CBO: Tolls, mileage fees would better fund roads

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By Keith Laing - 02/16/16 05:57 PM EST

The federal government would get more bang for their buck if U.S. drivers were charged directly for their use of highways through tolls or mileage fees, a new study from the Congressional Budget Office (CBO) says.

The report from Congress's budgetary scorekeepers says current "spending on highways does not correspond very well with how the roads are used and valued." 

The CBO said mechanisms like tolling, mileage fees or congestion pricing could be considered to fund transportation projects in lieu of relying mostly on gas tax revenue.

"Almost all federal spending for highways occurs through formula grants to state and local governments, and historically, less than half of the funding has been tied directly to the amount of travel on the roads," the report said.

"Although data from the past 20 years show that, on average, pavement quality is improving, fewer bridges have deficiencies, and highway fatalities occur less frequently, those averages mask differences between urban and rural areas and between interstate highways and other roads, differences that sometimes are not reflected in spending," the report continued. 

"For example, even though highway travel is more concentrated on Interstates and in urban areas, and urban roads are typically in poorer condition than rural ones, the federal government and state governments typically have spent more per mile of travel for major repairs on rural roads," the CBO said.  

The finding comes after lawmakers passed a five-year, $305 billion highway bill last fall.

Lawmakers relied on a package of approximately $70 billion of offsets from other areas of the federal budget to help pay for the recently completely highway bill, which lasts until 2021. 

The traditional source of transportation funding has been the 18.4 cents-per-gallon federal gas tax. The tax has not been increased since 1993, however, and improved fuel efficiency has sapped its purchasing power. 

The federal government typically spends about $50 billion per year on transportation projects, but the gas tax only brings in approximately $34 billion annually at its current rate. 

Lawmakers turned to other areas of the federal budget to close the $16 billion per year gap last year, but the CBO said they would have been better off finding another funding mechanism that would charge drivers directly for their highway use.  

"Charging drivers specifically for using roads would increase economic output by allowing highly valued transportation to move more quickly and more reliably," the study said. "Such pricing could take the form of per-mile charges (also known as vehicle-miles traveled, or VMT, charges), congestion charges, or tolls on Interstate highways. 

"When faster travel and avoiding delays were a priority, drivers could opt to pay for the use of a less congested road, and when travel speed was less important, they could use a road with a lower fee or avoid paying a fee by using a road without one," the report continued. "Charges that varied by time of day or that differed by road would also affect economic activity by limiting congestion." 

Tolling advocates cheered the CBO for concluding that it could be used more often to fund highways. 

“The CBO’s objective, impartial analysis of tolling as one funding method provides valuable insights in today's world where every highway dollar counts,” International Bridge, Tunnel and Turnpike Association (IBTTA) Executive Director Patrick Jones said in a statement.

“And as the study makes clear, tolls have the potential to do much more than fund the maintenance, repair and expansion of our highway system,” Jones continued. “As CBO explains in its report, implementing tolls on highly traveled highways can boost productivity by incentivizing more efficient travel patterns for workers, and by reducing delivery and inventory costs associated with goods by moving them more quickly to their destinations, among other benefits. These kinds of gains extend far into the broader economy.”

The CBO has projected that it would have taken about $100 billion, in addition to the annual gas tax receipts, to pay for a six-year transportation bill, which is the traditional lengthy of highway funding measures.