Tolling and Pricing FAQs
Tolling and Pricing Opportunities
The following frequently asked questions are provided to give a sense of the types of questions asked by state and local governments, as well as the public. It also provides some general background information on tolling and pricing.
What are tolling and pricing strategies?
Increasingly, Americans recognize that gas taxes do not provide adequate funds for the large capital and maintenance needs of the highway network. Tolling refers to charging drivers a fee for use of a highway, and using those fees collected to build, maintain, and improve the highway. "Pricing" refers to varying toll levels by time of day or traffic volume in order to manage congestion.
What are the benefits of implementing tolling and pricing strategies?
Tolling can provide revenue to build additional capacity and/or maintain existing systems. Pricing can significantly increase the capacity of new or existing systems, by spreading out demand and reducing congestion at peak hours.
Where and when should an entity consider a tolling or pricing strategy?
Tolling and pricing are appropriate in states and local regions where funds available to support the construction of highway improvements are constrained and where congestion is impacting economic productivity and quality of life. They can be used on state, county or local highways as well as the Interstate Highway System. Pricing should be used to encourage the efficient and effective use of new and existing transportation infrastructure, with toll revenues providing a supplementary funding source.
The Federal Highway Administration's Office of Operations will work with an interested agency through the Tolling and Pricing Team.
Tolling and Pricing Team
The Office of Operations has created a web site to provide information regarding opportunities to gain authority to toll facilities constructed using Federal funds. Please visit this web site for the Federal Register Notices, how to apply, and other useful resources.
How can a state get federal authorization to implement a tolling or pricing project on a federally-funded facility?
Congress has created a number of programs under which States can obtain authority to use tolling and pricing on Federal-aid routes. Eligibility varies depending on type of route (Interstate, non-Interstate), HOV lane status, past and current Federal funding, and other factors. To facilitate project development, FHWA has created a tolling and pricing project team that matches proposed projects to the appropriate program or programs.
Is Federal authorization all that is needed to implement a project?
In some cases, states may not need Federal authorization to implement a tolling or pricing project. In all cases, however, states or other project sponsors will need to have or obtain the state legal authority to levy tolls. Project sponsors may also need to obtain the power to issue bonds, obtain loans or other forms of financing, and engage in partnerships with the private sector.
What is the link between tolling and pricing and public-private partnerships (PPP)?
Not all tolling and pricing projects will be undertaken as public private partnerships (PPPs), and not all PPPs involve tolls. Yet incorporating tolls into a project definitely expands the type and potential benefits of PPPs that can be implemented. PPP models for tolling and pricing projects range from long-term concessions for design, build, finance, and operation of a facility to short-term operation and maintenance contracts. These models can provide accelerated project completion, cost savings, improved efficiency, quality, and system performance. PPPs can also provide access to new sources of private capital, substituting private personnel and resources for constrained public resources.
Who do I talk to for more information on tolling and pricing strategies?
The Office of Operations is the designated lead for coordinating all the Tolling and Pricing Programs within the FHWA. The Team serves as a clearinghouse to coordinate all tolling and pricing requests, but does not act to approve any requests. All approvals and program oversight rest with the respective responsible program offices. Any state wishing to begin the conversation of tolling and pricing is encouraged to contact their respective FHWA Division office.
Tolling and Pricing Opportunities For New and Existing Facilities Constructed Using Federal Funds
With the passage of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), the Federal-aid Highway Program, Title 23 of the United States Code (23 U.S.C.), offers states and/or other public entities an enhanced variety of opportunities for tolling motor vehicles to finance Interstate construction and reconstruction, promote efficiency in the use of highways, reduce traffic congestion, and/or improve air quality.
There are now six tolling and pricing programs or provisions within the Federal-aid Highway Program. All non-grant programs were advertised for participation in the Federal Register notice dated January 6, 2006. The Value Pricing Pilot (VPP) program was advertised for FY 2007-2009 participation on December 22, 2006.
Tolling and Pricing Team
The Office of Operations is the designated lead for coordinating all the Tolling and Pricing Programs within the FHWA. The Tolling and Pricing Team consists of representatives from all of the responsible program offices plus representatives from other stakeholder offices in the U.S. Department of Transportation. The Team serves as a clearinghouse to coordinate all tolling and pricing requests, but does not act to approve any requests. All approvals and program oversight rest with the respective responsible program offices. The Tolling and Pricing Team was formed by the Office of Operations to:
Building a Foundation for Tolling and Pricing
There is no single process involved in implementing tolling and pricing projects. The decision to use tolling and pricing in a state can be made for existing or future facilities. It is usually dictated by the financial needs of the agency implementing the project, a desire to expedite the implementation of the project, prohibitive project costs, strong local interest in curbing congestion, or in response to the direction of the state legislature or other elected officials.
State and local jurisdictions have the greatest flexibility to implement tolling and pricing on local roads and highways that have been, or will be built without federal funding. Restrictions apply when tolling and pricing are used on the Federal Aid Highway System or other projects funded with Federal-aid funds. When a state, local or private agency decides to move forward with a tolling and pricing project, there are several legislative issues that may or may not need to be addressed prior to implementation.
Does the state have the ability to toll?
State and local laws provide the authority to toll other highways and crossings. In many states this authority does not exist, and when it does exist, it may be limited to roads operated by a designated turnpike or toll road authority. Legislative provisions may be required to enable the collection of tolls on a new or existing facility.
Does the project sponsor have the ability to issue debt for revenue producing facilities?
While private entities do not require this legislative authority, state and local agencies must have the legislative authority to issue bonds of different kinds. Such legislation is also likely to established caps on the amount of debt that can be outstanding at any given time. It may also establish parameters for using a combination of different funding sources to develop tolling and pricing projects.
Does the state allow the use of Electronic Toll Collection (ETC)?
State legislation is also needed to establish the terms and conditions governing the use of ETC systems and requirements for account holders. This legislation provides ETC operators with access to data maintained by state registries of motor vehicles and allows toll operators to use video technology to identify toll violators.
Does the state allow public-private partnerships (PPP)?
Use of private financing mechanisms for transportation facilities can occur only when the necessary legal authority exists and governing legal principles and restrictions are observed. Almost half of the states in the U.S. have passed legislation providing the legal authority for private sector participation in transportation projects to varying degrees.
Will the public support a tolling or pricing concept?
Tolling and pricing are often new concepts, and public outreach for these types of projects involves a greater focus on education than those for traditional roadway projects. Outreach efforts need to communicate the critical function that user fees play in providing these benefits, as well as information on how and by whom tolls will be collected, and how toll revenues will be used.