Thursday, 17 January 2013

IBTTA launches campaign to promote tolling in the USA

The International Bridge Tunnel and Turnpike Association (IBTTA) is probably the nearest there is to a global industry association for providers of tolled roads, regulators and policy makers, and suppliers of the technology, systems, services and equipment for tolling and road user charging.  However, it does have primarily an interest in the United States market, and as such its focus and its value is primarily in networking within that country.  The IBTTA was founded in 1932 and its name clearly was too, as it implies a fascination with bridges and tunnels, with toll roads almost being tacked onto the end, but have no doubt about it - this is essentially a body of toll road operators and public and private bodies responsible for charging road users directly.

Given it is a tolling industry association focused on the US, it is not surprising and indeed welcome that it has launched a campaign in the United States to promote the use of tolls as a means of paying for road use.

The press release says:

Generating more than $10 billion in annual revenues from 5,431 miles of tolled highways, bridges and tunnels, tolling is already a big part of the solution to the challenge of creating new, dedicated revenue streams to support our country’s transportation infrastructure needs.

Everyone in this industry knows that tolling delivers a safer, more reliable drive for many millions of customers each year. With the launch of Moving America Forward, IBTTA has assembled the financial and staff resources to translate that knowledge into action. With the transportation funding crisis receiving significant attention, and severe events like Hurricane Sandy putting a different kind of spotlight on highway infrastructure, this is our moment to put forward the arguments and win the decisions that will benefit our members, our customers, and the public at large.

In short, the tolling industry in the US is going to be loud and proclaim that more tolls are a key part of the answer to the highway funding crisis in the country.

IBTTA is also quoting statements from the free market oriented Reason Foundation.  Dr Daryl Fleming  and Robert Poole, Director of Transportation Policy produced a report in November 2012 where they claimed tolling was no more expensive that fuel taxes, because the latest technology can reduce collection costs to as low as US$0.16-$0.25 per transaction (and they believe fuel tax administrative costs are underestimated, and pale in comparison to the opportunity cost of not being able to charge by time/location to influence congestion). 

The report from Reason is here.  It suggests that the Federal Government should remove prohibitions on tolling the Interstate network, and that many roads (freeways/limited access highways) could be switched to tolling now, as a precursor to vehicle mileage tax in the longer term.

It is good that the tolling industry sees that it can explicitly play a role in dispelling myths about itself, and promote greater use of tolling across the US.  I suspect the Federal Government's attitude to it will remain lukewarm, as it was in the first term of the Obama Administration.  However, some of the states are far warmer towards tolling and if this causes them to think more broadly than some crossings and manual toll booths, all the better.

Certainly it is a welcome antidote to the bizarre policy swing seen in Virginia.  It will also be interesting to see if the information and work done by IBTTA and its members will percolate beyond the United States, to influence debates elsewhere.

In any case, the idea that the user pays principle can be sold as being fair and that modern tolling with electronic free flow technology can be sold as the norm (in the UK at least, far too many people think tolls must mean manual barrier controlled tolling), ought to help change the debate about funding highways.

However, part of this must be some understanding that toll prices should be related to the costs of the infrastructure being operated on, with factors to manage demand at times when it gets close to exceeding capacity. A reasonable rate of return should also be part of any toll (that being a return on the cost of capital), and what is done with that should be up to the owner of the road.  The policy that will not promote acceptance of tolling is using tolls to extract monopoly rents that are used to pay for other government activities largely unrelated to the road.  The controversy over using the Dulles Toll Road to pay for a parallel rapid transit railway is in this category.

The simple points that politicians and policy makers should take from the campaign ought to be clear:

- There is no longer any need to think of tolling as involving manual tolls with barriers, in any modern economy with good enforcement systems, laws and reliable motor vehicle registries;
-  Electronic free flow point tolling, on crossings and on limited access highways can be cost effective and efficient in collecting revenue, with the key limitation being issues of diversion onto untolled roads;
-  Vehicle mileage tax (VMT) or distance based charging is likely to be the long term best answer, but in the meantime much can be achieved with electronic point tolling on limited access highways.

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