Introduction To Oregon’s Toll Policy

On any of its main thoroughfares or bridges, Oregon does not charge tolls. However, in order to earn billions of dollars in money, the Oregon Department of Transportation has committed to employing tolls in light of stagnant gas tax revenues and a desire for massive motorway development projects.

Let’s be clear: economists favour congestion pricing. Our urban transportation problem is mostly a result of the fact that we don’t charge drivers for the usage of the infrastructure they rely on. We attempt to run the state highway system like it’s “Free Ice Cream Day” every day at Ben & Jerry’s, but we don’t have enough money. People are queued up around the block.

There are a few things the state should be aware of regarding tolling as well as the dangers and repercussions of the strategy being followed by ODOT before it decides to go down the toll road. We made an effort to condense the main teachings into this baker’s dozen of crucial ideas.

1. According to the Oregon Department of Transportation, the freeways in the Portland area are congested and at capacity (I-5, I-205, I-84, 217). Since roads aren’t priced, this is actually a problem with peak hour congestion (or peak several hours). (And that WA, in essence, pays folks to go shopping in Oregon.) The majority of the day, these highways and all others have ample of capacity.

2. The ODOT’s traffic estimates anticipate mistakenly that traffic will increase and congestion will worsen on these roads. (In actuality, that is untrue. Capacity and bottlenecks, such as the I-5 Columbia River Bridges, place a cap on congestion (esp. in the AM). The I-5 bridges’ capacity is the reason why traffic cannot increase, according to ODOT’s own toll consultants.

3. To support the size of new roads (10 lanes at Rose Quarter, 12 lanes for the I-5 Bridge and approaches, as well as extra lanes for the Boone Bridge and Abernethy/I-205), ODOT is using these exaggerated predictions of future travel increase. The Interstate Bridge, Abernethy Bridge, and Boone Bridge are all projects that ODOT refers to as “bridges,” yet each one also entails extending many miles of roadway on either side of the bridge. It’s an intentional deception strategy. These concerns are not raised by a project that is merely “replacing” a bridge; for example, the proposed Burnside Bridge project in Portland is not a highway-widening project posing as a bridge replacement.

4. To finance all of these improvements, ODOT will issue bonds worth billions of dollars. Additionally, bonds will be issued ahead of the start of the projects. ODOT will also delay enforcing tolls until after the start of construction or until the projects are finished. Capitalized interest will be needed (i.e. borrowing money in excess of the construction cost and using it to pay interest before tolls are collected). Before there is any actual tolling experience, the massive projects will be committed to and the debt obligations established.

5. Not only will traffic numbers on toll roads be lower than ODOT’s overly optimistic projections but also lower than before the projects were completed. The average drop in traffic from pre-tolled levels caused by even low tolls is from 20% to 40%. Based on experience tolling previously untolled roads (such as the Highway 99 Tunnel in Seattle) and eliminating tolls from previously tolled facilities, those predictions are confirmed in the Pacific Northwest (in 2017, BC eliminated tolls on the Port Mann and Golden Ears Bridges).

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6. There will be surplus capacity on these enlarged roads and bridges. The construction of the I-65 Ohio River Bridges in Louisville, Kentucky, is a prime example of this taking place. It resembles the proposed CRC/Interstate Bridge Replacement very closely. After spending $1 billion to expand the I-65 bridges from 6 to 12 lanes, KY and IN imposed a toll (which, for normal travellers, amounts to $1 each way). As a result, the amount of traffic on I-65 decreased from 130,000 ADT to roughly 70,000 ADT. Even during PM peak, the twelve-lane bridge appears to be nearly empty. On a Monday afternoon at seven minutes after five, this is the I-65 bridge.

7. The design of tolls is a similar issue. Congestion pricing is centred on employing tolls to manage traffic, i.e., cutting toll rates during periods of low traffic and raising them during periods of high traffic. HB 3055’s “build/borrow/then toll” method has a fixed debt obligation, in contrast, and ODOT will probably wish to collect money from all drivers, including during off-peak hours. In 2013, the CRC tolling scheme underwent its last revisions, which resulted in a doubling of off-peak rates. Whereas the project’s Final Environmental Impact Statement stated that the minimum toll would be $1.30, the project’s Investment Grade Analysis (IGA) increased it to $2.60. Since there was only a 65-cent difference between peak and off-peak charges under the IGA, the time-shifting incentive is mostly lost. Peak tolls used to be more than twice as expensive as off-peak costs. Additionally, ODOT has significant incentives NOT to raise peak period toll rates so high that they shift traffic to off-peak periods because they will earn less money from motorists, in order to demonstrate the investment was “justified” in terms of demand and to maximise income. Tolls could be significantly lower, and off-peak tolls could be set to nil, effectively creating a low-cost travel option when we have ample capacity if we only utilised tolls to regulate demand rather than support massive construction projects.

8. In order to increase revenue, ODOT will probably have to gradually increase toll prices. In Washington State, where tolls have already gone up and more increases are anticipated for SR 99, SR 520, and TNB, this is currently taking place. The result of these toll increases is to further slow down traffic growth, and eventually, it becomes difficult to raise tolls in order to generate considerably more money. There is not enough money to repay the bonds even with the toll increases.

9. Toll-based initiatives will require financial support from additional sources. WA is now using “loans” from its motor vehicle account to save the SR 99 tunnel and Tacoma Narrows Bridge. In CA, FL, and TX, tolled roads have missed debt payments, received bailout money, and been forced into bankruptcy. In order to make creditors whole in Oregon, ODOT would be obliged by HB 3055 to shift funds from state taxes and federal funding, which would necessitate forgoing other projects and reducing maintenance and operations.

10. Tolls do not actually cover the entire cost of any of these projects. 20โ€“40% of projects’ expenditures are often covered through tolls. For instance, less than 10% of the cost of Seattle’s SR 99 tunnel was funded by toll-backed bonds. A small portion of SR 520’s revenue came from toll-backed bonds as well. Tolls would have made up over a third of the proposed CRC’s $3 billion budget. There is no assurance that toll income will be enough to cover a sizeable share of project expenses. ODOT is moving forward with the I-205 Abernethy project without conducting an independent, investment-grade review to ensure that tolls are high enough to pay capital expenses.

11. ODOT has substantial financial incentives to increase traffic on tolled roads thanks to the issuing of toll-backed bonds. Once bonds are issued, actions that lower VMT on tolled roads decrease the flow of income needed to pay bondholders, forcing ODOT to divert funds from other projects or cut maintenance costs. This policy is exactly the opposite of the incentives that should apply to ODOT, as you would see if you looked at it via a “climate lens.” In other words, if traffic on wider tolled freeways in the Portland area doesn’t increase, we’ll have to reduce spending on everything else ODOT spends money on. That is completely absurd from a climatic perspective. Expansions of toll-based capacity are intrinsically inconsistent with our declared climate aims. The fact that fewer people use these roads than they do today if they’re tolled even modestly means people will drive on these expanded roadways only if someone else pays for their cost.

12. They create the financial necessity of maintaining or increasing VMT, and with it, GHG, in order to avoid cutting other projects. People who would actually use the roads don’t place a high enough value on them to justify the costs. It costs the people who suffer the costs to spend more on the roadway than its services are worth to those who use it, which destroys the value of the road. Users aren’t being asked to pay anything close to the actual cost of the capacity, even with tolls (see #9). In a very real sense, we are paying individuals to drive more by utilising limited public resources.

13. This policy is terrible and absurd when taken into account in the context of generational and climate change. More roads are being constructed now, and the cost of those roads is passed on to future generations. In addition to repaying the loan, they will also be responsible for the environmental costs associated with a worsening climate of turmoil. The debt that must be paid off by cutting other transportation projects will grow as future generations find new methods to cut back on travel and GHG emissions.

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