OLR Report 2013-R-0394 briefly summarizes a (1) September 2013 study recommending that states use all-electronic tolling to finance reconstruction of their aging interstate highways, and (2) critique of that report's suggestion that private-public partnerships play a role in the tolling.
For more than a half century, highway and bridge repairs have been funded primarily through state and federal motor fuel taxes. But, as inflation and the introduction of increasingly fuel-efficient vehicles erode fuel tax revenue, transportation officials have begun looking at other ways to maintain and repair the country's aging infrastructure.
One option to finance highway infrastructure is to switch from taxing the amount of fuel peop
le consume to charging them for each mile they drive. But doing so poses many challenges.
A September 2013 Reason Foundation study proposes all-electronic tolling of the nation's interstate highways as a way to meet these challenges and start weaning the nation off fuel taxes. “America needs a second-generation interstate highway system,” study author Robert Poole wrote. “The 20th-century fuel tax system is inadequate for this trillion dollar task.”
Poole said that tolls of 3.5¢ per mile for cars, SUVs, and pickup trucks and 14¢ per mile for larger trucks could meet 99% of the $983 billion he estimated it would cost to rebuild all and widen some of the country's interstate highways.
Such major construction projects, Poole noted, would be good candidates for public-private partnerships, or P3s, in which a private company would pay a state for the right to improve and operate a highway and set and collect tolls on it.
These agreements benefit the public by allowing construction or improvement of new highways without using public money, and transferring construction risks, such as rising costs and construction delays, to the private partner, he said.
But the Reason Foundation's reasoning on this point has been challenged. Penn State University law professor Ellen Dannin, writing in response to the study, warns that P3s as currently structured are not the answer, and proposes certain safeguards to redress what she says is an unfair tilt in favor of the private sector. “The reality of infrastructure privatization is unequal power and information,” she wrote.
Dannin listed several possible drawbacks of P3 privatization, including a lack of public accountability and contract provisions that she said are contrary to the public interest.
For more information, read the full report.
