Both economic models support the hypothesis that rate increases divert traffic from toll roads to "free" roads.
"While recently privatized roads do not have enough history to determine how high actual rates will rise, adequate data do exist to determine what happens when toll rates increase dramatically on state-run toll roads," says co-author Peter Swan, Assistant Professor of Logistics and Operations Management at Penn State's Harrisburg campus.
The study concludes that if governments allow private toll road operators to maximize profits, higher tolls will divert trucks to local roads, depending on the suitability of substitute roads. The authors estimate that for 2005, a for-profit, private operator of the Ohio Turnpike could have raised tolls to roughly three times what they were under the public turnpike authority, resulting in about a 40% diversion of trucks from the Ohio Turnpike to other roads.
"The Ohio Turnpike substantially increased tolls during the 1990s to help finance construction of a third lane in each direction over substantial portions of the Turnpike," the researchers say. "Because the Ohio Turnpike raised its rates for trucks in the 1990s and later lowered them again, sufficient data exist to calculate a demand curve for the Turnpike based on demand and the toll rate. We then use the resulting demand curve to estimate diversion of trucks caused by the changes in the toll rates and to forecast how toll rates might affect Turnpike truck revenue."
First, many of the substitute roads are two-lane highways with crash rates many times that of the Turnpike. Second, the increased traffic has reduced the quality of life for communities located along diversion routes and dramatically increased the maintenance costs of many of these roads, say the researchers.
Finally, higher truck tolls have two negative effects on the economy. Motor carriers eventually pass all tolls to consumers in the form of higher prices for goods. While higher toll rates may not decrease the efficiency of non-diverted trucks, they have raised costs.
Furthermore, diversion reduces the efficiency of these trucks because they clearly are taking a second-best route. The resulting loss of efficiency can stifle economic activity, according to the study.
Many of these economic and social costs may not be considered in future leases or sales, especially when such costs are paid by people in states other than the one making the lease agreement.
The study researchers question whether it makes good policy sense to substitute the existing fuel tax-based system of funding road infrastructure with a system that uses widespread tolls and to grant long-term leases to private enterprises that will operate them for profit.
"The combination of inadequate maintenance, lack of capital for new capacity, and ever-growing demand has led to renewed calls for tolls," Swan and Belzer state. "It is curious that national policy clearly supports sales or long-term leases of roads to private parties when such negative results can be expected.
"It does not appear that the U.S. Department of Transportation has considered how far tolling and highway privatization should go ... how such a market-based system of interstate highways will affect the parallel system of publicly-owned state and local roads ... or the effect of private tolling on interstate commerce - unless U.S. DOT is already committed to the toll-based funding for all roads."
"If the true problem is that political leaders are unwilling to face the voters with the reality that there is no free lunch, then the problem we seek to solve by tolling and privatization will not solve the problem at all. In fact, our research suggests that it will only make the problem worse," Swan and Belzer say.
Source: Penn State
Trucking officials have a theory about why a federal commission prefers a fuel-tax increase to fund future highway improvements.
It’s as simple as knowing who is on the commission, one official says.
The National Surface Transportation Policy and Revenue Study Commission is scheduled to publish its recommendations on Tuesday, Jan. 15, leading up to committee hearings in the U.S. House and Senate.
The 12 commissioners with varying backgrounds debated whether to recommend an increase in fuel taxes – the traditional method of maintaining a highway trust fund – or the Bush Administration’s push to privatize and/or toll more highways.
“What it came down to in the debate was whether there should be a federal role in highway and transportation funding or whether there shouldn’t be a federal role,” Mike Joyce, senior government affairs representative with the Owner-Operator Independent Drivers Association, told “Land Line Now” on XM Satellite Radio.
U.S. Department of Transportation Secretary Mary Peters chaired the commission.
Joyce said Peters did not have a stacked deck for her pro-privatization stance.
“What we are finding is that the administration was not able to hijack this commission the way that they thought they could and determine what this report was going to say,” Joyce said.
“We have heard that nine commission members sided one way, and there are three members of the commission we hear are going to offer a dissenting minority opinion, essentially on how they feel the report should have been structured,” Joyce said.
The commission majority – those that favored fuel taxes – includes Vice Chairman Jack Schenendorf, a longtime advocate of trucking issues, and Patrick Quinn, co-chairman of U.S. Xpress Enterprises.
On the dissenting side – those favoring privatization – Peters garnered support from former DOT Interim Secretary Maria Cino and another commissioner, according to Joyce.
Even with an apparent majority recommendation set to be published, convincing federal lawmakers to pass a substantial fuel-tax increase will be no easy feat, Joyce says.
“These are just recommendations from a commission and depending on who is in the White House during the next re-authorization of the highway bill (in 2009), this report could become a doorstop. It could sit and wait and never be used, or it could be used,” Joyce said.
“Politically, members of Congress are walking out on the plank with something like that when they go home to their constituents, especially where fuel prices are today.”
The U.S. House Committee on Transportation and Infrastructure is scheduled to conduct a hearing about the report at 11 a.m. Eastern Time, Thursday, Jan. 17.
Video of the hearing is scheduled to be available online at the committee Web site. Click here to view it.
The Senate
Committee on the Environment and Public Works
will tentatively conduct its
hearing on Jan. 23. Click
here to watch for
updates to the committee’s hearing schedule.
– By David Tanner, staff writer
david_tanner@landlinemag.com
Jan 15, 3:36 By HOPE YEN http://apnews.myway.com/article/20080115/D8U6725G2.html
WASHINGTON (AP) - A special commission is urging the government to raise federal gasoline taxes by as much as 40 cents per gallon over five years as part of a sweeping overhaul designed to ease traffic congestion and repair the nation's decaying bridges and roads.
The two-year study being released Tuesday by the National Surface Transportation Policy and Revenue Study Commission, the first to recommend broad changes after the devastating bridge collapse in Minneapolis last August, warns that urgent action is needed to avoid future disasters.
Under the recommendation, the current tax of 18.4 cents per gallon for unleaded gasoline would be increased annually for five years - by anywhere from 5 cents to 8 cents each year - and then indexed to inflation afterward to help fix the infrastructure, expand public transit and highways as well as broaden railway and rural access, according to persons with direct knowledge of the report, who spoke to The Associated Press on condition of anonymity because the report is not yet public.
The report also calls for rebuilding and expanding the national rail network to meet a growing demand for alternatives to congested highways.
Continuing to apply patches to the nation's aging infrastructure is "no longer acceptable," and without dramatic changes, "the nation's system of transportation will further deteriorate," according to the report, portions of which were read to the AP.
But the 12-member commission's proposals, which are expected to cost $225 billion each year for the next 50 years, face internal division. The commission's chairwoman, Transportation Secretary Mary Peters, and two other members oppose gas tax increases and were issuing a dissenting opinion to the report calling instead for private-sector investment and tolls.
The gas tax has not been increased since 1993, and recent efforts by Congress to raise it have faltered over the objections of the Bush administration. The tax increase being proposed is designed to take effect in 2009, after President Bush leaves office.
The commission was formed by Congress in 2005 to study the future needs of the nation's surface transportation system, which includes roads, mass-transit systems, ports and rail lines - as well to recommend funding options.
The report comes as state governments and several business groups, including the U.S. Chamber of Commerce and the National Association of Manufacturers, are calling on the federal government to raise gas taxes to pay for substantial transportation improvements. The Minneapolis bridge collapse, which killed 13 people and injured about 100, spotlighted the decaying infrastructure and drew new calls for additional spending.
The Bush administration has said that raising taxes won't cut congestion and creates additional risks for congressional pork, such as Alaska's infamous multimillion dollar "Bridge to Nowhere," which has been scuttled.
In its report, the commission unanimously agreed that measures of accountability were needed to keep watch over state and federal spending.
Besides Peters, the two commissioners opposing a tax increase are Maria Cino, Peters' former deputy who is organizing the 2008 Republican National Convention, and Rick Geddes, a Cornell University professor who has served as a senior staff economist in the Bush administration on the President's Council of Economic Advisers.
- National Surface Transportation Policy and Revenue Study Commission: http://www.transportationfortomorrow.org
- Transportation Department: http://www.dot.gov/