Monday, 18 March 2013

Texas - leading toll road state in the USA?

Is Texas the king state for tolling in the US?

A story from TV station KENS5 on its website seems to suggest this.  Some key points:

- Tolling is the default option as a source of funding for major road projects, as long as it is technically feasible to do so;

- Fuel taxes in Texas have not increased in 20 years, so revenue has been substantially eroded by inflation and engine efficiency (75% of fuel tax revenue is hypothecated into the state Highway Trust Fund);

- A report in 2009 said Texas needs US$4 billion more spending per year to prevent congestion worsening (although I'd argue congestion pricing might make a major dent on that);

- Since 2006, Texas has built 150 miles of toll roads and has 100 miles more planned (this includes HOT lanes);

- Texas legislature authorised seven PPP toll roads in 2011.

The philosophy appears to be that tolls are preferable to raising taxes, including taxing fuel.  There is a sStrong belief that user pays is fair.

Mike Perez, the McAllen city manager said  “The feeling is if you want to use it, you should pay for it,” ...“That’s what I see in McAllen. There’s a kind of hesitancy toward ‘Let's all go together and pay for it so 20 percent can use it.’

That's a point to respect, all new road projects benefit a minority of motorists, so why should all pay for it, when those who use it can be charged directly?

The growth in private investment is notable too:

Cintra, a toll operator based in Spain, is the lead company in three large Texas toll projects, including the state’s first privately operated toll road, a segment of State Highway 130 from Austin to Seguin that opened in October. The terms of all three contracts allow Cintra to collect tolls on the roads for roughly 50 years.Nicolas Rubio, the president of Cintra’s American arm, based in Austin, said contracts for such long periods are the only way companies like his can recoup the large upfront investment they make in building the roads and maintaining them.“When you really look at these projects, the bulk of the revenues are back-ended, and you need to be patient until you can be able to get back that money,” Rubio said.


States across the US are coming to realise that with the difficulty in raising fuel taxes, there will have to be new sources of revenue to pay for roads and new arrangements to finance, build and own them.   Texas has grasped the obvious option of simply using tolls more frequently, and to be fair the projects that have progressed have lent themselves to tolling.   It has embraced user pays, but I question whether more may be done with tolls to manage peak demand, and what happens when conventional tolls cannot be stretched further.  That's when debate must move onto VMT/MBUF/distance based charging, which will raise the hackles of some in terms of privacy.  Yet a state that purportedly is led by politicians who embrace private enterprise and user pays should embrace more user pays on roads, and even the commercialisation and private investment in existing roads.

In the meantime, good on Texas for embracing tolls, may it continue and inspire other states to see how far they can practically use tolls to pay for new road capacity.   The question being how far it is efficient and effective to toll new roads, but not untolled ones.

An interactive map of toll roads in Texas is here.

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