How to Pay for Rebuilding and Modernizing the Interstate Highway System
New study details how toll revenues can generate nearly $1 trillion to reconstruct, modernize and widen Interstates in all 50 states
Washington, D.C. (Sept. 12, 2013) - Over the next two decades most of the aging Interstate highway system will need to be reconstructed, which a new Reason Foundation study finds will cost approximately $1 trillion - nearly $600 billion in rebuilding costs plus $400 billion to add capacity.
The new study by Robert Poole shows that the price tag, while extremely large, could be covered almost entirely by toll revenues generated by charging drivers and truckers via all-electronic toll collection on the rebuilt Interstates.
Poole created detailed traffic forecasts, identified areas that need additional Interstate capacity, pinpointed key shipping corridors that would benefit from truck-only lanes, and made construction cost calculations for every state. The costs of reconstructing urban Interstates, for example, ranged from a low of $315 million in Vermont to a high of $59 billion in California.
In 37 of the 50 states revenues from modest toll rates would be sufficient to cover 90 percent or more of the costs associated with reconstructing and widening the Interstates. The baseline toll rates would be 3.5 cents per mile for cars and 14 cents a mile for trucks. The tolls would be indexed to inflation and adjusted annually. Some states, like California, New York and Alaska, would require higher toll rates, as detailed in the study.
"The current transportation funding system is failing and won't be able to rebuild or upgrade the Interstate system," said Robert Poole, director of transportation policy at Reason Foundation and author of the report. "This study shows that alternative financing, via all-electronic tolling, is a feasible way to transform the Interstate system."
But Congress holds the key to states moving forward. Except for a limited pilot program, federal law currently forbids using toll revenues to finance the reconstruction of Interstates. The report explains how Congress can start the transition away from the gas tax and towards more sustainable mileage-based user fees, via all-electronic tolling, and how public-private partnerships can be utilized so that private investors bear a significant portion of the costs and risks involved in these large-scale projects.
The full report, "Interstate 2.0: Modernizing the Interstate Highway System Via Toll Finance," is available online at:
About Reason Foundation
Reason Foundation is a nonprofit think tank dedicated to advancing free minds and free markets. Reason Foundation produces respected public policy research on a variety of issues and publishes the critically acclaimed Reason magazine and its website www.reason.com. For more information please visit www.reason.org.