OP-ED | Replace Gas Tax with Congestion Pricing
There is no prohibition on proposing bad ideas in the Connecticut General Assembly, assuring that Connecticut’s citizens will be hearing many as the new Legislative Session begins next Wednesday. State Rep. Patricia Dillon will introduce a bill to bring tolls back to Connecticut’s highways. Piled on top of the bad ideas that have already become law in this state, tolling would be a particularly lousy one. But if a type of tolling, congestion pricing, were used to eliminate the state’s gas tax and the revenue used only to rebuild the state’s highways, Rep. Dillon would be on to a good idea.
According to the INRIX National Traffic Scorecard, 4 of the 162 most congested highway corridors in the nation are in Connecticut, making Connecticut’s congestion the fifth highest on a state per capita basis. Traffic congestion serves as a hidden tax on the economy, with the Texas Transportation Institute (TTI) estimating the monetized cost nationally at more than $100 billion per year. Other research shows that for every 10 percent increase in travel speeds, labor markets expand by 15 percent and productivity by 3 percent. Relieving congestion should be a top priority of legislators seeking to promote economic growth.
The gas tax was an effective financing mechanism because it linked road use with a charge for that use. Innovation and inflation, however, are eroding this link. Both improved fuel efficiency and the rise of vehicles that do not use carbon-based fuel spurred a decline in gas tax revenue. Connecticut’s gasoline tax generated $364 million in Fiscal Year 2012, marking at least the third straight year of producing less revenue than the previous fiscal year, according to the Office of Policy and Management’s Fiscal Accountability Report for Fiscal Years 2013-16. Further adjusting revenue figures for inflation reveals that “drivers pay about a third as much for each mile they drive as was paid in 1956 when Congress created the Interstate Highway System.”
The link can be re-established, however, by replacing the gas tax with automatic electronic tolling (AET) and dynamic pricing to both raise revenue and address congestion. Such systems are already in place around the world. London implemented a form of congestion pricing, cordon pricing, for individuals driving within a specified zone in central London. After some initial skepticism, support for the system grew as demonstrated by a study of central London’s business community one year after it was implemented in 2003 showing 72 percent of companies believed it to be working. Studies showed that the new system increased average travel speed in central London by 37 percent.
The most common American experiences with congestion pricing are with the growing network of High Occupancy Toll (HOT) lanes that are being constructed in urban areas. One such system recently opened on Interstate 495 in northern Virginia.
The libertarian Reason Foundation recently conducted a study of Chicago’s transportation infrastructure, proposing a $52 billion infrastructure plan to dramatically reduce congestion and increase mobility throughout the greater Chicago metropolitan area. Their plan was fully funded by dynamically priced user fees.
Here is how such a system might work. As part of a car’s registration fee, drivers receive an E-Z pass transponder. In order to get on the highway, drivers would pass underneath an AET system at highway speed and then again as they exited the highway. The motorist would be charged a per-mile fee for their travel. During peak travel times on congested highways, drivers would pay a higher fee.
Connecticut’s list of “unfundable” transportation projects is long and grows in urgency every day. Raising the revenue necessary to tackle these projects and reduce congestion will be less and less feasible as long as the state remains dependent on the gas tax. Replacing the gas tax with congestion pricing is a good idea that should be considered far more carefully than simply adding a new revenue stream from traditional tolling.
Heath W. Fahle is the Policy Director of the Yankee Institute for Public Policy and a former Executive Director of the Connecticut Republican Party. Contact Heath about this article by visiting www.heathwfahle.com