Vol. 16, No. 3; May/Jun 2005

Beyond the Interstate Highway System: It May Be Time To Rethink The State-Federal Relationship

Commentary

In June of next year the Interstate Highway System will be 50 years old. As this anniversary approaches, the future of the Interstate system is becoming a subject of growing discussion. An important catalyst for this has been a provision in the House version of the Surface Transportation reauthorization bill (H.R. 3). Section 1122(b) of that bill directs the Secretary of Transportation to take appropriate action “to preserve and enhance the Interstate System to meet the needs of the 21 st century.” Section 1122( c) establishes a National Commission on the Future of the Interstate Highway System. The Commission is directed to “develop a conceptual plan with alternative approaches for the future of the Interstate System” for 15-, 30-, and 50-year horizons. The nine-member Commission is to submit its report to Congress by September 30, 2006.

 Recently, a group of Washington-based transportation professionals sat down for one of their periodic confabs to speculate on what some of these alternative approaches might be. The scenario depicted below was by no means the only one considered. A wide range of views were expressed concerning such issues as projected future demands placed on the nation’s highway network, the necessity to accommodate rising freight movements, the relative need for metropolitan vs. interregional expansion of road capacity, and the changing federal role. On one thing, however, there was a clear consensus: doing nothing is not an option.

The National Commission will face a vastly different set of circumstances than those that prevailed twenty five years ago when the Interstate system was reaching completion. Since 1980, traffic on the Interstates has more than doubled --- from roughly 296 billion VMTs [vehicle-miles traveled] in 1980 to more than 702 billion VMTs in 2003--- while capacity of the system has remained virtually unchanged. Maintaining bridges and pavements of the 42,700-mile system in good condition is consuming a major share of available highway resources. Metropolitan portions of the Interstates have become saturated with commuter and local traffic generated by suburban growth — travel demand that was not foreseen by the planners of the original Interstate System. More recently, serious bottlenecks have arisen at gateways to the nation’s ports, causing delays in freight deliveries and affecting adversely international trade. Overall system performance shows no signs of improvement despite advances in technology that have led to more efficient methods of collecting tolls, capability to monitor system performance in real time, and more effective approaches to handling highway incidents. Clearly, the problem cannot be solved through improved management and operations alone. Highway capacity will need to be expanded in critical places to keep pace with projected growth in vehicle-miles of personal travel and freight movements. Additionally, new infrastructure will have to be provided to accommodate emerging new population concentrations and changing travel patterns.

The policy environment has also undergone significant changes since the time the Interstate System was completed. Throughout the second half of the 20 th century the federal transportation program had a unifying national purpose and a well-defined objective – construction of the Interstate System. States were willing to contribute more than their proportional share in the interest of achieving a common goal of nationwide road connectivity.

With this task completed, the federal-aid highway program has ceased to have a common vision. A growing portion of the program is dedicated to congressionally earmarked projects that benefit only local constituencies. Each state tries to get the largest possible share of the Highway Trust Fund revenue, a competition that has pitted “donor” states against “donee” states and has made the so-called “minimum guaranteed rate of return” a dominant theme of the congressional reauthorization debate. At the same time, Congress lacks political will to raise fuel taxes. The resulting stagnation of Highway Trust Fund revenues is a cause of growing concern among state transportation officials.

As the Nation prepares to celebrate the 50 th anniversary of the Interstate Highway system, the time may have come to rethink the state-federal relationship in surface transportation. The state of Texas may be a harbinger of the changing realignment of state and federal roles. The Texas legislature, faced with uncertain prospects for more help from Washington and unwilling to enact massive gas tax increases, has embraced tolling and public-private partnerships as key mechanisms for financing future highway expansion. According to Ric Williamson, chairman of the Texas Transportation Commission, Texas is facing a historic change in the way major transportation facilities will be built and paid for. “Private investment” he said, “not taxpayer dollars, will be where we look first for funding.” Federal funds will be used mainly to maintain and reconstruct existing federal-aid highways within the state.

Under new Texas law, “Regional Mobility Authorities” can act as toll agencies and partner with the private sector to build new roads using streamlined project delivery methods that save money and years in construction delays. The law even permits the RMAs to take over certain sections of state highways and incorporate them into toll projects.

A number of other states have followed Texas’ example and are exploring creative ways of funding new highway infrastructure. Virginia has engaged the private sector in its efforts to build HOT lanes and new toll roads. New York’s Governor Pataki is looking into long term leasing of state owned toll facilities to the private sector to raise capital for needed transportation improvements. Maryland is planning a statewide network of express toll lanes financed partly with bonds. Utah and North Carolina have created toll road commissions, California’s Governor Schwarzenegger has proposed a legislation that would allow private investment in state transportation projects, paving the way for privately operated toll roads and express toll lanes. Other governors — Mitch Daniels of Indiana, Bill Owens of Colorado, Janet Napolitano of Arizona — have likewise been looking into novel ways of expanding the resources and speeding up highway projects with the help of toll financing, equity participation, long-term franchising and public-private partnerships.

What may eventually emerge from these efforts is a two-tiered system of roads. Supplementing the existing system of toll-free Interstates will be networks of toll-financed priced lanes offering premium level of service in heavily traveled corridors. As existing Interstates become saturated, motorists, businesses and trucks will switch to the uncongested priced lanes in sufficient numbers to make them politically and financially viable.

That is not a far-out vision. In Northern Virginia’s Dulles Corridor commuters already are offered two parallel routes into Washington — one, a toll-free state route, the other, a privately-financed toll road, the Dulles Greenway. Thousands of commuters are opting to pay a daily fee of $7.00 on the free-flowing Greenway in order to avoid the stop-and-go traffic on the state route.

On a larger scale, we can look to France. There, the core system consists of a dense nationwide network of toll-free primary roads (routes nationales). Overlaid on this road system is a network of toll roads (autoroutes), constructed in the last 40 years. French motorists have a choice: they can travel on the congested primary highways or they can take the more direct and faster toll roads. Most long haul travelers and trucks opt for the toll roads even though they have to pay a hefty price by U.S. standards. Other foreign countries also follow this model. In eastern Europe, Latin America, and the Far East, networks of modern toll roads, financed, built and operated by public and private utility companies under long-term franchises, are providing a faster and safer alternative to antiquated toll-free roads.

In this country, the challenge ahead will be to facilitate a transition to a more market-based system while maintaining a basic level of service on the existing federal-aid highway network. This will require a new kind of a state-federal relationship. States will need to create utility-type entities responsible for construction of new highway capacity. The Federal government will need to ensure that existing Interstate and National Highways remain in serviceable condition. In this modified state-federal relationship, Highway Trust Fund and state-level fuel tax revenues will be devoted entirely to the essential task of preserving and reconstructing the existing network of toll-free roads. User fees in the form of tolls will support construction and operation of new state-sponsored networks of priced facilities. Express toll lanes and toll truckways will offer premium-level service to individuals, freight and bus riders who desire faster and more reliable means of travel than could be obtained on the aging system of toll-free Interstates and National Highways. The possibility of driving in uncongested lanes will make the financial success of this option virtually assured.

It’s a scenario that we believe deserves serious consideration

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INNOVATION BRIEFS
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