Private Toll Roads Present Better Options for Drivers, State Budgets

Published October 24, 2014

As some states increasingly see toll roads as a good way to pay for neglected highways, one transportation expert is warning about using toll roads as “cash cows.” Other states, he notes, are privatizing their toll roads and reaping the benefits.

Robert Poole, director of transportation policy for the Reason Foundation, says privatization of toll roads is a good way to prevent government from tapping tolls and unsuspecting motorists for the costs of other road projects.

“Why is the government in this business?” Poole said. “My view is highways should be like the investor-owned utilities, like cable TV. Motorists should pay user fees that pay for the capital and operating costs of the roads they use. They should not be taxed through additional tolls to pay for other people’s projects. That’s a very bad tendency and is a growing trend.”

Revenue Grabs
Over the past year, some local and state governments have worked to import that “very bad tendency” into their own communities.

Atlantic City’s City Council proposed a resolution earlier this year asking the South Jersey Transportation Authority to double toll rates in order to increase the city’s revenue.

In Pennsylvania, state law requires the Pennsylvania Turnpike to make payments to that state’s Department of Transportation, to be used by the state government. The Pennsylvania Turnpike Commission says it has to raise tolls every year in order to cover that payment to PennDOT, in addition to making cuts to its own long-term projects and capital expenses.

There were more toll roads in 2013 than in 2008, according to the U.S. Department of Transportation. Nationwide, there were 2,795 miles of interstate toll road in 2008, and 3,299 miles in 2013.

In Texas, state legislators are discussing expansion of the state’s toll system. Texas has invested billions in toll road projects across the state, and Joe Weber, executive director of the state transportation department, said in September toll roads were a vital part of its public transportation planning.

Taxing Questions
Lobbyist groups are campaigning against the addition of more private toll roads, however, claiming they unfairly impact toll customers. Instead, such groups push for a higher tax on gasoline.

In May 2014 the Owner-Operator Independent Drivers Association (OOIDA), a trade association representing truckers, sent a letter to Michigan State Rep. Wayne Schmidt (R-Traverse City), opposing a bill that would expand the state’s ability to enter into agreements with private entities involving public transportation.

“Tolls are financially crippling to truckers,” Mike Matousek, the OOIDA’s director of legislative affairs, said in his letter. Instead, Matousek suggested raising revenue for infrastructure by increasing the gasoline tax.

In a July 2014 letter explaining its opposition to Virginia Gov. Terry McAuliffe (D), OOIDA stated the organization opposes addition of toll roads through public-private partnerships, fearing private companies may hike toll use fees in the name of profitability.

Unsupported Fears
Such fears are not supported by the evidence provided by the history of Indiana’s toll-road company, the Indiana Toll Road Concession Company (ITRCC).

In 2006, Gov. Mitch Daniels (R) approved leasing some of the state’s roads to a group of private companies operating as a collective entity, ITRCC.

The state received a payment of $3.85 million up front, for the rights to run the 157-mile roadway. ITRCC applied for bankruptcy proceedings in September 2014, but both drivers and taxpayers will remain unaffected.

“The ones criticizing the Indiana toll road are people who don’t understand the difference between private losses and public losses,” said Wendell Cox, a national transportation consultant  and Heartland Institute senior fellow. “If private investors want to invest their money stupidly, what do we care? If a government makes a bad deal, it’s not an indictment of privatization. It’s an indictment of government.”

Tom Gantert ([email protected]) is the Mackinac Center for Public Policy’s senior news correspondent.