Indiana Begins Studying Tolling on Interstate Highways

Published July 10, 2018

The Indiana Department of Transportation (IDOT) is contracting with infrastructure consultancy firm HNTB to study how much revenue the state could raise by charging tolls on interstate highways.

Indiana signed a $9.6 million contract with HNTB in June. The company is expected to deliver its findings to IDOT by November 2.

House Bill 1002, signed into law by Gov. Eric Holcomb in December 2017, which increased the state’s excise tax on gasoline from 18 cents per gallon to 28 cents per gallon, directed IDOT to study the idea of interstate tolling.

The law also requires IDOT to request the U.S. Department of Transportation grant a waiver from provisions of the Federal Aid Highway Act of 1956 which prohibit charging tolls on interstate highways.

‘It Is Up to the States’

Robert Poole, director of transportation policy at the Reason Foundation, says interstate tolling is an example of states picking up where the federal government has failed.

“There is close to zero likelihood of Congress coming up with the estimated $1 trillion cost of replacing and modernizing these vital but aging highways,” Poole said. “The states—not the feds—own the interstates, so it is up to the states to take the lead on this. The only realistic way to pay for replacing first-generation interstates with ‘interstate 2.0’ is toll financing.”

Gas Taxes Not Working

Gas tax revenues aren’t going far enough to cover needed highway maintenance, prompting states to leave larger projects unfinished, Poole says.

“The average revenue from federal and state fuel taxes was 2.2 cents per mile for passenger cars,” Poole said. “In most states, our estimated cost of rebuilding and maintaining the interstates required revenues closer to 3.5 cents per mile for cars. So it’s not surprising that legislators and state DOTs spend fuel tax monies on lots of smaller projects, leaving major investments in the interstates undone.”

Justin Stevens, state director of the Indiana chapter of Americans for Prosperity, says gas tax increases are tough on lower-income people and won’t raise the expected revenue.

“Gas tax increases shrink the amount of money Hoosiers could otherwise use to support their families, invest in their communities, or grow a business,” Stevens said. “Lower-income earners feel the pain most sharply, as a larger percentage of their take-home pay is taxed. Moreover, gas taxes will see diminishing benefit as fuel mileage continues to improve.”

Suggests Regulatory Relief

In addition to allowing states to charge tolls on interstates, there are plenty of other ways Congress can cooperate with state lawmakers to make the roads better for travelers, Stevens said.

“Federal mandates such as Davis-Bacon prevailing wage keep public construction costs artificially high,” Stevens said. “Myriad other rules and regulations further complicate matters.  Fortunately, for Indiana, lawmakers have repealed prevailing wage, but there remain several ways to reform spending. We need to continue to look for ways to streamline the regulatory process and ensure that current gas tax dollars are actually being spent on core priorities such as roads and bridges instead of diverted to other thing like bike paths, as they often are.”

Sees Better Roads Ahead

Poole says interstate tolling and the “second-generation” system it will fund will lead to happy trails for everyone.

“All Americans will benefit from a second-generation interstate system with more lanes where needed, smoother and better-maintained pavement, and real service plazas with gas stations, restaurants, electric-car recharging, and other services.”