Friday, April 30, 2010

Tolling: An Answer to the Budget Crunch?

The great recession and resulting budget crunch has left many states scrambling to find new sources of revenue to pay for such basic services as road repair and maintenance. Revenue from gas taxes has been declining due to the economic climate and increasing shift to fuel-efficient cars – a trend which is only expected to increase with the introduction of higher CAFE standards.

In response, Pennsylvania turned to one of the oldest forms of road funding: tolling. The state proposed to toll the entire length of I-80 to raise revenue for road maintenance and fund mass transit networks in the state. However, the plan was shot down by the USDOT due to the diversion of some toll money away from the roads on which they are raised.

Critiques of the decision have been widespread, citing a need to reform the user fee approach and change the DOT’s law to a less outdated one. The user fee approach to transportation funding has originated by using gas tax revenue on federally funded highways. This user fees concept is very equitable on the benefits-received principle. Whoever uses the road pays for upkeep of the road. However, this was only true on highways and the declining revenue from the gas tax has led to shortages in highway trust fund. Obama has infused funds from the general fund into the highway trust fund to keep it afloat and still there is a need for more revenue. The highway system that “pays for itself” may be over.

Tolling Analyzed
Outside of the debate regarding the DOT’s decision, tolling itself is controversial. It raises interesting equity and efficiency questions. Since tolls are often levied as a flat fee, they are regressive for lower income individuals many of whom have to drive work. In areas without adequate public transportation, the inequity of tolling is more pronounced. If toll funds are spent on transit networks, then the inequity could be lessened. Moreover, tolling a specific road while leaving others untolled could lead to significant diversion of traffic as drivers attempt to avoid paying.

Options for Pennsylvania
The question for Pennsylvania is, why not just raise the gas tax? The answer is: people don’t like that. Without tolling or a raised gas tax, Pennsylvania, like many other states, will have to be inventive in finding revenue for roads. Without additional funds, Pennsylvania will have to cut maintenance and transit service which would be the most iniquitous solution of all.

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