorsen and Ken Leiser, have documented this problem in recent years. Thorsen wrote about her own experience with the E-470 in Denver in July 2016, noting how the advanced electronic toll system was built with no tax dollars at both the state and federal level. The E-470 was entirely financed by bond debt, of which $1.6 billion remains and which will be paid off in 2041. It was opened for traffic in 1991.

The E-470 Public Highway Authority, a consortium governed by representatives of the communities linked by the 47-mile roadway, generated tolls of $190 million in 2015, paying out $91 million to bondholders. The road has seen increased usage over the last six years, including a 15 percent jump between 2014 and 2015, with 630,000 accounts for users who use set-up accounts (cars and trucks without accounts are billed through identification of license plates). Only 2.1 percent of toll transactions are by 18-wheel trucks.

Are toll roads then the future of highway funding? A lot of political hurdles need to be overcome. But Missouri Department of Transportation director Patrick McKenna noted, “people use them and they’re often in better shape because there’s more resources put into them.” That’s clearly the case with Denver’s E-470, where millions of users who have alternative routing available to them nonetheless use the tollway, paying a premium for smooth pavement and less congestion.

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