Wednesday, 19 January 2011

Subsidised toll roads and HOT lanes in Virginia

The Washington Examiner reports that the Governor of Virginia is proposing using taxpayers’ money to kickstart four toll road projects in the state, on the basis that it makes the projects viable for the private sector.

The projects are:

-       VA17 Dominion Boulevard;
-       US460 89km expressway;
-       Second Midtown Tunnel;
-       I-95/I-395 HOT Lanes.

The average subsidy per project is 25%, so that private concessionaires are expected to raise the remainder and charge tolls to recover the cost. 

The initial reaction may be that toll roads should be viable in their own right.  Yet if there remain other road related taxes (e.g. fuel taxes), it is quite legitimate to count state revenue from such taxes when such roads are being used as being able to contribute towards the project’s costs.  Nevertheless, I have yet to see such a deliberate “shadow toll” approach used that connects fuel taxation to particular projects.

However, as tolling is to be welcomed as a source of financing, the viability and economics of the projects may be questioned.

TollRoadsNews has more on the projects, and its own commentary.

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