DALLAS — The expansion of a pilot program for tolling existing Interstate highways in the multiyear transportation bill approved by the Senate in late July could give more states the opportunity to test the concept as an infrastructure funding source, industry experts say.
"There are still more than a few huge hurdles but some states are desperate for revenues," said Neil Gray, director of government affairs at the International Bridge, Tunnel, and Turnpike Association.
The Interstate System Reconstruction and Rehabilitation Pilot Program, which was first approved in 1998, would still be limited to three states. Those slots are occupied by Virginia, Missouri, and North Carolina.
None of the states have actually moved ahead on interstate tolling mostly due to internal political differences, Gray said, so the new bill extends it for another 10 years but sets a time limit for the participants.
"States within the program will have to issue a request for proposals for a tolling project within a year of the bill's enactment and sign a construction contract within two years or give up their slots," he said. "Right now, there's no administrative way for a state to give up its slot and let others into the pilot."
The Alliance for Toll-Free Interstates, an advocacy group consisting of major shipping firms and large manufacturers, said it was "disappointed" with the retention of the interstate tolling pilot program, which it said should be ended rather than expanded.
"This pilot program has provided 17 years' worth of evidence that tolling existing interstates is unviable, as no state has succeeded in levying tolls even after multiple attempts," the group said after the Senate vote.
"Tolling interstate lanes which drivers now freely access is an inefficient financing mechanism that is the worst possible approach to raising transportation revenue," the group said.
The Senate bill retains the prohibition of tolls on existing interstate lanes, Gray said. States can convert dedicated high-occupancy vehicle lanes to tolls to pay for system upkeep as long as the number of free lanes is not reduced.
A reduction in the funding for Transportation Infrastructure Finance and Innovation Act loans to $300 million a year from the $1 billion allocated in fiscal 2015 could affect some toll road projects, Gray said.
The low-interest TIFIA loans are part of the funding plan for toll roads and other facilities, he said.
"We don't like the cut, but maybe it will allow projects to catch up with the available funding," Gray said. "That has been a problem."
The Federal Highway Administration had to return $639 million of TIFIA funds to the highway program in April because the uncommitted balance exceeded the legal limit.
The DRIVE Act, which was approved, 65-34, by the Senate on July 30, would provide a total of $273.4 billion from the Highway Trust Fund for transportation infrastructure over six years.
The House Transportation and Infrastructure Committee is slated to vote on a multiyear transportation bill by mid-September.
The Senate measure would require the Transportation Department to track the federal toll credits accrued by states and establish a new test marketplace where the credits could be sold or transferred.
The credits are earned when states, toll authorities, or private operators finance a capital project from tolls on existing facilities. The credits are not an actual funding source but can be used by states as a "soft match" for federal highway grants.
The Senate bill also includes a provision that removes the ban on using tax-exempt bonds as part of the funding for water infrastructure projects financed with a low-interest loan through the Water Infrastructure Finance and Innovation Act passed in 2014.
A report from Fitch Ratings in June 2014 said removing the restriction "would improve project economics and could enlarge the number of projects under consideration under the WIFIA program."
The WIFIA law currently limits the loans to 49% of a project's cost and does not allow the use of municipal bonds for any of the remaining 51%.
Sen. Barbara Boxer, D-Calif., the ranking Democratic member of the Senate Environment and Public Works Committee who helped develop the DRIVE Act, was the chief champion of removing the bond ban.
