6/24/2008

Toll Roads Mean Billions in Extra Costs for Motorists

by TheNewspaper.com

Collecting revenue with a toll road is twenty-five times less efficient than collecting the same amount in gas tax.

With the promise of federal taxpayer subsidies, many states are rushing to embrace public-private toll road partnership deals as a means of boosting existing state transportation budgets. Our analysis shows, however, that when tolls are used instead of more traditional gas tax funding sources, motorists end up paying twenty-five times more in administrative overhead costs.

Last year, the Washington State Department of Transportation (WSDOT) conducted a survey to determine precisely how much it costs to collect a toll from drivers (view report, 120k PDF). The agency examined the budgets of the most high-tech toll roads in the country -- those roads that rely upon Electronic Toll Collection (ETC) for at least two-thirds of their transactions. Electronic transponders minimize the expense of hiring employees to handle cash transactions and ensure costs are kept at a minimum. WSDOT documented only the costs for the operation and maintenance of the transponder reading equipment and automated coin machines, salaries for human toll collectors and customer service staff, and the cost of toll violation processing. It did not include any costs that would have applied had the roads been open for free use by the public. On average, the roads selected for comparison by WSDOT spent $22 in collection costs for every $100 in toll revenue.

RoadSize/
type
Toll
Revenue
Tolling
Costs
Overhead
E-470
Denver, Colorado
47 miles
67% ETC
$84,499,000$13,165,20015.6%
183-A
Austin, Texas
4.5 miles
ETC
$11,599,000$6,650,29557%
73, 133, 241, 261
Orange County, CA
51 miles
70% ETC
$168,000,000$37,893,00022.6%
SR91 HOT Lanes
Orange County, CA
10 miles
100% ETC
$32,375,471$7,671,52623.7%
Total112.5 miles$296,473,471$65,380,02122%


This compares unfavorably with existing methods of collecting revenue for roads such as the motor vehicle fuel excise tax. Each state imposes a tax on gasoline of about 19 cents per gallon. This tax is levied not in the form of a sales tax at the gasoline station, but in bulk as the fuel leaves wholesalers -- slashing the number of transactions that must be processed on a daily basis and greatly reducing the cost of administration. California is one of the states that does apply a six percent sales tax at the pump on top of the excise tax. According to figures maintained by the Federal Highway Administration, state governments, on average, spent just 88 cents in collection costs for every $100 in revenue from the gasoline tax last year. (View data, 28k PDF)

State/
Tax Rate
RevenueCostOverhead
Colorado
22 cents
$602,897,000$2,334,0000.39%
Texas
20 cents
$2,970,092,000$30,686,0001.0%
California
18 cents
$3,258,087,000$22,530,0000.69%
All 50 States
19 cents
$36,278,026,000$321,057,0000.88%


As the price of gasoline continues to rise, toll road proponents have suggested that gasoline taxes should be phased out and replaced with user fees based on tolls. That means that if Colorado were to switch over to tolling to raise the $600 million currently generated by the gasoline tax, motorists in the state would have to spend $700 million on tolls -- an increase of $100 million just to cover the costs of toll collection. California motorists, similarly, would pay an extra $730 million to private toll road companies just to maintain the existing level of revenue generated by the gas tax. On a nationwide basis, drivers would spend $8 billion in added collection costs if every state replaced its gas tax with tolls.

Read the whole report HERE.

2 comments:

Steve said...

Very interesting.

Notice that cost of revenue collection is highest in TX -- for both gas tax and tolls!! apparently TxDOT has efficiency issues.

also, reported cost to collect a toll is just for maintaining the equipment. doesn't include capital cost to build toll readers/ booths.

finally, in cases where frontage roads would be unnecessary if the highway were free, that is also an extra cost of going tolled.

Anonymous said...

I bet most of the cost is to pay the tolling executives salary and bonuses, not the workers. Perry says construction costs are going up- where does that money REALLY go? To the construction workers? I bet not. To the top brass' personal bank accounts? Yes!