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It’s Time to Toll

By MIKE NICHOLS | Nov. 24, 2014

I’ll be heading through Chicago and down to Indiana for Thanksgiving this week, a trek that will add an inch or two to my waist and remove more than a buck or two from my wallet.

The Chicago Skyway, which connects the Dan Ryan Expressway to the Indiana Toll Road, is now $4 each way – and going up. In addition to $8 there, we’ll give another $4 or $5 to the Illinois Tollway and another couple bucks to the Indiana Toll Road.

The only thing that causes more heartburn than donating all that cash to the Flatlanders and Hoosiers is knowing they will be using our roads absolutely free.

I know this will go down about as easy as Uncle Hank’s canned oyster and goose-liver stuffing, but we Wisconsinites need to get used to the idea of electronic tolls on our Interstates and other freeways. It’s going to be expensive and no matter how many Flatlanders and Minnesotans we hit up we’ll be the ones doing most of the paying. But it’s a free-market solution to an overwhelming problem: lack of cash to pay for modestly modern highways.

Some folks might have been shocked the other day when Transportation Secretary Mark Gottlieb floated the idea of hundreds of millions of dollars of new taxes and fees – as well as the transfer of lots of cash from the state’s main account – to pay the bills. But those are just the folks who haven’t been paying attention.

We have 115,000 miles of public roads in this state, 90% of which are maintained by counties, towns and local municipalities. Forget about those for now. The big concern today is the State Highway System maintained by the Wisconsin Department of Transportation, which includes “only” about 11,800 miles but carries 60% of the traffic.

Funding upkeep and modest expansion is expensive and Wisconsin, for years, has been digging itself into a hole deeper than Lake Wazee. Numerous studies over the years, including one here at WPRI, put the annual funding shortfall in the coming years at between $500 million and $1 billion each and every year.

Our problem is not that we have more roads than everybody else. Our 2011 WPRI study, “Wisconsin State Highway System: Needs and Resources, 2011-2020,” determined that the number of miles of state highway in Wisconsin (11,839 at the time, to be exact) was 22nd in the country. (We’re 25th in square miles of land.)

Nor are we particularly outlandish in our transportation spending. We spend about the same per mile as the U.S. average. Overall, we’re rated 28th nationwide for system cost-effectiveness.

That suggests we could probably spend our dollars at least a little more wisely.  But the depressing fact is that we need more revenue too – and, although the solution as to be multifaceted, it should include some sort of tolling.

WPRI commissioned a second study in 2011, “Rebuilding and Modernizing Wisconsin’s Interstates with Toll Financing,” that laid out the facts.
 
The Wisconsin State Highway System includes 743 miles of Interstates (I-43, I-94, I-794, I-894, I-90 and I-39) that carry about 18% of all traffic and 21% of heavy truck travel. Over the next 30 years most of it will need to be reconstructed at a cost of $26 billion.

According to the study by Robert W. Poole Jr.:

"Wisconsin already has a $1 billion per year highway funding gap. The total $26.2 billion cost of this Interstate program is far beyond the ability of current transportation funding sources to handle. Federal and state fuel tax revenues, the largest source of transportation funding, are in long-term decline in real, or inflation-adjusted, terms, and a portion of Wisconsin’s vehicle registration fee revenue is now committed for several decades to paying debt service on transportation revenue bonds issued since 2003 to cover funding shortfalls.

General obligation bonds, with general fund debt service, were also issued to make up for recent diversion of transportation fund revenue to the state’s general fund. To rebuild the rural Interstate and southeastern freeway system in a timely manner will require an additional source of transportation revenue.

Under the principle of value-added tolling, tolls would not be charged on a corridor until it was reconstructed and modernized. All toll revenues would be dedicated to the rural Interstate and southeastern freeway system corridors, as pure user fees. Based on a 30-year program of reconstruction and assuming moderate toll rates comparable to those on other toll road systems, the study estimates that the entire rural Interstate program could be financed by toll revenue bonds.

For the southeastern freeway system (which includes U.S. 41 and U.S. 45 in addition to the Interstates), one option is to toll only the new lanes, operating them as express toll lanes. Doing so would produce enough revenue to cover about 17% of the cost of the entire freeway system reconstruction. Tolling would be all electronic, with no toll booths or toll plazas to impede traffic. If political support could be garnered to price all lanes on the southeastern freeway system instead, our analysis estimates that the revenues would cover 71% of the cost of reconstruction."

Those numbers are a few years old already, and some of the urban freeway reconstruction projects are now already underway, including the Zoo Interchange. So Gottlieb was wise to recently suggest a new tolling feasibility study.

That updated study needs to be done as quickly as possible in order to determine how exactly to proceed with a plan similar to Illinois’ I-Pass system (but without any toll booths or toll plazas at all), and what this state needs to do to secure federal approval.

It should not be done, however, to determine whether to proceed. We already know the answer to that.

A large portion of the current transportation budget in this state is spent on the 11,000 miles of state highway other than our Interstates and Milwaukee-area freeways. And the WPRI reports have not even looked at local roads – which, in many areas, may be in even worse shape than our state roads.  So figuring out how to pay for work on I-43, I-94, I-794, I-894, I-90 and I-39 as well as U.S. 41 and U.S. 45 is just one little part of the problem.

But one for which we have an answer.

It’s time to toll.

Mike Nichols is president of the Wisconsin Policy Research Institute.

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