Congress continues to struggle in an effort to come up with a transportation funding plan. The Senate passed a bill last summer and the House is working on its own bill. Both bills fail to effectively address the most pressing transportation problem, congestion. Congestion exists because we do not charge vehicles when they enter a highway. This results in overuse or congestion. The solution to this problem is to charge a toll when people decide to drive on a highway. Congress restricts the use of tolls on congested interstate highways, which makes no sense.
Many cities have serious congestion problems. Congestion wastes both time and fuel. It can increase air pollution. The Texas A&M Transportation Institute estimated that congestion costs the United States $160 billion in 2014. Compared to the cost in the 1980s, this represents a fourfold increase. An urban driver must allow 48 minutes during peak congestion for a trip that would normally take 20 minutes. Congestion makes trip planning more difficult.
Most politicians want to build our way out of congestion. This approach is popular with construction companies and unions who are major contributors to political campaigns. However, it is very costly, and nearly impossible to add highway capacity in dense urban areas. Also, evidence suggests building greater capacity doesn’t solve congestion problems. The additional capacity attracts more traffic and congestion returns.
The current House bill contains funding for state pilot programs for vehicle mileage tolls (VMT). These programs would charge a driver a fixed toll per mile driven rather than on the amount of fuel consumed. Oregon is currently experimenting with a voluntary VMT program. While this is a step in the right direction, it’s not the best way to reduce congestion.
Programs such as these and higher gasoline taxes create an incentive to drive less. The problem with both of these taxes is they fail to target peak congestion problems. They reduce the incentive to drive whether highways are jammed or free flowing. Variable tolls that are highest during peak drive times can effectively mitigate highway congestion. Reducing highway congestion lowers the need to spend more on highway construction.
Currently, federal law limits the use of congestion tolls. Tolls may be placed on new interstate lanes or when HOV lanes are converted into high-occupancy toll (HOT) lanes. Our limited experience with tolls in the United States and abroad show they work, reducing congestion and increasing highway speeds. Any serious transportation bill coming out of Washington could consider allowing states to use variable congestion tolls on all interstates.
A common complaint about using tolls is that its hurts the poor because they will end up paying a larger share of their income on tolls than high-income drivers. However, few recognize that the gasoline tax has the same effect. Evidence suggests that congestion tolls are no more regressive than the gasoline tax.
Like most taxes, highway tolls are often viewed unfavorably by drivers. However, in cases where tolls have been used, drivers warm up to the idea when drive times decline, something they don’t experience with gasoline taxes. The revenues raised by the toll could be used to offset any harmful effects by allowing a reduction in sales or gasoline tax rates. Toll revenues could be used for highway maintenance or to expand public transport in areas where density makes it an effective option for commuters.
A well-functioning transportation system is an integral part of a healthy economy. Politicians in Washington have focused mostly on ways to raise more revenues, paying less attention on how to make our highway system work better. We cannot build our way out of congestion. Only a variable toll can solve this problem.
Krol is a professor of economics at California State University, Northridge and author of “Political Incentives and Transportation Funding” and “Do Governments Impede Transportation Innovation?” research papers published by the Mercatus Center at George Mason University.