Friday, 17 August 2012

Massachusetts permitted to use Turnpike revenue on other roads

Generally speaking, tolling can be undertaken either at specific points on a road or continuously along an entire journey.  Conventional tolling finds fixed points on a road network to charge the road user, whereas distance based road user charging, vehicle mileage tax, time-distance-place road pricing, is about charging a vehicle for its trip on all roads.

It is fair to say that as vehicles don't typically carry the technology to allow the latter, and governments (which own and operate most roads) don't have the political will to shift towards that, there is a preference, for now, to stick with conventional tolls.

So what does a government do when it finds it difficult to raise fuel taxation, but has a series of toll roads which are happily generating surplus revenue, and has a difficulty meeting demands for funds for road maintenance.   Does it divert the surplus from the profitable toll roads into untolled roads?

That's what Massachusetts did and it upset more than a few.

For many a toll road should be self-contained.  The toll should be related to the road it applies to, and the money raised should be enough to pay for its capital and maintenance costs (and upgrades), not to pay for other roads.  

Yet an alternative view is that if the state has assets that are profitable, then why not treat those assets as businesses that can be used to support related infrastructure?

In 1997, Massachusetts faced a problem.  It was the cost of the Big Dig, possibly the world's most expensive urban highway scheme ever (at an eye watering US$22 billion).  The state decided to start using money from the Massachusetts Turnpike to pay some of those costs. 

The Newspaper.com reports on what happened when some of those motorists were unimpressed:

In 2009, turnpike users sued the turnpike authority over 58 percent of their toll money -- $440 million -- being siphoned off for the expensive tunnel, which they argued changed the money from a "user fee" to a tax under the state constitution. The coalition of motorists and trucking associations behind the suit argued the system was also fundamentally unfair.

"The majority of travelers who use Metropolitan Highway System (MHS) facilities each day pay no tolls at all: MTA collects tolls from only 46 percent of the travelers who use MHS facilities each day, allowing 54 percent of travelers to pay nothing at all for their use of the most expensive part of the MHS," lawyers for the plaintiffs argued. "This court should not hesitate to invalidate a tolling scheme that impermissibly functions like a tax or that unreasonably or disproportionately burdens those who are singled out to pay tolls."

The court judgment summarised the claim as:

"according to the plaintiffs, the tolls are lawful user fees when applied to pay the expenses of the tolled roads and tunnels, but an unconstitutional tax when applied to pay the expenses of the nontolled roads, tunnels, and bridges."


The tolls "were collected to compensate the authority for the expenses incurred in operating the MHS (and limited by statute to the amount necessary to pay those expenses), not to raise revenues for the commonwealth...Where, as here, a public authority manages an integrated system of roadways, bridges, and tunnels, and chooses to impose tolls on only some of the roadways and tunnels in an amount sufficient to support the entire integrated system, its purpose does not shift from expense reimbursement to revenue raising simply because the toll revenues exceed the cost of maintaining only the tolled portions of the integrated system... Because we conclude that the tolls collected by the authority on the MHS were fees, and because we conclude that they would still be constitutional excise taxes even if they were taxes, we affirm the dismissal of the plaintiffs' state constitutional claims"

In other words, the Court treated the Turnpike as part of an integrated network and that just because tolls have not be imposed on all of that network does not mean revenue can only be spent on the tolled segments.  It treated the tolls as "user fees", because they could be avoided by driving on untolled roads (taxes can't be avoided).

Massachusetts can happily continue to reap profits from its toll roads to cross-subsidise the rest of its network (and so offset other taxes).

Background

The Massachusetts Turnpike is one of the oldest toll roads in the USA and is essentially an east-west artery from New York State (where it connects to the tolled New York State Thruway) to Boston.  It is part of the Interstate highway network, being the easternmost end of I-90.  It utilises both manual tolls and the basic "Fastlane" DSRC (RFID) toll tag system (soon to be transferred to the EZPass franchise which it is interoperable with).   Wikipedia has an excellent map depicting how important the Turnpike is to the state.  Within Boston, part of the "Big Dig" project includes a link used as part of the Turnpike (the Ted Williams Tunnel which itself is tolled in one direction) which completed its connection to Boston Logan International Airport.

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