EZ-Pass Or EZ-Cash? Why Toll Roads Are A Bad Idea

January 7th, 2008 Posted in Toll Roads

tollbooth By NMA President, James Baxter

Electronic transponder technology, like E-ZPass, is making toll roads more palatable, but that doesn’t mean toll roads are good public policy.

Toll roads are an inefficient, backwards approach to providing public highways. Worse, they foster corruption, political patronage, and discourage needed improvements on the rest of the highway system.

Don’t be fooled by the references to “free-market principles,” “proper pricing,” “supply and demand,” and “economic incentives” from those selling the for-profit roadways.

The truth is, any resemblance to free-market principles is more illusion than fact.

A real market-based system has willing sellers, willing buyers, and reasonably unfettered competition. Any highway of consequence falls flat from the get-go, when it comes to market principles.

First, highway corridors are not assembled by willing buyers in competition with other willing buyers. The state identifies the corridor it wants, establishes what it considers to be a politically and judicially acceptable price, and condemns the land of those sellers who disagree. This is market principles at the end of a gun barrel.

Toll road advocates argue that those who use the system the most will pay the most. Fair enough, but who determines what the buyers should pay? It isn’t competing sellers of similar services.

Highway users do not have viable alternatives to buy highway services from other sources.

For all practical purposes, there are no other sellers competing for the motorists’ business and realistic alternatives don’t exist. Toll roads are literally a monopoly that is sanctioned and protected by the state. Yet, the state’s citizens and other highway users have no channel to influence toll road management and pricing decisions.

Upgrades and improvements to any highway viewed as competing with the toll road are likely to be postponed or ignored.

Unnecessary congestion, underposted speed limits and arbitrary enforcement on alternative roads are silently condoned by transportation officials and elected officials. Think about it, toll roads can’t compete without the presence of congestion and motorist inconvenience on the public highway system. Are congestion problems going to be corrected if they threaten the income of the toll road?

Motorists found this out the hard way in Orange County, Calif., when a clause in the model contract for the 91 Freeway Express Lanes prevented expansion of the freeway’s regular lanes. As a result, congestion got so bad that in April 2002 the Orange County Transportation Authority paid $207.5 million to buy out the toll lanes that originally cost just $139 million to build.

A major retardant to the expansion of toll roads, besides arbitrary tolls, has been the inconvenience of the toll-paying systems. Little is ever mentioned of the human carnage, property damage, air pollution, and inconvenience attributable to toll-booth systems.

In exchange for removing toll-booth inconvenience, accidents, and waste, motorists are being asked to accept higher tolls and invasive surveillance technology that can monitor the movement, location, speed and operation of any vehicle on any highway or road.

While this type of surveillance will not be confined to toll roads, it is on toll roads where its use will be most easily rationalized.

Compare that to our system of fuel taxes that charge users of the highway system based on fuel consumption.

No charge cards, no electronic surveillance, no toll bureaucracy, no cameras, no roadside monitoring (no automated enforcement!), not even any toll booths! That is, apparently, way too efficient and user friendly.

Toll road proponents are fond of referring to the “new money” that will flow to highway projects. That new money comes from the same tired old wallets that pay existing highway-user fees. The difference is the highway users will pay twice; once in taxes and again in tolls.

There are billions of gas-tax dollars being siphoned off for non-highway purposes, or covering government deficits. Anyone who thinks tolls will be any less likely to be usurped for non-highway purposes is not a student of history.

As for building new highways with this new money, most new toll roads aren’t going to be new roads at all. They are going to be existing Interstates or Interstate corridors converted to toll roads — the same corridors and roads for which we have already paid.

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  1. 8 Responses to “EZ-Pass Or EZ-Cash? Why Toll Roads Are A Bad Idea”

  2. By Dave on Apr 25, 2008

    NJ has spent over $1 billion so far on its EZ Pass system. On top of those upfront costs, the company that collects the payments gets something like 13 cents out of every 35 cent toll (that’s 37%). If that is not corruption at its finest, then I don’t know what is. That would be like Walmart installing 24-karat gold cash registers at every checkout line and then throwing away $1 for every 3 they take in. Why would you spend over $1B on a cash register, which is what this EZ Pass system equates to? They’ll need to take in tolls for decades just to pay off the cash register.

  3. By other Joe on Mar 4, 2008

    MJ, James knows what he’s talking about. We both know how Oklahoma has had an extensive toll road system, maybe one of the pioneers in the nation. We pay the same gas tax everybody else does yet we still pay expensive tolls (up to about $4 for a hundred miles in a car). In fact Tulsa, Oklahoma’s second largest city, has NO tax payer funded Interstate type roads except toll roads. WE must pay an expensive toll no matter which direction we travel away from Tulsa and we have at least one main inter-city road that is toll. All good Okies have a pike pass. For the state they are a solution to everything. They are habit forming. Some have been paid off for years but the revenue only goes to support more pikes. These are roads that were supposed to go non-toll after they were paid off absolute, guaranteed, promised, pledged. It didn’t happen….surprise. I don’t know where the gas tax money is going because this state has some of the worst roads. It’s a common subject of conversation around here.

  4. By Paul on Mar 4, 2008

    MJ must work for a toll-road company the following statement is a lie:

    “Improvements in fuel economy, to be expected over the next decade or so, will only further weaken the link between road use and fuel consumption, making fuel taxes a less suitable finance instrument.”

    In fact, oil usage has been rising and is projected to do so for the next 30 years. That means gas-tax receipts will increase, not decrease.

    I’ve heard this spin before and it can only come from someone who is laying out the industry line to the ignorant.

  5. By Keith Irwin on Jan 19, 2008

    As a side note:

    It was always explained to me that tolls were a way to pay for the road and that once paid off the road would become free of tolls. Toll roads have been in place for decades in the north but are relatively new in the south. I was looking at the financial statements of the Sam Houston Tollway here in Houston and noticed that the operating costs were exactly the same as the tolls received (therefore the road will never be paid off).

    And now traffic has gotten so bad on the tollroad that I sit in bumper to bumper traffic and pay extra. Usually the EZ Tag lanes are the worst. Unfortunately, other than side streets, I have no other options.

  6. By John David Galt on Jan 15, 2008

    Toll roads, especially as they are (badly) done now, only seem bad until you consider the alternative.

    The state DOTs that are supposed to be using our fuel taxes to build and maintain roads have stopped doing their jobs - usually quite deliberately. Depending on your state, most or all fuel tax money is being wasted on rail systems and other phony congestion solutions. Sometimes this is quite deliberate. The Sacramento Bee recently published a piece bragging about how area planners (SACOG) are deliberately creating congestion, especially downtown, to try to force drivers out of our cars.

    Somehow the Environmental Impact Reports for these groups’ grandiose plans never reflect all the extra pollution from cars that are forced to sit idling or take less direct routes — let alone the road rage deaths caused by all that deliberate congestion. The planners should all be in jail.

    Privatizing the road business is the only way to take matters out of the planners’ untrustworthy hands and get road building going again.

    All the problems cited in the article that started this thread are problems of not enough privatization, not of too much.

  7. By Joe on Jan 14, 2008

    After watching a program on Public television about the projected tolling of Route 80. One of the speakers on the matter mention how the tax on gas that is suspose to go for infrastructure is diverted in a lage portion to Philadelphia Transportation system. Let the busses or other transportatio pay higher fares for their use and let the gas taxes pay the infrastructure as it is suspose to. If they didn’t use the money for other purposes they wouldn’t need to charge Tolls which upset the economic growth onf an area. Companies which use Highway system will relocate to avoid higher shipping cost. Tolls , bad Idea.

  8. By MJ on Jan 8, 2008

    James,

    You can’t possibly be serious.

    Do you honestly think that fuel taxes are less politicized than highway tolls?

    Tolls and taxes should exist in combination, each financing a share of the roadway network. Highways, especially urban ones, are congestible, and hence good candidates for tolling. Lower-level networks cannot identify and exclude users as easily — hence some form of tax financing is necessary.

    Gas taxes are highly politicized, which is why they cannot be adjusted regularly to account for inflationary pressures. In Minnesota, where I live, we saw a bridge collapse because of this.

    It is not true that existing roads are most likely to be tolled. The only cases of this have been conversion of HOV lanes to HOT status — arguably an improvement. The only possibility for new toll roads will be where new capacity is needed (and governments cannot meet the financial needs).

    Improvements in fuel economy, to be expected over the next decade or so, will only further weaken the link between road use and fuel consumption, making fuel taxes a less suitable finance instrument.

    Finally, roads are never really ‘paid for’. They incur ongoing operations and maintenance costs, and they need to be periodically rehabilitated or replaced. Failure to recognize this leads to poor highway policy.

  9. By RICK GOLD on Jan 7, 2008

    FOLKS,

    IS ANYONE SURPRISED ?? THIS IS JUST ANOTHER EXTENSION OF THE CONCEPT OF THE MOTORIST AS A PROFIT CENTER.

    SHOW ME THE MONEY BABY !!!!

    MY FAVORITE LINE FROM THIS ARTICLE: “NEW MONEY…FROM THE SAME TIRED OLD WALLETS”.

    WELCOME TO AMERIKA 2008.

    (OR IS IT “1984??)

    RICK GOLD

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