Louisiana’s Transportation Secretary on Tolling and Gas Taxes

If this is any indication, Louisiana Governor Bobby Jindal made a smart hire as state transportation secretary:

Louisiana secretary of transportation William D Ankner says the states must move to tolls and other direct user fees if mobility is to be maintained and improved in the US. “We cannot continue to fund our vital transportation assets by taxing a fuel that is unsustainable. Transportation agencies in America must move to tolling and other direct user fees to support transportation and much needed mobility,” Ankner said during a maintenance committee conference of the International Bridge Tunnel and Turnpike Association (IBTTA) in New Orleans earlier this week. “High occupancy toll lanes (HOT lanes) and other forms of variable road charging will play an increasingly important role in efforts to relieve congestion in densely populated metropolitan areas.” Ankner said toll facilities are far better maintained than tax supported ones: “Your contribution to the life of our assets is without parallel.” “In this era of constrained government revenues and a worldwide crisis in credit markets, preserving our existing assets is imperative…Good maintenance is at the heart of a sustainable and socially responsible transportation system. Maintenance professionals in the toll industry are leading the way in innovation and have many positive lessons to share with state departments of transportation across the country.”

This is a key point that often gets lost in tolling discussions. In stark contrast to “tax roads,” toll roads are subject to financial requirements that do not allow deferred maintenance. The reasoning is simple: toll road investors demand accountability for proper maintenance, and to that end, toll road financing packages generally require maintenance to have the first call on toll revenues collected, even before debt service. Why? Because the use of a toll road is voluntary, and toll revenue bond buyers understand that the toll road must be in excellent shape as part of being competitive with tax roads. Meanwhile, for standard “tax” roads, maintenance is an afterthought, a casualty of the political allocation of highway funds. Because the focus is on getting the lowest upfront cost to build a roadâ€”as opposed to minimizing life-cycle costs, as toll roads doâ€”we see governments skimp on the things (like thicker pavements and longer-lasting materials) that would actually save them a ton of money over the life of the asset. Worse, maintenance for new facilities gets lumped into the overall maintenance budget, so from day 1, new projects are a maintenance liability and are forced to compete with every other facility in the system for increasingly scarce funds. This all boils down to an unfortunate myth: that once you’ve built a road, it’s “paid for.” This is a gross misunderstanding of the realityâ€” whatever it cost to build a road in the first place, it’s going to cost over twice as much in maintenance costs over the asset’s life-cycle (several decades). So in the end, roads are never “paid for.” People seem to understand that this is the way it works with other big-ticket assets like homes (roofs last 10-20 years on average before needing replacement; appliances and systems need regular maintenance; etc.), so it’s puzzling when they don’t make the same connection with transportation infrastructure. Reason’s Transportation Research and Commentary

Leonard Gilroy is vice president of government reform at Reason Foundation and senior managing director of Reason's Pension Integrity Project.