Improving Interstate Highway System Using Tolls

September 25, 2013

The Interstate highway system is America's most important surface transportation system. With just 2.5 percent of the nation's lane-miles of highway, it handles some 25 percent of all vehicle miles of travel. It served to open the country to trade and travel, enabling the just-in-time logistics system at the heart of the U.S. goods movement. Yet the first-generation Interstate system is wearing out. Most of the pavement has exceeded or is nearing its 50-year design life, says Robert Poole, the Searle Freedom Trust Transportation Fellow at the Reason Foundation.

The need for massive investment to transform the first-generation Interstate into what this report calls Interstate 2.0 occurs just as our 20th century highway funding system -- based on fuel taxes and state and federal highway trust funds -- is running out of gas. The transportation community agrees that we need to phase out fuel taxes and replace them with a more sustainable funding source, generally agreed to be mileage-based user fees of some sort.

Poole's study seeks to address both problems: replacing the aging Interstate system with a 21st century Interstate 2.0 and taking the first major step toward implementing mileage-based user fees. It proposes that the United States finance the Interstate 2.0 project based on per-mile tolls collected using all-electronic tolling (AET). Over several decades, the transformation of the Interstate system, state by state, would convert at least one-fourth of all travel from per-gallon fuel taxes to per-mile charging.

  • The estimated cost of improving the current interstate system is $983 billion (2010 dollars).
  • To get a handle on the feasibility of toll financing, the study models a tolling system based on 3.5¢/mile for cars and 14¢/mile for trucks that would fully fund the project after 35 years, indexed annually for inflation.
  • To make the transition attractive to highway users, the study proposes it be implemented on the principle of "value-added tolling." That means tolls would only be introduced in a corridor once it was reconstructed and modernized, designed to operate at a higher "level of service" than today's design standards call for.
  • If a state has not yet replaced its per-gallon fuel taxes with a standard mileage-based user fee at the time Interstate tolls are introduced, the AET system will permit rebates of fuel taxes generated by the miles driven on the tolled Interstates, thereby avoiding "double taxation."

Source: Robert Poole, "Interstate 2.0: Modernizing the Interstate Highway System via Toll Finance," Reason Foundation, September 12, 2013.

 

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