For Infrastructure Funding, Tolls Remain a Steep Challenge in Some Places
Posted at 2:43 p.m. on July 17, 2014
Federal law prohibits most interstate highway tolling. Lifting that ban is not likely to happen soon, even though toll revenue would help states pay for some infrastructure projects.
States are turning to public-private partnerships, or P3s, to finance projects. But with P3s in some parts of the country, there’s a potential obstacle: public dislike of tolls.
“One of the largest hurdles is public perception. In the Midwest, people view tolling as what happens on the East Coast when they go on vacation,” said Tracy Henke, the legislative director for Sen. Roy Blunt, R- Mo., who spoke at a panel discussion at the American Road & Transportation Builders Association conference on P3s Thursday.
The Obama administration’s Grow America Act proposal would allow states to put tolls on their sections of the interstate system if they chose to do so — opening another revenue source to them for highway building.
The consensus among Henke and three other congressional staffers on the panel was that ending the toll ban probably won’t happen this year or next year when Congress takes up a multi-year transportation authorization bill.
Colin Peppard, a transportation policy adviser to Sen. Thomas R. Carper, D- Del., said no one is advocating that the federal government impose tolls on the interstate system within the states.
But some policy experts say that governors should at least have a chance to make the case to voters that taxes do not cover the full cost of building and maintaining highways.
Tolls would allow state transportation departments to make road improvements and, in effect, say “We’re going to show you real benefits that are worth the money. If the voters agree with that, great. And if they don’t, that’s fine too,” Peppard said. “But it’s a debate that the federal government’s prohibition on tolling is preventing.”
There are challenges in persuading drivers to accept toll roads as part of a P3 project, said Joseph Aiello, chief business development partner for Meridiam Infrastructure, a New York-based investment and asset manager specializing in infrastructure.
Let’s say a state that makes a decision to shift the revenue risk of a new highway project onto a private concessionaire, who owns an equity stake in the project.
Aiello said the reaction from the driver might be, “I’m going to take a quarter out and throw it in the basket. I never used to do that before. Everything was free. Now you’re telling me there’s a private guy who uses equity and I’m putting my quarter in the basket to not only pay for the road, but to pay for his profit. Is this something I feel comfortable with?”