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6/23/2008Toll Roads Mean Billions in Extra Costs for Motorists
Revenue collection with toll roads is twenty-five times less efficient than the gas tax.
With the promise of federal taxpayer subsidies, many states are rushing to embrace public-private toll road partnership deals as a means of boosting existing state transportation budgets. Our analysis shows, however, that when tolls are used to replace traditional funding sources like the gas tax, the out-of-pocket costs for motorists jumps by a factor of twenty-five.
Last year, the Washington State Department of Transportation (WSDOT) conducted a survey to determine precisely how much it costs to collect a toll from drivers (view report, 120k PDF). The agency examined the budgets of the most high-tech toll roads in the country -- those roads that rely upon Electronic Toll Collection (ETC) for at least two-thirds of their transactions. Electronic transponders minimize the expense of hiring employees to handle cash transactions and ensure costs are kept at a minimum. WSDOT documented only the direct expenses for the operation and maintenance of the transponder reading equipment and automated coin machines, salaries for human toll collectors and customer service staff, and the cost of toll violation processing. It did not include any costs that would have applied had the roads been open to free use by the public. On average, the roads selected for comparison by WSDOT spent $22 in collection costs for every $100 in toll revenue generated.
This compares unfavorably with existing methods of collecting revenue for roads such as the motor vehicle fuel excise tax. Each state levies this tax, which averages 19 cents per gallon, at the wholesale level tax. Although a few states like California also impose an additional sales tax at the gasoline station pump, collecting the tax from the fuel distribution point simplifies the administrative burden of the tax. According to figures maintained by the Federal Highway Administration, state governments, on average, spent just 88 cents in collection costs for every $100 in revenue generated from the gasoline excise tax last year. (View data, 28k PDF)
As the price of gasoline continues to rise, toll road proponents have suggested that user fees based on tolls should eventually replace gasoline taxes entirely. If Colorado were to raise the $600 million currently generated by the gasoline tax with tolls, for example, motorists would have to spend an additional $100 million in administrative costs every year just to maintain the current level of revenue. Likewise, to replace California's gas tax, motorists would have to toss an extra $730 million in the collection basket before generating any new revenue for high-priority projects. On a nationwide basis, the added cost of toll collection would amount to $8 billion.
As gas prices continue to skyrocket, toll road proponents have suggested taxation of gasoline is no longer sustainable. Data from the state of Indiana show that sticker shock at the pump has actually had more of a negative impact on toll roads than it has had on gas tax revenue (view data).
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