CEG Industry Blog

The Best Route to Keep U.S. Highways Running Smoothly

With fuel tax revenue falling because of higher-mileage vehicles, we have a choice of higher fuel taxes, more booths, or more tire-wrecking holes in the road.

📅   Thu March 17, 2016 - Edition
Giles Lambertson


With high-speed automatic tolling reducing the frequency of toll booths, the aggravation level for toll-road travelers is decreasing.
With high-speed automatic tolling reducing the frequency of toll booths, the aggravation level for toll-road travelers is decreasing.

An investment firm leases a public toll road and when repairs are required, the lessee pays for it out of pocket. This is how a public-private highway partnership is supposed to work—and is exactly the story of a 70-mile stretch of the Indiana Toll Road. The highway is going to be rebuilt to the tune of $200 million and taxpayers aren't paying a dime of it.

The public-private partnership that turned the 157 miles of Indiana highway into a private toll system was inked 10 years ago. Not everyone heralded it. There was squawking that the Australia-Spanish investment consortium leasing it was getting too good a deal at taxpayer expense.

But critics fell silent when the original investment group ran into financial trouble. After the recession slowed interstate commerce and traffic on the artery between Chicago, Ill., and the Ohio turnpike, toll revenue declined sharply. The money didn't come in fast enough for the investment group to cover debts. Bankruptcy loomed.

Now interstate traffic—and revenue—is increasing and another investment firm, this time from Australia, has paid nearly $6 billion to pick up the toll road contract. The company will this month start repairing bridges, repaving the road's surface and shoulders, adding fiber optics for faster highway information and otherwise enhancing the roadway for travelers.

Ideally, a cross-country traveler never encounters a toll booth or a potholed road. The reality is that with fuel tax revenue falling because of higher-mileage vehicles, we have a choice of higher fuel taxes, more booths, or more tire-wrecking holes in the road. Letting travelers pay a reasonable user fee—ie, a toll—to travel a road is the preferable choice, which is why the U.S. has some 6,000 miles of toll roads and 33 states have public-private partnerships to keep traffic on critical highways moving smoothly.

With high-speed automatic tolling reducing the frequency of toll booths, the aggravation level for toll-road travelers is decreasing. Furthermore, if tolls remain reasonable—and that's for state partners to police—gasoline taxes won't be jacked up to pay for new bike paths. Paying as you go makes sense.