IBTTA director Pat Jones makes spirited pitch for tolling - public and private

March 21, 2007
Pat Jones - orating above, pondering below
Pat Jones - orating above, pondering below
Appearing before the congress' transport study commission March 19 IBTTA exec-director Pat Jones said governments in the US won't and can't make the tax-based grants needed to sustain and improve roads, and tolling is destined to fill the gap. He cited GAO reports on the federal budget as showing that even present discretionary spending is unsustainable so increases in federal funding are out of the question.

Tolling he said is important to road financing because it establishes a direct connection between road use and payment for that use. The fuel tax he said "is clearly not a sustainable source of funds" and the country needs to consider a move toward general charging - vehicle miles traveled - for road use.

"All over the world... tolling has become more popular," Jones said, citing:

- improved technology making toll collection easier

- open road tolling allows full highway speeds by tolling points

- new technologies make possible dynamic pricing to maintain free flow travel

Concessions being vilified by obstructionists

Jones said opponents of toll concessions are blocking improvements to our transport networks.

"We hear many arguments today in which people take common everyday words and turn them into profanities. Good words like private, investment, foreign, profit and lease. The opponents of tolling use these perfectly good words to stand in the way of entrepreneurs and risktakers who seek to improve the performance of our transportation system by investing in our highways and seeking a legitimate return on their investment - in the tradition of American capitalism."

Tolling has historically taken on and accomplished great highway projects quite beyond the capabilities of funding through normal budgetary cycles by means of taxes, he said. It did this by creating entities that acted like businesses spreading the risk over different projects.

First federal grants for interstates killed early tolling

The nation's first superhighways were created by quasi-government toll authorities, but the start of major federal grants (in 1956) ended this.

"Why would anyone go to the trouble of to plan and 'sell' such (toll) projects when he federal government was giving money away?" Jones asked.

But, he said, after 50 years the gas tax collection has diminished in value so much that it has become inadequate even for sustaining let alone improving our roads. This inadequacy of the tax-and-grant system has led to "a resurgence of interest" in toll financing.

"It has become increasingly apparent that (the US) Congress is unable or unwilling to provide significant new resources, thus leaving the burden to be solved by lower levels of government. City, county, state and regional governments are stepping up to fill the void by once again going to investor-based financing models to pay for the projects their constituents need now and in the future. We have also observed a growing crop of investors who see the acquisition of key highway facilities as an investment opportunity that will produce longterm and reliable returns."

Jones said that there are undervalued facilities that if privatized or leased longterm can "garner significant gains for investors."

The appearance of "cherries" attractive to investors reflects, he said, the "stresses" produced by underfunding in the presence of strong demand.

We should welcome private investment in tollroads

Jones: "If our present system is unable to address these demands then any entity that can enter the scene to improve the situation, whether a public or a private entity, should be welcomed."

Jones said IBTTA has many government owned toll roads that are proud of their service and the value they produce for motorists, adding: "At the same time we have members around the world who view longterm concessions as a well tested operational model that also brings benefits to the government and to the public while earning a profit through their efficiency."

IBTTA does not have a preference, he said, but "Both bring benefits to the public and most especially to their customers."

Tremendous opportunities for tolling

New technologies, Jones said, offer the opportunity for earning "large amounts of money" while also providing "the tolls we need to manage our highway system more efficiently" he said in a reference to using variable tolls to maintain free flow operations. The public is willing to pay for time savings, for convenience and for accessibility so long as they get that service, and tolling can now provide that service.

Freeways provide "brownout" equivalent twice daily

The free roads, Jones said provide "the equivalent of an electrical brownout twice a day, ever day, in every major metropolitan area in this country," referring to the collapse of morning and evening peak hour traffic collapses in traffic flow from congestion.

"Tolling technologies give us the tools to manage this congestion... so that we don't spend $63 billion a year in lost wages, delays and wasted fuel."

Jones said remaining restrictions and limits on tolling should be eliminated from old laws. States should have maximum flexibility to leverage available funds with tolls, and private investment should be actively encouraged.

Specifically he urged:

- governments to welcome private investment in tollroads

- make provision for public private partnerships and toll concessions

- amendments to the tax code to exempt from income tax partnership distributions or corporate dividends from tollroads

- law to allow government authorities and private companies to compete on a level playing field for toll concessions

- ending the limit on the total of private activity bonds under the federal tax code

He also stressed the importance of toll facilities to freight movement and the need for more efficient movement through border controls for improved trade between Mexico, the US, and Canada.

IBTTA is the International Bridge Tunnel and Turnpike Association, the toll industry trade group based in Washington DC. Jones was speaking to the National Surface Transportation Policy and Revenue Study Commission which has almost more words in its title than it has members and which was established by law in the last 5-year federal transport funding bill whose title is equally longwinded, and riddled with euphemism to boot. TOLLROADSnews 2007-03-20

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