Toll Roads and Double Taxation: The Left and Libertarians Converge

By Rachel Alexander
Town Hall.com

4/1/2013

Toll roads are appealing to many on the right, because the fees don't look like taxes; motorists are charged for the voluntary action of driving on a specific road. Toll roads appear to be run by private entities, not the government. Also known as turnpikes, they are becoming an increasingly popular way to raise money to build roads, instead of increasing gas taxes which have traditionally paid for highways. Gas tax revenues only have about one-third the buying power they did a decade ago, insufficient to build new roads or maintain existing ones. There are now 5,244 miles of toll roads in the U.S., operating in 35 states.

It is an illusion that toll roads are a free market way to solve a growing government expense. Toll road contracts are set up as public-private partnerships, which are not the same thing as privatization. Public-private partnerships (PPPs) result in government-sanctioned monopolies granted to one or more favored companies, essentially crony capitalism. It is easy for the government to write specifications for projects so they will only fit select businesses. The PPPs may last from 30 to 100 years, granting an extremely long monopoly without competition. Government continues to oversee the projects, interfering with the private company's ability to fully maximize revenues. Even libertarians who promote toll roads admit the government still owns the toll roads.

The most expensive highway project in the U.S. was paid for by tolls, and so mismanaged that taxpayers filed a lawsuit against the state of Massachusetts over being required to pay tolls for the enormous expense. The Big Dig toll project in Massachusetts resulted in criminal prosecutions, ran 600 percent over cost, and took an extra six years to complete. It will not be fully paid for until the year 2038. Fortunately there were some consequences. The consortium that oversaw the project ended up paying out $407 million in restitution, and several smaller companies agreed to pay a combined sum of approximately $51 million. This experience should have served as a warning.

Tolls are inherently inefficient. There are reports that 80 percent of the money raised from tolls goes to the company managing the toll roads. Up to one-third of the revenues goes to tollbooth operators. Even many of the toll roads that have electronic pass options still have a costly tollbooth option.

Tolls rarely disappear after enough money has been raised to pay for a project. Proponents admit this, but defend the perpetual tolls by stating that the money goes to ongoing maintenance. Isn't that what gas taxes are for? Tolls aren't just initiated to create new roads; often they are put into place for maintenance only.

Toll road proponents admit the increased revenues will go for additional environmental projects that normally would not be affordable with just a gas tax; projects such as the complete undergrounding of roads in environmentally sensitive areas and light rail.

The traffic diversion that results from toll roads increases congestion on roads in other locations. This leaves too few motorists on the toll roads to make them efficient. Proponents argue that there is always an alternative road that motorists can use instead of the toll road. However, they fail to point out that the alternative road is usually miles away and congested, making it an unrealistic solution for most commuters. There is no realistic practical alternative, otherwise virtually everyone would avoid the toll road.

Those who do not pay the tolls, for whatever reason, are treated practically like criminals and fined incredible amounts of money. Not to mention the state may suspend their driver's license and registration. The state of Texas charges per mile in some areas, such as 15.3 cents per mile in North Texas. The state humiliates toll violators by listing their names and amounts owed on a website. Some owe as much as $153,000. It seems preposterous how one person can be responsible for owing that much simply for the privilege of driving on the public roads for a few years. The toll on the 520 bridge from Bellevue to Seattle costs anywhere from $1.13 to $5.13, but if not paid within 80 days, will likely be assessed a $40 late fee per unpaid toll, plus costs. This averages out to at least 1300 percent more than the original toll! Where is the outrage over a small civil fee increasing this much? Clearly, the punishment is grossly disproportionate to the crime.

The way toll roads were forced on the public in parts of Texas without a real vote sparked a documentary exposing the unfair maneuvering called Truth be Tolled. Since 2004, Texans have been loudly fighting toll roads. Toll roads are administered under regional mobility authorities (RMAs), which are not held directly accountable to the public. The contracts are negotiated in secret, and there is no cap on the spending nor end dates set. A San Antonio Toll Party emerged to fight the toll roads imposed undemocratically upon that area of Texas.

There is a deafening silence from the left about the disparate impact toll roads have on the poor. The left is also noticeably silent regarding the extra wasted fuel that is used and dispersed into the environment as motorists drive extra miles to avoid the toll roads. The poor, who are most likely to drive gas-guzzling, older, polluting cars, will be the ones driving extra miles to avoid toll roads.

There is equally deafening silence from libertarians about the excessive surveillance that is required to track drivers on toll roads. Drivers in Texas are tracked on so many highways now it is possible to tell where Texans are multiple times throughout the day. To rack up $253,000 in fees, how often was Texas's top violator tracked by surveillance?

Toll roads sound good in theory, especially to libertarians sitting in ivory tower think tanks. But practically they don't work. Toll roads wouldn't be quite as bad if government would adopt them in place of gas taxes. But government will never get rid of gas taxes. The right generally dislikes gas taxes, which are poorly correlated to their purpose of funding road maintenance. Gas taxes and tolls only provide a third of state and local road spending.

Bexar County, Tex. Commissioner Lyle Larson, who opposes toll roads, revealed on a radio show a few years ago that the state highway fund lost $10 billion over 20 years, because funds were diverted to non-road related purposes. More than half of the money went to fund the Department of Public Safety, $115 million went into the state's general fund, several million went for a computer system for the state comptroller’s office, and the rest to the Texas Department of Mental Health and Mental Retardation, arts commissions, and various politicians’ pet projects.

Texas State Representative Garnet Coleman said he believes the Texas Department of Transportation sits on road construction that has already been authorized, in order to keep traffic congestion bad in Houston so people will welcome toll roads.

The problem can be fixed by ensuring that revenues go directly to road maintenance, perhaps through a sales tax or mechanism other than gas taxes if necessary, not by adding another level of revenue generation that gives government more money to waste.

David Ellis, a researcher at the Texas Transportation Institute at Texas A&M, came up with a way to fund highways that would not require tolls or raising gas taxes. Index the gasoline tax to inflation and put the incremental revenue in the mobility fund, where it can be used to pay off bonds. Gas taxes may not be a perfect way to fund roads, but they aren't much more of a tax than toll roads. People can avoid gas taxes by choosing not to drive as much, driving electric cars and bicycles, or taking cheaper public transportation.

Toll roads do nothing but enable a new layer of irresponsible spending by the government. The public ends up paying for roads twice, plus additional environmental projects. Libertarians overlap with the left on social issues, not fiscal issues. Libertarians should look long and hard at why they agree with the left on double taxation here.