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Transportation, Federal Government, Government, North America, United States
Time's Toll on U.S. Highways
An Interview with Ed Regan: New Financial Solutions for the Future of Transportation
Ed Regan is a senior vice president based in Columbia, South Carolina, USA, and a preeminent thought leader on transportation finance and planning. Nearly 4 decades of dedication to the toll industry have fed his passion to advocate sustainable solutions for funding transportation infrastructure today and in the future―starting by supporting the U.S. interstate highway system (IHS).
What is the IHS?
The IHS is a series of limited access highways designed to link the country’s major cities, making it possible to drive from New York City to Los Angeles without stopping at a single traffic light. Without a doubt, this system is one of the most important elements of mobility in the United States, carrying passenger and commercial traffic between the nation’s major hubs.
We are facing some real challenges in transportation funding and demand management that will affect our future mobility. It is an interesting time―a time of a lot of change―and I’m excited for what is to come.
The IHS accounts for only 1.1 percent of U.S. roadway miles, but carries 24 percent of all highway travel. Originally conceived in 1937 and signed into law in 1956, this 47,000-mile system took 35 years and cost $129 billion to complete—with 90 percent of funds coming from the federal government.
How is the IHS maintained?
The system was planned and funded at the federal level, but the states own these roadways and are responsible for their upkeep. Tolls were originally part of the funding plan; however, most of these roadways were built using only the federal gas tax, which was designed to finance the bulk of ongoing expenses and restricted the use of future monetary sources.
Now, the sustainability of the gas tax—transportation’s primary revenue source—is in doubt. As gas prices rise and Americans become more sensitive to greenhouse gas emissions, we are seeing a shift to more fuel-efficient vehicles. This is great news for the environment and reducing foreign oil dependence, but it is detrimental to transportation finance.
Today, states spend an average of more than $25 billion annually on IHS maintenance, expansion and reconstruction, which means that every 5 years they are spending the same amount of money on maintenance that was originally spent to build the system. Only 45 percent of current funding comes from federal sources, and that will likely continue to decline in the future.
Could tolling be a viable source of future IHS funding?
Tolling the interstates could provide a new, sustainable revenue source. Increasing the gas tax would go a long way as well, but it is almost impossible to approve additional taxes in this political climate. Interstate highway tolls, on the other hand, offer states a virtually untapped way of funding repairs to the most heavily used roads from their most active users.
States are considering these benefits—some are even desperate for change. State governors and departments of transportation are beginning to call for tolling restrictions to be lifted so that the states can fund repairs themselves and maintain these vital resources.
What challenges are there to implementing IHS tolling?
The biggest hurdle is political. With very few exceptions, current federal law prohibits the use of tolling on the interstates. Yes, there are about 3,000 tolled miles in the IHS today, but these were already in existence or well into development before the start of original construction. These federal restrictions stem from the argument that the roads were paid for during construction. However, the system is more than 50 years old and will need about $2.5 trillion of upkeep and reconstruction over the next 50 years—20 times the system’s original cost. It is difficult to continue claiming that the roads are “paid in full.”
Technologically, there is little impediment for states to begin tolling. Today’s advancements in cashless electronic tolling remove the inconveniences of tolling barriers, heavy traffic congestion and increased emissions at tolling points. In 10 to 15 years, you will not see a single toll booth, thanks to toll transponders and video imaging systems.
What does the future of IHS funding look like?
In the short term, the gas tax’s sustainability will continue to erode and interstate tolling will be used to help states maintain roadways. In the long term, I ultimately believe we will see a gradual transition from the gas tax to a per-mile basis of user fees for all travel, shifting the focus from fuel consumption to miles of roadway driven. That is a long way in the future—probably 20 to 25 years—but it is coming.
We are facing some real challenges in transportation funding and demand management that will affect our future mobility. It is an interesting time—a time of a lot of change—and I’m excited for what is to come.
