Tolls Fall Short on Future Highway Funding

State highway officials warned of a looming $11 billion hole in federal highway funds and said the growing shift toward tolls and private leases of roads can't generate enough money to meet the nation's short- or long-term transportation needs. 

Instead, the federal gas tax of 18.4 cents per gallon, last raised 14 years ago, would have to go up at least 3 cents by 2009 and 7 cents more by 2015 just to maintain the current highway system and keep pace with the fast-rising cost of roads, according to a new report by the American Association of State Highway and Transportation Officials (AASHTO).

One popular solution to road-funding woes involves state and local governments adding toll lanes or leasing toll roads to private companies. In 2005, Indiana Gov. Mitch Daniels (R) inked a $3.85 billion deal to lease the Indiana Toll Road to an international consortium for 75 years. In 2002, Texas Gov. Rick Perry (R) launched a 50-year plan to build 4,000 miles of privately financed toll roads along portions of I-69 and I-35. Pennsylvania and New Jersey are considering leasing portions of their toll roads to private companies.

In 2005, tolling earned $7.7 billion, which was 5 percent of highway revenues nationally, AASHTO reported. Tolling could increase to 9 percent of highway funds over the next decade, a significant amount but not a "silver bullet" to fix the country's transportation funding problems, said Victor Mendez, director of the Arizona Department of Transportation and AASHTO president.

Pete Rahn, director of the Missouri Department of Transportation, said states are looking for innovative ways to use the marketplace. “But the reality is, no matter how far we try to stretch these resources, we're not even coming close to dealing with the real needs of the critical roads that are the lifeblood of this country," he said.

The report is the first of six that AASHTO plans to provide a congressionally chartered panel analyzing the country's future transportation needs. The last similar comprehensive study was issued in 1979 and called for deregulation of the aviation, rail and trucking industries and major investments in transportation.

The AASHTO report said the capacity of the Interstate highway system will have to double during the next 50 years and the number of people riding public transportation should double within 20 years. Railways must be prepared to handle a 63 percent increase in freight by 2035, according to the association's estimates.

The half-century old Interstate highway system is in danger of being overwhelmed by long-term neglect, a steady increase in the number of drivers, a stagnant source of funding and rampant inflation of road-building costs, according to AASHTO.

The biggest immediate hurdle to improving roads is that federal gas taxes, which pay for more than 45 percent of the nation's transportation infrastructure, have not been raised since 1993 and are not even sufficient to cover the spending authorized in the 2005 federal transportation law. Federal gas taxes will fall $11 billion short of planned road projects by 2009, but the gap could be as big as $19 billion the following year.

U.S. Rep. Jim Oberstar (D) of Minnesota, chairman of the U.S. House Committee on Transportation and Infrastructure, said the average individual pays $240 a year for gas taxes, or about 2 cents per mile driven. He told state highway administrators, meeting in Washington, D.C., that political will is needed to raise the gas tax, as three of the last four presidents have done.

A longer-term problem is that the cost of building and fixing roads has grown rapidly in recent years. Between the last gas-tax hike in 1993 and 2015, construction costs will have increased by more than 70 percent, report stated.

Mendez of Arizona said costs in his state have risen 20 percent to 30 percent in the past 18 months because of higher-priced steel, oil for asphalt, and fuel for road-building equipment.

While the United States faces financial shortfalls in keeping up its highway system, emerging economies such as China are being bolstered by major transportation initiatives, AASHTO warns. China, with a population of 1.3 billion compared to 301 million in the U.S., is building a 53,000-mile expressway system -- 6,000 miles more than U.S. interstates -- that is slated to be finished in 2020.