A Fresh Look at Tolls

As states and communities consider toll roads as a means to boost mobility and finance new transportation infrastructure, a better understanding of this industry is essential to making crucial decisions.

From state capitols to kitchen tables, the subject of tolls as a means to create and maintain transportation infrastructure has been heavily debated. In communities where roads have been historically built and maintained without “user fees,” introducing toll roads can be an emotionally charged endeavor, requiring substantial public involvement efforts.

Today, as gasoline prices hit record highs, piling on more taxes to fuel costs is no longer a popular or viable solution to funding shortfalls for transportation facilities. At the same time, electronic payment systems are dispelling the stereotypical image of overcrowded toll plazas manned by grumpy toll attendants. Already, there are more than 5,000 miles of toll roads and bridges in 31 states, and those numbers are expected to grow markedly as more states and local governments see tolls as an attractive—and publicly acceptable—financing strategy.

“Tolled facilities have been a part of our country’s transportation strategies since the 1700s, yet misinformation about them abounds,” says Max D. Crumit, P.E., PBS&J’s national service director for transportation. “For example, we find that there are still large segments of the population that view tolls as ‘double taxation’ and believe that tolls can always be eliminated once the project’s initial debt is retired. A toll is not a tax; it is a user fee.”

For those taking a fresh look at tolls, there is no better primer than the lessons learned by others. Although the manner in which tolls will be applied will be dictated by individual legislative requirements and state policy priorities, the experiences of mature, growing, and even fledgling operations are beneficial for both near-term and long-range planning.

A History of Success

When you raise toll rates on roads heavily traveled by daily commuters, an outpouring of protests would hardly be a surprise. But when toll rates along the 47-year-old Florida’s Turnpike were raised from 6 cents to 7.5 cents per mile for cash customers in March 2004, there was minimal negative feedback from the public.

Certainly an active public awareness program was a major factor in the highly successful toll rate increase. And customers willing to pay electronically were not impacted by the increase. But there also exists tremendous support within the state for its toll roads. In addition to the Florida’s Turnpike system of expressways, Florida has 10 other toll authorities and four bridge authorities formed by acts of the state legislature. Many have lengthy histories in the state and are active in addressing the mobility concerns of their individual communities.

Over the past 15 years, Florida’s Turnpike has become the primary mechanism by which Florida has been able to build major new roadway systems. In fact, in 2002, the state made the Florida’s Turnpike organization an “enterprise,” a change that allows the Florida Department of Transportation (FDOT) to further leverage the financial capabilities of the state’s second largest revenue-producing asset and expands the Turnpike’s capital program capability.

James L. Ely, executive director of Florida’s Turnpike Enterprise, recalls the turning point in the state’s toll road history. “Between 1973 and 1986, Florida’s Turnpike was really in a maintenance mode. The Turnpike stretched from Homestead in the south up through the center of the state to I-75 north of Orlando and included an east-west portion of S.R. 528 in the Orlando area,” Ely recalls. “Visitors, truckers, and people wanting to move quickly through the state were the primary users of the system. Then in 1987, after most of the original bonds were retired, the state completed a study that recommended an aggressive plan to use the bonding capacity of the Turnpike to finance new, badly needed intrastate highway projects.” It was the beginning of the state’s most dynamic period of highway improvement and construction.

Today, the Florida’s Turnpike 449-mile system includes its historic “Mainline” Turnpike and nine other completed expressways that serve some of the most densely populated areas of the state. Two other expansion projects are currently under way. During this growth period, Ely has seen his system’s customer base shift from the long-distance traveler to the daily commuter. And with this change has come an increased focus on providing Turnpike customers with greater value for their tolls.

“We are working on increasing the capacity of our current system and on improving toll plaza throughput by promoting the use of SunPass, our electronic toll collection system,” says Ely. “In fact, we are working toward completely cashless tolling, targeting one of our expressways to be the state’s first open road toll system in the near future. We are also enhancing safety on the system through a program that involves major guardrail additions and a Road Ranger service that assists motorists with incapacitated vehicles. And we are training our employees to be highly customer-service-oriented, understanding that keeping our customers informed and satisfied is job number one for us. We try to never take anything for granted in our organization and always strive to be better.”

For Ely, who has led the Turnpike management team since 1989, the critical factors for his organization’s success have been maintaining the confidence of bondholders and rating agencies and constantly finding ways to improve customer service. “Accurate project costs and schedules, as well as accurate traffic and revenue forecasts are essential. Prudent management here makes a difference in the long run with rating agencies. This is reflected by the recent bond rating upgrade Florida’s Turnpike received from Moody’s Investor Services from an Aa3 to Aa2. Then there’s the issue of creating value for customers. People are paying for the use of your system and choose whether or not they travel it or other roadways.”

The Texas “Twist” On Toll Roads

Toll roads have long been a part of Texas’ transportation system. The Texas Turnpike Authority (TTA) was formed in 1953, and today there are more than 20 tolled facilities operating in the state. Yet considering both the size of the state and its pressing needs, the potential of user-financed facilities has scarcely been tapped. That’s about to change.

More than 12.4 million people—60 percent of all Texans—live in only eight major metropolitan areas. This, combined with rapid growth, has made traffic congestion a primary political and social issue in the Lone Star state. Data indicate that between 1990 and 2000, Texans spent 2.6 billion hours and burned 4.5 billion gallons of fuel while stuck in traffic. The state equates the total cost of this delay to $45.6 billion.

With traditional funding sources projected to support only about one-third of the state’s needed transportation projects, Texas has taken an aggressive stance. A bold and sweeping piece of legislation, House Bill (HB) 3588, was enacted in June 2003 to address virtually every aspect of transportation in the state. Most significantly, the legislation embraced the use of innovative funding techniques—and specifically tolls—as a means to advance needed projects and fill the funding gap.

As part of the legislation, every new capacity-enhancing project—from roadway widenings to entirely new expressway systems—will consider tolling as the first financing option. Unlike conventional approaches to toll roads, where the projected revenues of a particular toll road are used to finance its development, Texas’ approach is to look at toll roads as actual revenue generators, which can be used to address broader, future infrastructure needs.

And flexibility is the watchword for toll implementation in Texas. Under the new legislation, the Texas Department of Transportation (TxDOT), through TTA and its other districts; traditional toll road authorities; and a new entity, the regional mobility authority (RMA), are all now able to be involved in the design, construction, and management of toll roads. RMAs are counties that come together to address broad transportation issues at the local level and to help fill the funding gap with sources that they help to find.

“A whole new way of doing business is the result of HB 3588,” says Phil Russell, director of TxDOT’s Turnpike Division. “This legislation brought TxDOT and our local partners more tools and more options needed to move people and goods across the state. Essentially, the tools of HB 3588, such as toll roads and regional mobility authorities, allow innovative financing options to complement existing state highway funds so that more transportation improvements can be built sooner.

“With congestion one of the biggest mobility challenges facing Texas, the tools of HB 3588 have been put into action,” Russell continues. Already five RMAs have been created and the eight largest metropolitan areas have developed transportation plans that include toll roads as a way to accelerate projects.

In addition, TxDOT has developed a plan for the use of the Texas Mobility Fund, which allows the Texas Transportation Commission to issue bonds and other obligations to accelerate mobility projects, as one way to help finance toll roads and other public transportation projects. According to Russell, the new legislation also gives the state authority to finance and develop the Trans-Texas Corridor through bonds and by encouraging private entities to participate in the corridor’s development and operation.”

“Transportation in Texas is on the move,” he concludes. “Better highways, efficient freight transportation, less congestion, and cleaner air are some of the benefits that will enhance the quality of life for Texans.”

Safety and Reliability, Keys to Toll Road Success

The concept for the modern Pennsylvania Turnpike began as early as 1910, when visionaries saw an abandoned railway alignment as the start of a motorway for automobiles. A model for the superhighways we enjoy today, the 160-mile original section of the Pennsylvania Turnpike opened in 1940, demonstrating not only contemporary design strategies, but also that revenue bonds could be used to finance toll roads.

Today, the Pennsylvania Turnpike serves more than 188 million vehicles a year on its 531 miles of tolled expressways. It is the third largest toll facility in the U.S. in terms of roadway miles and fourth in terms of gross revenues. Despite its reputation as the grandfather of U.S. expressways, the Pennsylvania Turnpike is anything but outdated, remaining a vital transportation facility that consistently provides a safe and reliable system that brings more and more value to its customers.

“The Turnpike is an essential link in Pennsylvania’s economic and recreational infrastructure,” states Pennsylvania Turnpike Commission Chief Executive Officer Joe Brimmeier. “It is a vital connector to America’s northeast corridor. Our commitment to the commonwealth and to our customers is reflected in our continued investment in our highway.”

Emphasizing that customer safety is the Turnpike’s “number one priority,” Brimmeier describes the Turnpike Commission’s efforts to improve and enhance the roadway, ensuring travelers the safest and smoothest trips possible. For example, the Commission has embarked on one of the most aggressive reconstruction campaigns in its 64-year history, rebuilding aging sections of the roadway from the ground up. In addition to road reconstruction, the Commission has made a commitment to implement state-of-the-art technology on its highway.

“Technology has changed the way toll agencies operate—the way the Pennsylvania Turnpike operates,” said Brimmeier. E-ZPass electronic toll collection, Advanced Traveler Information Systems (ATIS), and improved communications are “effective and proven responses to the needs, demands, and challenges confronting transportation and tolling agencies.”

The Turnpike Commission’s comprehensive intelligent transportation system (ITS) initiative is an integral component of the Turnpike’s strategic plan, designed to rebuild and enhance its communications infrastructure and better serve the Turnpike traveler. Keeping Pennsylvania Turnpike customers informed about road and weather conditions is the best way to keep them safe and satisfied. “It’s an investment in service and safety that customers expect and deserve,” believes Brimmeier.

“At every turn, the Turnpike Commission reaffirms its commitment to customer safety and service, determined to stay at the forefront of the toll industry,” Brimmeier says. “Planning for the future, pursuing opportunities for growth and managing that growth responsibly, and providing customers with a satisfying and safe travel experience remain the highest priorities of the Turnpike Commission.”

Networking and Collaboration to Bring the Best to Customers

Toll agencies have done their part to help bring the best technologies and services to the constituents they serve by networking and collaborating. The International Bridge, Tunnel and Turnpike Association (IBTTA) provides a multinational forum for toll agencies to share knowledge and ideas to promote and enhance toll-financed and other direct-user-fee-financed transportation services. IBTTA’s new Tollways publication presents white-paper discussions on some of the most challenging issues facing policy makers and transportation practitioners today. The association’s seminars and conferences also promote collaboration and information exchanges.

Individually, toll agencies come together to share information as well. While much of this networking is informal, there have been numerous examples of more structured relationships. In Florida, the majority of Florida’s toll roads are owned and managed by Florida’s Turnpike Enterprise, but local toll authorities also play key roles in meeting Florida’s road infrastructure needs, having been given broad powers to build, operate, and maintain urban and suburban expressways within specific metropolitan areas. To facilitate idea sharing and strong partnerships, Florida’s toll agencies and key consultants came together in 1997 to form TEAMFL—an acronym for Turnpike and Expressway Authority Membership in Florida. TEAMFL also explores potential policies and represents policies to advance official causes to the FDOT and the Federal Highway Administration.

Another example of agency collaboration is TeamTX (Transportation and Expressway Authority Members of Texas), created in 2002 to promote interoperability between all of the toll facilities throughout Texas. TeamTX offers assistance to its members through the preparation of topical white papers, through meetings and conferences, and by creating intergovernmental agreements. The group develops policy standards on transportation issues, provides information about toll roads and bridges to governmental bodies, and supplies information to the legislature on
toll-related topics.

“Today’s toll agencies do not have to be isolated. The leaders in the tolls community are very much in touch with each other and are willing to share their knowledge and lessons learned with those coming along,” says PBS&J’s Max Crumit. “Communities can feel very comfortable knowing that the agency’s whose roads they drive have a lot of existing information to draw from.”