How high would the tolls be?
The
Maryland State Highway Administration has consistently refused
to tell commuters how high the tolls would be on the Express
Toll Lanes that it wants to build on the Beltway.
But
a good basis of comparison is California's SR‑91, the oldest
express toll lanes in the United States and a
project that SHA touts as a forerunner to Maryland's express
toll lanes. Both share the basic concept of express toll
lanes: the toll is set just high enough to keep traffic freely
moving.
Specifically, on SR‑91 this means that peak-hour tolls are
raised whenever a lane is carrying more than 1600 vehicles per
hour.
At
present (March 12, 2006), the peak toll on SR‑91 is $8.50, or 85
cents per mile, which is charged from 4:00 to 6:00 on Thursdays
and from 3:00 to 4:00 on Fridays. (The
complete toll schedule can be seen here.) For comparison,
at this rate per mile the toll to drive from US 50 to the
American Legion Bridge would be $17 one way.
While both the Beltway and SR‑91 connect suburban counties
(Montgomery to Prince George's and Orange to Riverside), there
are significant differences between the two situations:
-
Congestion was more severe on
SR‑91. Before the toll lanes opened, at the most congested
time of day the average speed along their entire length was
12 to 16 miles per hour ([SR‑91
data report, p. 44); the most recent
MWCOG traffic study, p. 87) shows that average traffic
speeds on the Maryland Beltway are above 20 mph during the
evening rush hour except on the short stretch between
Rockville Pike and Connecticut Avenue.
-
Because SR‑91 cuts through a
mountain range,
few
alternative routes are available for drivers who want to
avoid tolls. There are many local roads onto which Beltway
traffic can spill over.
-
SR-91 had four free lanes in
each direction both before and after the toll lanes were
built. On the Beltway, there are four free lanes in each
direction now, and would be three after the toll lanes are
built. The amount of traffic that a pair of toll lanes can
carry is a slightly larger fraction of the pre-existing
traffic volume on the Beltway than on SR‑91; thus
Beltway tolls will have to deter a slightly smaller
proportion of highway users from using the toll lanes.
-
Income levels are lower in the
counties served by SR‑91. According to the 2000 census,
average household incomes of $71,551 in Montgomery and
$55,256 in Prince George's compare to $58,820 in Orange and
$42,887 in Riverside.
The
first factor will tend to make Beltway tolls less than on SR-91;
the last factor will tend to make them higher.
Until the State Highway Administration releases results from its
studies, the SR‑91 tolls are the best guide we have to what will
happen on the Beltway.
Can tolls pay for construction?
Experience on SR‑91 shows how much revenue is raised by express
toll lanes. The annual report (available at
the SR‑91 web
site by clicking on
"annual report" under "general information") of the authority
which runs the toll lanes shows revenues of $38.7 million for
the year ended June 30, 2005. This includes, in addition to
tolls, the fines charged to drivers who enter the lanes without
the electronic transponders (like EZ-passes) that are used to
pay the tolls. The report does not separate tolls and fines;
however, the fines appear to be a major revenue source because
there were $3.3 million of unpaid fines outstanding as of June
30.
The
operating expenses were $14.5 million, leaving a net revenue of
$24.2 million available to pay interest and principal of the
costs incurred to buy the toll lanes from the private company
that originally built them. This is more than enough to cover
the authority's debt payments, and SR‑91 generates a small
surplus.
But
it will be impossible for toll revenue to pay for building
express lanes on the Beltway. The SR‑91 toll lanes were
comparatively inexpensive to build because they were laid down
on a pre-existing median strip and have no interchanges. The
original construction cost was $126 million and the price paid
to the private owners was $207.5 million. Beltway express toll
lanes will be far more expensive to construct because the
existing lanes must be relocated and expensive bridge
improvements and flyover ramps will be needed;
the State Highway Administration has estimated the total cost at
$3 to $4 billion.
There are four toll lanes on SR‑91 and they are ten miles long,
so the net revenue per lane-mile is approximately $605,000 per
year. Let us suppose the Beltway generates the same amount of
revenue per lane-mile as SR‑91. (Actually, the Beltway will
generate less revenue if the tolls are equal. Anyone entering
the SR‑91 toll lanes must stay on them for the entire length of
the road, while the Beltway has less congested sections south of
US 50 where either tolls will be discounted or traffic will be
lighter.) The Maryland portion of the Beltway is 42 miles long,
so four lanes yield 168 lane miles, and the total net revenue
would be $102 million per year.
SHA
intends that the Beltway toll lanes will be built by private
investors. A typical private-sector target return on investment
is at least 12%.
At this rate of return, the projected net toll revenue of the
Beltway toll lanes would cover an investment of $847 million.
This is barely one-quarter of the estimated construction
cost of $3.5 billion. Taxpayers would have to pay the remainder
‑- more than $2.6 billion.
For
a private company to pay the entire construction cost with
tolls, net revenues of $2.5 million per lane mile would be
required. Assuming no change in traffic volume, this would
require peak tolls of $2.50 per mile, or $50 to drive from US 50
to the American Legion Bridge.
However, it is obvious that such high tolls would greatly reduce
traffic volumes, making unattainable SHA Administrator Neil
Pedersen's goal "to be able to develop projects where the user
fees pay for them, so we're not diverting money away from
projects like the Bi-County Transitway." (quoted from
Washington Post, Jan. 26, 2006)
Another express toll lane project cited by SHA is on San
Diego's I‑15. The rush-hour toll varies between 50 cents and
$1.00 per mile, depending on traffic conditions.
This road
generates even less revenue than SR‑91. This project,
consisting of two 8‑mile‑long lanes that reverse direction
between morning and evening, collects $2 million per year in
tolls. After deducting operations and enforcement costs of
$800,000, the project yields only $1.2 million in net revenues,
or $75,000 per lane-mile.
SHA
has acknowledged elsewhere that tolls can only make a minor
contribution to paying the cost of building Beltway toll lanes.
For example,
the SHA web site states that "Revenue would first be used
for maintenance and operation costs on the new lanes with excess
revenue used for capital costs to build and maintain the
network."
Why express toll lanes?
What
do these numbers mean for express toll lane projects like the
one proposed for the Beltway? They show that the relatively
small amount of added transportation capacity that the tolls pay
for is merely a beneficial side effect of tolls, not the main
reason they are charged. Taxes continue to pay the bulk of
construction costs, and the amount of new capacity will be
constrained by the availability of tax revenue.
This
represents a fundamental change in the role of tolls in highway
finance. In the past, tolls made highway users pay for the
highway and took the burden off the non-highway-using taxpayer.
Here they have the opposite effect -- building this extremely
expensive widening project will require an increase in the
amount of tax funding used to subsidize highway use.
It
simply isn't feasible to unclog the Beltway by building
general-purpose lanes. If new lanes aren't to be congested the
day they open, there must be some allocation mechanism to limit
who gets to use them (and thus who gets the benefit of the very
large tax expenditure on construction). There is a choice among
several alternative allocation mechanisms, including HOV
restrictions and ramp metering as well as tolls. By choosing
tolls, SHA reserves the new lanes for the drivers who are
willing and able to pay, rather than those who can carpool or
who are willing to wait at traffic lights on ramps.
Tolls
on Beltway express toll lanes will be primarily an allocation
mechanism and only secondarily a financing mechanism. Their
main purpose is to deter those less willing and able to pay from
using the new lanes. Those least able to pay are inevitably the
least affluent commuters,
who will be unable to use the new lanes their tax money builds.
The wealthy few who can afford to pay the tolls every day are
able to bypass the congestion that everyone else continues to
suffer.
A
study for Maryland Dept. of Transportation says on
p. 68 that private investors demand an even higher rate
of return: "International infrastructure firms are
interested in entering the US highway market but prefer
to have significant control over the toll revenues for
an extended period, 30 to 50 years, and a significant
rate of return on their investment (15-25%)."
This
calculation assumes that the operating costs of $362,500
per lane mile remain unchanged and that the fines are
increased by the same ratio as the tolls (approximately
tripled).
Surveys
of SR‑91 users in 1996 and 1999 show that "The use of
toll facilities (ETR+91X) ranges from 21% for the lowest
income group to 51% for the highest. The differences
among income groups are statistically significant at the
1% level." Furthermore, as tolls increased toward their
present levels, use of the toll lanes among
middle-income commuters (incomes between $40,000 and
$60,000) decreased.
Section 3.4 of the 1999 survey report discusses the
relationship between toll lane use and income in detail;
the quotation is from p. 85.
