a

GAO

United States Government Accountability Office

Report to Congressional Requesters

June 2006 HIGHWAY FINANCE

States’ Expanding Use 

of Tolling Illustrates 

Diverse Challenges 

and Strategies

GAO-06-554
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

June 2006

HIGHWAY FINANCE

States’ Expanding Use of Tolling 

Illustrates Diverse Challenges and 

Strategies Highlights of GAO-06-554, a report to 

congressional requesters 

Congestion is increasing rapidly 

across the nation and freight traffic 

is expected to almost double in 20 

years. In many places, decision 

makers cannot simply build their

way out of congestion, and 

traditional revenue sources may

not be sustainable. As the baby

boom generation retires and the 

costs of federal entitlement

programs rise, sustained, largescale increases in federal highway 

grants seem unlikely. To provide 

the robust growth that many 

transportation advocates believe is 

required to meet the nation’s 

mobility needs, state and local 

decision makers in virtually all 

states are seeking alternative 

funding approaches. Tolling

(charging a fee for the use of a

highway facility) provides a set of 

approaches that are increasingly

receiving closer attention and 

consideration. This report 

examines tolling from a number of 

perspectives, namely: (1) the 

promise of tolling to enhance 

mobility and finance highway 

transportation, (2) the extent to 

which tolling is being used and the 

reasons states are using or not 

using this approach, (3) the

challenges states face in

implementing tolling, and (4) 

strategies that can be used to help

states address tolling challenges. 

GAO is not making any 

recommendations. GAO provided 

a draft of this report to U.S. 

Department of Transportation 

(DOT) officials for comment. DOT 

officials generally agreed with the 

information provided. 

Tolling has promise as an approach to enhance mobility and finance 

transportation. Tolling can potentially enhance mobility by reducing 

congestion and the demand for roads when tolls vary according to 

congestion to maintain a predetermined level of service. Such tolls can 

create incentives for drivers to avoid driving alone in congested conditions 

when making driving decisions. In response, drivers may choose to share 

rides, use public transportation, travel at less congested times, or travel on 

less congested routes, if available. Tolling also has the potential to provide 

new revenues, promote more effective investment strategies, and better 

target spending for new and expanded capacity. Tolling can also potentially 

leverage existing revenue sources by increasing private-sector participation 

and investment. 

Over half of the states in the nation have or are planning toll roads to 

respond to what officials describe as shortfalls in transportation funding, to 

finance new highway capacity, and to manage road congestion. While the 

number of states that are tolling or plan to toll has grown since the 

completion of the Interstate Highway System, and many states currently 

have major new capacity projects under way, many states report no current 

plans to introduce tolling because the need for new capacity does not exist, 

the approach would not generate sufficient revenues, or they have made 

other choices. 

According to state transportation officials who were interviewed as part of 

GAO’s nationwide review, substantive challenges exist to implementing 

tolling. For example, securing public and political support can prove 

difficult when the public and political leaders argue that tolling is a form of 

double taxation, is unreasonable because tolls do not usually cover the full 

costs of projects, and is unfair to certain groups. Other challenges include 

obtaining sufficient statutory authority to toll, adequately addressing the

traffic diversion that might result when motorists seek to avoid toll facilities,

and coordinating with other states or jurisdictions on tolling projects. 

GAO’s review of how states implement tolling suggests three strategies that 

can help facilitate tolling. First, some states have developed policies and 

laws that facilitate tolling. For example, Texas enacted legislation that 

enables transportation officials to expand tolling in the state and leverage 

tax dollars by allowing state highway funds to be combined with other funds. 

Second, states that have successfully advanced tolling projects have 

provided strong leadership to advocate and build support for specific 

projects. In Minnesota, a task force was convened to explore tolling and 

ultimately supported and recommended a tolling project. Finally, tolling 

approaches that provided tangible benefits appear to be more likely to be 

accepted than projects that offer no new tangible benefits or choice to users. 

For example, in California, toll prices on the Interstate 15 toll facility are set 

to keep traffic flowing freely in the toll lanes. 

www.gao.gov/cgi-bin/getrpt?GAO-06-554.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact JayEtta Z. 

Hecker at (202)512-2834 or

heckerj@gao.gov. 
Page i GAO-06-554 Highway Finance

Contents

Letter 1

Results in Brief 2

Background 5

Tolling Has Promise as an Approach for Enhancing Mobility and for 

Financing Transportation 11

States’ Use of Tolling to Address Funding Shortfalls, Finance New 

Capacity, and Manage Congestion Is Expanding; but for Some 

States, Tolling Is Not Viewed as Feasible 20

States That Are Considering and Implementing a Tolling Approach 

Face Two Broad Types of Challenges 32

Three Broad Strategies Can Help State Transportation Officials 

Address Challenges to Tolling 42

Concluding Observations 53

Agency Comments and Our Evaluation 54

Appendixes

Appendix I: Objectives, Scope, and Methodology 56

Appendix II: Correlation Analysis 59

Appendix III: Survey Questions 62

Appendix IV: GAO Contact and Staff Acknowledgments 65

Tables Table 1: Tolling-Related Programs Authorized in Surface 

Transportation Legislation 9

Table 2: Questions That Can Be Considered When Planning and 

Designing Toll Projects 48

Table 3: Results of Correlation Analysis 61

Figures Figure 1: State Highway Revenue Sources, Fiscal Year 2004 6

Figure 2: Annual Delay per Traveler in Selected Urban Areas, 1982, 

1993, and 2003 12

Figure 3: Combined Federal and Average State Motor Fuel Tax 

Rates 16

Figure 4: Existing Toll Road Facilities 21

Figure 5: Planned Toll Road Facilities 23

Figure 6: Conceptual Drawing of the Trans Texas Corridor 27

Figure 7: California State Route 91 Express Lanes and Toll 

Rates 30

Figure 8: Challenges to Tolling 33
Contents

Page ii GAO-06-554 Highway Finance

Figure 9: Challenges to Tolling 34

Figure 10: Challenges to Tolling 39

Figure 11: Strategies to Address Challenges to Tolling 42

Figure 12: Strategies to Address Challenges to Tolling 43

Figure 13: Strategies to Address Challenges to Tolling 46

Figure 14: Strategies to Address Challenges to Tolling 51

Abbreviations

BEA Bureau of Economic Analysis

EIS environmental impact statement

FHWA Federal Highway Administration

GDP gross domestic product

HOT high occupancy toll

HOV high occupancy vehicle

ISTEA Intermodal Surface Transportation Efficiency Act of 1991

MPO metropolitan planning organization

PPP public-private partnership

PPTA Public-Private Transportation Act of 1995

ROD Record of Decision

SAFETEA-LU Safe, Accountable, Flexible, Efficient Transportation Equity 

Act: A Legacy for Users

SEP-15 Special Experimental Projects 15

State DOT State Department of Transportation

TEA-21 1998 Transportation Equity Act for the 21st Century

TIFIA Transportation Infrastructure Finance and Innovation Act of 

1998

TOT truck-only toll

TTC Trans Texas Corridor

U.S. DOT U.S. Department of Transportation

VMT vehicle miles traveled

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Page 1 GAO-06-554 Highway Finance

United States Government Accountability Office

Washington, D.C. 20548

A

June 28, 2006 Letr

The Honorable James M. Inhofe

Chairman

Committee on Environment and Public Works

United States Senate

The Honorable Christopher S. “Kit” Bond

Chairman

Subcommittee on Transportation and Infrastructure

Committee on Environment and Public Works

United States Senate

The nation’s highways are critical to providing for and enhancing 

mobility—the free flow of passengers and goods—and to sustaining 

America’s economic growth. Mobility gives people access to goods, 

services, recreation, and jobs; gives businesses access to materials, 

markets, and people; and promotes the movement of personnel and 

materiel to meet national defense needs. During the twentieth century, 

motor fuel taxes were the mainstay of highway financing, and during the 

latter part of that century the construction of the 47,000 mile Interstate 

Highway System dominated the agendas and activities of state and federal 

highway decision makers. In the twenty-first century, state and local 

transportation officials are on the front lines of transportation decision 

making and face a new and daunting set of challenges. Congestion is 

increasing rapidly across the nation, particularly in urban areas, and freight 

traffic is expected to almost double in 20 years. In many places, decision 

makers cannot simply build their way out of congestion, and traditional 

revenue sources may not be sustainable. As the baby boom generation 

retires and the costs of federal entitlement programs rise, sustained, largescale increases in federal highway grants seem unlikely. To provide the 

robust growth that many transportation advocates believe is required to 

meet the nation’s mobility needs, state and local decision makers in 

virtually all states are seeking alternative funding approaches. Tolling (i.e., 

charging a fee for the use of a highway) provides a set of approaches that 

are increasingly receiving closer attention and consideration.

As requested, this report provides information on states’ experiences with 

tolling and provides some insights on issues that state transportation 

officials have encountered when considering or implementing a tolling 

approach. Specifically, this report examines (1) the promise of tolling to 

enhance mobility and finance highway transportation, (2) the extent to 
Page 2 GAO-06-554 Highway Finance

which tolling is being used in the United States and the reasons states are 

using or not using this approach, (3) the challenges states face in 

implementing tolling, and (4) strategies that can be used to help states 

address the challenges to tolling. 

To fulfill our objectives, we reviewed and analyzed research reports and 

analytical studies; interviewed a wide range of stakeholders, including state 

and local transportation officials, project sponsors, and private-sector 

representatives; conducted a nationwide survey of state departments of 

transportation; and conducted semistructured interviews with state 

department of transportation officials. We also performed a correlation 

analysis to identify the extent to which state financial and demographic 

characteristics are associated with states’ use of tolling. In addition, we 

interviewed transportation stakeholders in six states that were either 

planning toll projects or constructing toll projects. In addition to our survey 

and semistructured interviews, states planning toll roads were identified 

through an analysis of states’ participation in Federal Highway 

Administration (FHWA) tolling programs, including the Interstate System 

Reconstruction and Rehabilitation Pilot Program and the Value Pricing 

Pilot, and states constructing toll roads were identified through an analysis 

of relevant reports and studies. During our review, we determined that a 

number of states with toll bridges or tunnels do not have or are not 

considering the tolling of roads. We, therefore, decided to exclude toll 

bridges and tunnels from our definition of states tolling or planning to toll 

to more accurately report on the challenges to tolling. Although we discuss 

the federal role with regard to states’ experience with tolling, we did not 

assess the effectiveness of federal toll programs or the potential effects of 

federal grant programs on states’ experience with the approach. (See app. I 

for our objectives, scope, and methodology.) We performed our work from 

June 2005 through June 2006 in accordance with generally accepted 

government auditing standards. 

Results in Brief Tolling has promise as an approach to enhance mobility and finance 

transportation. A tolling approach can potentially help enhance mobility by 

managing congestion. Congestion impedes both passenger and freight 

mobility and is increasing as a result of rapid population growth and more 

vehicles traveling farther on our roads. Applying tolls that vary with the 

level of congestion—congestion pricing—can potentially reduce 

congestion and the demand for roads because tolls that vary according to 

the level of congestion can be used to maintain a predetermined level of 

service. Such tolls create additional incentives for drivers to avoid driving 
Page 3 GAO-06-554 Highway Finance

alone in congested conditions when making driving decisions. In response, 

drivers may choose to share rides, use public transportation, travel at less 

congested (generally off-peak) times, or travel on less congested routes, if 

available, to reduce their toll payments. For example, a study of the State 

Route 91 Express Lanes in California found that when tolls increased 50 

percent during peak hours, traffic during those hours dropped by about 

one-third. As concerns about the sustainability of traditional financing 

sources continue to grow, tolling also has promise to improve investments 

and raise revenue. The per-gallon fuel tax, the mainstay of transportation 

finance for 80 years, is declining in purchasing power because fuel tax rates 

are not increasing, and more fuel-efficient vehicles and alternative-fueled 

vehicles undermine the long-term viability of fuel taxes as the basis for 

financing transportation. In this environment, tolling potentially has 

promise to promote more effective infrastructure investment strategies by 

better targeting spending for new and expanded capacity. For example, 

among other factors, toll project construction is typically financed by 

bonds, and projects must pass the test of market viability and meet goals 

demanded by investors, although even with this test, there is no guarantee 

that projects will always be viable. Tolling can also potentially enhance 

private-sector participation and investment in major highway projects. 

Tolling’s promise is particularly important in light of long-term pressures on 

the federal budget.

According to our survey of state transportation officials, 31 of the 50 states 

and the District of Columbia have or are planning toll roads, including 24 

states that are operating toll roads and 7 states that are planning to toll. 

Tolling grew in the 1940s and 1950s and, after a period of slower growth, 

states’ tolling again began to expand in the 1990s. In total, 23 states are in 

some phase of planning new toll roads. Officials in the 31 states that have 

toll roads or are planning toll roads indicated that their primary reasons for 

using or considering the use of a tolling approach was to address 

transportation funding shortfalls, finance new capacity, and manage 

congestion. For example, in Texas, tolling is being used to finance major 

new capacity projects, such as the Trans Texas Corridor (TTC)—a 

proposed multiuse, statewide network of transportation routes that will 

incorporate existing and new highways—and to manage congestion in 

Houston and other metropolitan areas. Transportation officials in some 

states, however, have told us that tolling is not feasible because of limited 

need for new capacity, insufficient tolling revenues, and public and political 

opposition to tolling. For example, officials from nearly every state that is 

not pursuing tolling mentioned some form of public or political opposition 

to toll roads. In New Jersey, officials told us that opposition to new toll 
Page 4 GAO-06-554 Highway Finance

roads is strong because many state border crossings and major highways 

are already tolled. 

State transportation officials face two types of challenges that are broadly 

related to securing support for and implementing a tolling approach to 

finance transportation. The first type of challenge, according to 

transportation officials, is the difficulty of obtaining public and political 

support in the face of opposition from the public and political leaders in 

states where tolling is being considered and applied. According to 

transportation officials with whom we spoke, opposition is largely based 

on arguments that (1) fuel taxes and other dedicated funding sources are 

used to pay for roads and tolling is, therefore, a form of double taxation; (2) 

a tolling approach is unreasonable because tolls often do not cover the 

costs of a project; and (3) applying tolls can produce regional, income, and 

other inequities. For example, a Wisconsin transportation official told us 

that Wisconsin is not implementing a tolling approach because the public 

generally believes that fuel taxes already pay for roads and tolls would 

adversely affect the state’s tourist economy, while Kentucky and Arkansas 

officials said that it would be difficult to undertake tolling unless toll roads 

could be largely financially self-sufficient. In Florida, concerns about 

regional inequity led local governments to pass a law that led to the state’s 

taking action to ensure that spending on facilities in three counties was 

commensurate with toll collections in those three counties. The second 

type of challenge is the practical difficulty of implementing tolling, 

including obtaining the statutory authority to toll, addressing the traffic 

diversion that might result when motorists seek to avoid toll facilities, and 

coordinating with other states or jurisdictions. For example, Minnesota had 

legislation authorizing tolling, but conditions built into the legislation, most 

importantly, local government veto authority that could be exercised 

without recourse, prevented transportation officials from implementing a 

specific project. As a result, when state decision makers identified a toll 

project that would convert underused high occupancy vehicle (HOV) lanes 

to high occupancy toll (HOT) lanes that would allow non-HOV’s to use the 

lanes for a fee—the Interstate 394 optional toll lane project—state decision 

makers pursued specific legislation that exempted HOV to HOT lane 

conversions from local veto, thus providing an opportunity to advance the 

Interstate 394 optional toll lane project several years later.

Through our review of the ways states use tolling, we have identified three 

broad strategies that have both short-term and long-term relevance for 

state transportation officials who are considering tolling. The first strategy 

that transportation officials can consider involves developing policies and 
Page 5 GAO-06-554 Highway Finance

laws that facilitate the use of tolling to finance transportation. In 

developing such a framework, transportation officials can, first, build 

support for the approach by establishing a rationale for its use and then 

secure the legislative authority to use the approach. For example, to 

expand the use of tolling and to leverage tax dollars by allowing state 

highway funds to be combined with other funds, Texas enacted legislation 

that enabled transportation officials to realize these goals. The second 

strategy that transportation officials can consider involves providing 

leadership to build support for individual projects and addressing the 

challenges to tolling in project design. For example, in Minnesota, a task 

force of state and local officials, citizens, and business leaders was 

convened in 2001 to explore a range of road pricing options, including the 

conversion of HOV lanes to HOT lanes, and make recommendations to 

elected officials. Since tolling had been fairly controversial in the past, 

decision makers believed that a task force would provide a more credible 

and independent voice to the general public. Ultimately, the task force 

supported the HOV to HOT conversions and, with the governor’s support 

and the passage of legislation authorizing the conversion, the project was 

implemented. The last strategy that transportation officials can consider 

involves selecting a tolling approach and a project that provides tangible 

benefits. Promoting a project that provides tangible benefits can potentially 

help transportation officials justify both the costs of the project and the 

fees that users will be required to pay for the service. Although tolling can 

take different forms and decisions about its use are state specific, in 

concept, a tolling structure that varies with the level of congestion—

congestion pricing—offers increased predictability and, as a result, 

provides tangible benefits to users. While actual experience with 

congestion pricing is still fairly limited in the United States, projects in 

operation illustrate how transportation officials have advanced projects 

seeking to achieve the potential benefits that may result from congestion 

pricing. For example, toll prices on Interstate 15 in San Diego are set 

dynamically, changing every 6 minutes, which has succeeded in keeping 

traffic flowing freely. 

The U.S. Department of Transportation reviewed a draft of this report. 

Officials from the Department indicated that they generally agreed with the 

information provided and provided technical clarifications, which we 

incorporated as appropriate. 

Background The responsibility for building and maintaining highways in the United 

States rests with state departments of transportation in each of the 50 
Page 6 GAO-06-554 Highway Finance

states, the District of Columbia, and Puerto Rico. In addition, local 

governments finance road construction through sources such as property 

and sales taxes. In 2004, state governments took in about $104 billion from 

various sources to finance their highway capital and maintenance 

programs—44 percent of these revenues came from state fuel taxes and 

other state user fees, and 28 percent came from federal grants. Sources of 

state highway revenues in 2004 are shown in figure 1. 

Figure 1: State Highway Revenue Sources, Fiscal Year 2004

FHWA administers federal grant funds through the federal-aid highway 

program and distributes highway funds to the states through annual 

apportionments established by statutory formulas. Once FHWA apportions 

these funds, they are available to be obligated for the construction, 

reconstruction, and improvement of highways and bridges on eligible 

federal-aid highway routes and for other purposes authorized in law. Within 

these parameters, responsibility for planning and selecting projects 

generally rests with state departments of transportation (DOT) and with 

metropolitan planning organizations, and these states and planning 

organizations have considerable discretion in selecting specific highway 

projects that will receive federal funds. For example, section 145 of title 23 

5%

28%

15%

52%

Tolls

State general

revenues

Other

(local contributions, bond proceeds, 

and miscellaneous) 

Federal grants

State fuel taxes

and user fees

State funds

8%

44%

Source: FHWA.
Page 7 GAO-06-554 Highway Finance

of the United States Code describes the federal-aid highway program as a 

federally assisted state program and provides that the federal authorization 

of funds, as well as the availability of federal funds for expenditure, shall 

not infringe on the states' sovereign right to determine the projects to be 

federally financed.

About 5 percent of the highway revenues to the states in 2004 came from 

tolls. In 2005, the United States had about 5,000 miles of toll facilities in 

operation or under construction, including about 2,800 miles, or 6 percent, 

of the Interstate Highway System, according to FHWA.1

 Tolling of roads 

began in the late 1700s. From 1792 through 1845, an estimated 1,562 

privately owned turnpike companies managed and charged tolls on about 

15,000 miles of turnpikes throughout the country.2

 Between 1916 and 1921, 

the number of automobiles in the United States almost tripled, from 3.5 

million to 9 million, and as automobile use increased, pressure grew for 

more government involvement in financing the construction and 

maintenance of public roads.3

 In 1919, Oregon became the first state to 

impose a motor fuel tax to finance roadway construction.4 In 1916, the 

Federal Aid Road Act provided states with federal funds to finance up to 50 

percent of the cost of roads and bridges constructed to provide mail 

service. This act and its successor, the 1922 Federal Highway Act, 

prohibited tolling on roads financed with federal funds. 

In the 1930s and 1940s, President Roosevelt led the thinking for developing 

a series of interconnected systems of toll roads that crossed the United 

States, which was the beginning of the idea of an interstate highway 

system. Then, between 1940 and 1952, 5 states opened such highways,

1

Federal Highway Administration, Toll Facilities in the United States Interstate System 

Toll Roads in the United States, Table T-1, Part 3 (Washington, D.C.: Jan. 1, 2005) and 

Federal Highway Administration, Toll Facilities in the United States Facts (Washington, 

D.C.: Jan. 1, 2005).

2

Turnpike is a term used interchangeably with toll road, which is a highway that requires toll 

collections from all drivers (usually with the exception of emergency vehicles). Typically, 

the tolls are used to support operations and maintenance, as well as to pay debt service on 

the bonds issued to finance the toll facility. 

3

Tom Lewis, Divided Highways: Building the Interstate Highways, Transforming 

American Life (New York: Penguin, 1997).

4

National Bureau of Economic Research, Political Processes and the Common Pool 

Problem: The Federal Highway Trust Fund (Cambridge, MA.: June 2000).
Page 8 GAO-06-554 Highway Finance

which they financed through tolls.5 The first of these highways, the 

Pennsylvania Turnpike, was completed in 1940. During this time, about 30 

states considered building toll roads, given the success of Pennsylvania. In 

1943, Congress passed an amendment to the Federal Highway Act, 

directing the Commissioner of Public Roads to conduct a survey for an 

express highway system and report the results to the President and 

Congress. However, there was no determination as to how such a system 

would be funded. President Eisenhower supported a toll system financed 

with bonds to be paid back with toll revenues until the bonds were paid off, 

at which time the tolls would be removed. A committee appointed by 

President Eisenhower also recommended a highway program financed 

with bonds, but proposed that federal fuel tax revenues, instead of tolls, be 

used to pay back the bonds. Ultimately, the Federal-Aid Highway Act of 

1956 authorized the creation of a Highway Trust Fund to collect federal fuel 

tax revenues and finance the construction of the Interstate Highway 

System on a pay-as-you-go basis. The act prohibited tolling on interstate 

highways and all federally assisted highways; as a consequence, states built 

few new toll roads while the Interstate Highway System was under 

construction. However, many of the toll roads built before 1956 were 

eventually incorporated into the Interstate Highway System, and tolling on 

these roads was allowed to continue. Tolling was also allowed, on a caseby-case basis under very specific conditions and with a limited federal 

funding share, for interstate bridges and tunnels.

During the 1990s, as interstate construction wound down, states again 

began considering and implementing tolling. At the same time, some of the 

federal restrictions on the use of federal funds for tolling began to ease. 

The Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) 

liberalized some of the long-standing federal restrictions on tolling by 

permitting tolling for the construction, reconstruction, or rehabilitation of 

federally assisted non-Interstate roadways and by raising the federal share 

on interstate bridges and tunnels to equal the share provided for other 

federal-aid highway projects. The 1998 Transportation Equity Act for the 

21st Century (TEA-21) established a new pilot program to allow the 

conversion of a free interstate highway, bridge, or tunnel to a toll facility if 

needed reconstruction or rehabilitation was possible only with the

5

Lewis, Divided Highways.
Page 9 GAO-06-554 Highway Finance

collection of tolls.6 The Safe, Accountable, Flexible, Efficient 

Transportation Equity Act: A Legacy for Users (SAFETEA-LU), enacted in 

2005, continued all of the previously established toll programs and added 

new programs. The federal tolling-related programs that have been 

authorized in surface transportation legislation are shown in table 1.

Table 1: Tolling-Related Programs Authorized in Surface Transportation Legislation 

Source: FHWA.

SAFETEA-LU also created a National Surface Transportation 

Infrastructure Financing Commission to consider revenue sources 

available to all levels of government, particularly Highway Trust Fund 

revenues, and to consider new approaches to generating revenues for 

financing highways. The commission’s objective is to develop a report 

recommending policies to achieve revenues for the Highway Trust Fund 

that will meet future needs. The commission is required to produce a final 

report within 2 years of its first meeting.

In addition to SAFETEA-LU’s new tolling provisions and enhancements to 

existing programs, FHWA offers an innovative credit assistance program, 

6

Federal Highway Administration, Federal-Aid Highway Toll Facilities (Washington, D.C.: 

June 16, 2005).

Program Purpose

Value Pricing Pilot Program Authorized in ISTEA in 1991, this program is a pilot program for local transportation 

programs to determine the potential of different value pricing approaches to manage 

congestion, including projects that would use tolls on highway facilities. 

Interstate System Reconstruction and 

Rehabilitation Toll Pilot Program

Authorized in TEA-21 in 1998, this program allows tolls on three pilot projects in 

different states to reconstruct an existing interstate facility. 

Express Lanes Demonstration Program Authorized in SAFETEA-LU in 2005, this program allows 15 demonstration projects to 

use tolling on interstate highways to manage high congestion levels, reduce emissions 

to meet specific Clean Air Act requirements, or finance additional Interstate lanes to 

reduce congestion. 

High Occupancy Vehicle (HOV) Facilities Authorized in SAFETEA-LU in 2005, this program permits states to charge tolls to 

vehicles that do not meet occupancy requirements to use an HOV lane even if the lane 

is on an interstate facility. 

Interstate System Construction Toll Pilot 

Program

Authorized in SAFETEA-LU in 2005, this program permits tolls on three pilot projects 

by a state or compact of states to construct new interstate system highways.

Section 129 of title 23, United States Code Section 129 authorizes federal participation in specific toll activities that are otherwise 

generally prohibited under Section 301, also from title 23.
Page 10 GAO-06-554 Highway Finance

which can be used to develop toll roads, and an experimental program, 

which can be used to test innovative toll road development procedures. 

The Transportation Infrastructure Finance and Innovation Act of 1998 

(TIFIA) permits FHWA to offer three kinds of credit assistance for 

nationally or regionally significant surface transportation projects: direct 

loans, loan guarantees, and lines of credit. Because TIFIA provides credit 

assistance rather than grants, states are likely to use it for infrastructure 

projects that can generate their own revenues through user charges, such 

as tolls or other dedicated funding sources. TIFIA credit assistance is 

aimed at advancing the completion of large, capital intensive projects—

such as toll roads—that otherwise might be delayed or not built at all 

because of their size and complexity and the financial market’s uncertainty 

over the timing of revenues from a project. The main goal of TIFIA is to 

leverage federal funds by attracting substantial private and other 

nonfederal investment in projects. FHWA has also encouraged 

experimental projects through the Special Experimental Projects 15 (SEP15) program, which is intended to encourage the formation of publicprivate partnerships for projects by providing additional flexibility for 

states interested in experimenting with innovative ways to develop 

projects, according to FHWA officials. SEP-15 allows innovation and 

flexibility in contracting, compliance with environmental requirements, 

right-of-way acquisition, and project finance.

In addition, the Department of Transportation’s Office of Transportation 

Policy is proposing a pilot program—the Open Roads Pilot Program—to 

explore alternatives to the motor fuel tax. Under this pilot, the Office of 

Transportation Policy is proposing to make funds available to up to five 

states to demonstrate on a large scale the viability and effectiveness of 

financing alternatives to the motor fuel tax. Goals of the program would be 

to: (1) demonstrate whether or not there are viable alternatives to the 

motor fuel tax that will provide necessary investment resources while 

simultaneously improving system performance and reducing congestion, 

(2) identify successful motor fuel tax substitutes that have widespread 

applicability to other states, and (3) provide a possible framework for 

future federal reauthorization proposals. 
Page 11 GAO-06-554 Highway Finance

Tolling Has Promise as 

an Approach for 

Enhancing Mobility 

and for Financing 

Transportation 

As congestion increases and concerns about the sustainability of 

traditional roadway financing sources grow, tolling has promise as an 

approach to enhance mobility and to finance transportation. Tolls that are 

set to vary with the level of congestion can potentially lead to a reduction in 

congestion and demand for roads. Such tolls can create additional 

incentives for drivers to avoid driving alone in congested conditions when 

making their driving decisions. In response, drivers may choose to share 

rides, use public transportation, travel at less congested (generally offpeak) times, or travel on less congested routes, if available, to reduce their 

toll payments. Tolling is also consistent with the important user pays 

principle, can potentially better target spending for new and expanded 

capacity, and can potentially enhance private-sector participation and 

investment in major highway projects. Tolling’s promise is particularly 

important in light of long-term fiscal challenges and pressures on the 

federal budget. 

In the Face of Increasing 

Congestion, Tolling Holds 

Promise as an Approach to 

Enhance Mobility

Tolling can be used to potentially enhance mobility by managing 

congestion, which is already substantial in many urban areas. Congestion 

impedes both passenger and freight mobility and ultimately, the nation’s 

economic vitality, which depends in large part on an efficient 

transportation system. Highway congestion for passenger and commercial 

vehicles traveling during peak driving periods doubled from 1982 through 

2000. According to the Texas Transportation Institute, drivers in 85 urban 

areas experienced 3.7 billion hours of delay and wasted 2.3 billion gallons 

of fuel in 2003 because of traffic congestion.7

 The Texas Transportation 

Institute estimated that the cost of congestion was $63.1 billion (in 2003 

dollars), a fivefold increase over two decades after adjusting for inflation. 

On average, drivers in urban areas lost 47 hours on the road in 2003, nearly 

triple the delay travelers experienced on average in 1982. During this same 

period, congestion grew in urban areas of every size; however, very large 

metropolitan areas with populations of more than 3 million were most 

affected. (See fig. 2 for examples of congestion growth in selected urban 

areas.) Freight traffic—which has doubled since 1980 and in some 

locations constitutes 30 percent of interstate system traffic—added to this 

congestion at a faster rate than passenger traffic, and FHWA projects 

7

Texas Transportation Institute, 2005 Urban Mobility Report (College Station, TX: May 

2005). 
Page 12 GAO-06-554 Highway Finance

continued growth, estimating that the volume of freight traffic on U.S. 

roads will increase 70 percent by 2020.

Figure 2: Annual Delay per Traveler in Selected Urban Areas, 1982, 1993, and 2003

A number of factors, as follows, are converging to further exacerbate 

highway congestion:

• Most population growth in the nation occurs in already congested 

metropolitan areas. In 2000, the U.S. Census Bureau reported that 79 

percent of 281 million U.S. residents lived in metropolitan areas. 

Nationwide, the population is expected to increase by 54 million by 

2020, and most of that growth is expected in metropolitan areas.

• Vehicle registrations are steadily increasing. In 2003, vehicle 

registrations nationwide stood at 230 million, a 17 percent increase in 

just 10 years.

0 

10 

20 

30 

40 

50 

60 

70 

Colorado Springs,

Colorado

Riverside-San Austin, Texas

Bernardino, California

Atlanta, Georgia

Hours of delay 

Urban areas

Source: GAO analysis of Texas A&M University data.

1982

1993

2003
Page 13 GAO-06-554 Highway Finance

• Road usage, as measured by vehicle miles traveled (VMT), grew at a 

steady annual rate of 2.8 percent from 1980 through 2003. For the 10-

year period between 1994 and 2003, the total increase in VMT was 22 

percent.

• Road construction has increased at a slower pace than population 

growth, vehicle registrations, and road usage. For example, from 1980 to 

2000, VMT increased by 80 percent while urban lane miles increased 37 

percent.

In light of this increasing congestion, a tolling structure that includes 

congestion pricing can potentially reduce congestion and the demand for 

roads during peak hours. Through congestion pricing, tolls can be set to 

vary during congested periods to maintain a predetermined level of service. 

One potential effect of this pricing structure is that the price that a driver 

pays for such a trip, including the toll, may be equal to or close to the total 

cost of that trip, including the external costs that drivers impose on others, 

such as increased travel time, pollution, and noise.8

 Such tolls create 

financial incentives for drivers to consider these costs when making their 

driving decisions. In response, drivers may choose to share rides, use 

transit, travel at less congested (generally off-peak) times, or travel on less 

congested routes to reduce their toll payments.9

 Such choices can 

potentially reduce congestion and the demand for road space at peak 

periods, thus potentially allowing the capacity of existing roadways to 

accommodate demand with fewer delays.

Actual experience with congestion pricing is still fairly limited in the United 

States, with only five states operating such facilities and six states planning

8

As we reported in 2003, economists generally believe that charging surcharges or tolls 

during congested periods can enhance economic efficiency by making them take into 

account the external costs they impose on others in deciding when, where, and how to 

travel. In congested situations, external costs are substantial and include increased travel 

time, pollution, and noise. The goal of efficient pricing on public roads, for example, would 

be to set tolls for travel during congested periods that would make the price (including the 

toll) that a driver pays for such a trip equal or close to the total cost of that trip, including 

external costs. GAO, Reducing Congestion: Congestion Pricing Has Promise for 

Improving Use of Transportation Infrastructure, GAO-03-735T (Washington, D.C.: May 6, 

2003). For further discussion of the research on congestion pricing, see Transportation 

Research Board, Curbing Gridlock: Peak-Period Fees to Relieve Traffic Congestion

(Washington, D.C.: January 1994).

9

GAO-03-735T.
Page 14 GAO-06-554 Highway Finance

facilities.10 Some results show that where variable tolls are implemented, 

changes in toll prices affect demand and, therefore, levels of congestion. 

For example, on State Route 91 in California, the willingness of people to 

use the Express Lanes has been shown to be directly related to the price of 

tolls. A study by Cal Poly State University for the California DOT estimated 

that a 10 percent increase in tolls would reduce traffic by 7 percent to 7.5 

percent, while a 100 percent increase in tolls would reduce traffic by about 

55 percent.11 By adjusting the price of tolls, the flow of traffic can be 

maintained in the toll lanes so that congestion remains at manageable 

levels. In the Minneapolis-St. Paul area, a Minnesota DOT study of a 

proposed system of variable priced HOT lanes called MnPASS estimated 

that, over time, average speeds and vehicle mileage would increase, while 

vehicle hours traveled would decrease.12 By 2010, with tolled express lanes 

and free HOV lanes, the daily vehicle mileage on the entire system is 

projected to be 3.6 million compared with 3.2 million if the highways are 

not tolled. Average overall speed on the system is expected to be 47 mph 

compared with 42.8 mph if the system is not implemented. Finally, 

congestion pricing has been in use internationally as well. Canada, Great 

Britain, Norway, Singapore, and South Korea all have roadways that are 

tolled to manage demand and reduce congestion. For example, in 1996, 

South Korea implemented congestion tolls on two main tunnels. Traffic 

volume decreased by 20 percent in the first 2 years of operation, and 

average traffic speed increased by 10 kilometers per hour.

Although congestion pricing was dismissed by some decision makers in the 

past partly because motorists queuing at toll booths to pay tolls created 

congestion and delays, advances in automated toll collection have greatly 

reduced the cost and inconvenience of toll collection. Today, nearly every 

major toll facility provides for electronic toll collection, greatly reducing 

the cost and inconvenience of toll collection. With electronic toll 

collection, toll fee collection for using a facility can be done at near 

highway cruising speed because cars do not have to stop at toll plazas. 

However, as we reported, there are no widely accepted standards for 

10According to our survey of state DOTs, the five states currently operating facilities are 

California, Minnesota, New York, Texas, and Virginia. States that are planning facilities 

include California, Colorado, Maryland, Virginia, Texas, and Washington.

11Cal Poly State University, Continuation Study to Evaluate the Impacts of the SR 91 ValuePriced Express Lanes Final Report (San Luis Obispo, CA: December 2000).

12Cambridge Systematics for Minnesota Department of Transportation, MnPASS System 

Study, Final Report (Cambridge, MA: Apr. 7, 2005).
Page 15 GAO-06-554 Highway Finance

electronic toll systems, which could become a barrier to promoting the 

needed interoperability between toll systems.13

Tolling Holds Promise as an 

Approach to Finance 

Transportation Projects 

Tolling holds promise to improve investment decisions and raise revenues 

in the face of growing concerns about the sustainability of traditional 

financing sources for surface transportation. For many years, federal and 

state motor fuel taxes have been the mainstay of state highway revenue. In 

the last few years, however, federal and motor fuel tax rates have not kept 

up with inflation. Between 1995 and 2004, total highway revenues for states 

grew an average of 3.6 percent per year, with average annual increases of 

4.9 percent for federal grants and 3 percent for revenues from state 

sources, according to FHWA data. However, these increases were smaller 

than increases in the cost of materials and labor for road construction and 

are not sufficient to keep pace with the robust levels of growth in highway 

spending many transportation advocates believe is needed.14 The federal 

motor fuel tax rate of 18.4 cents per gallon has not been increased since 

1993, and thus the purchasing power of fuel tax revenues has been steadily 

eroded by inflation. Although the Highway Trust Fund15 was reauthorized 

in 1998 and 2005, no serious consideration was given to raising fuel tax 

rates. Most states faced a similar degradation of the value of their state 

motor fuel tax revenues—although 28 states raised their motor fuel tax 

rates between 1993 and 2003, only three states raised their rates enough to 

keep pace with inflation. State gasoline tax rates range from 7.5 cents per 

gallon in Georgia to 28.5 cents in Wisconsin. Seven states have motor fuel 

tax rates that vary with the price of fuel or the inflation rate—including one 

state that repealed the linkage of its fuel tax rate to the inflation rate 

effective in 2007. Figure 3 shows the decline in the purchasing power in 

13GAO, Highway Congestion: Intelligent Transportation Systems' Promise for Managing 

Congestion Falls Short, and DOT Could Better Facilitate Their Strategic Use, GAO-05-943

(Washington, D.C.: Sept. 14, 2005). 

14Brookings Institution, Improving Efficiency and Equity in Transportation Finance

(Washington, D.C.: April 2003); Eric Kelderman, Road Funding Takes a Toll on States

(Washington, D.C.: Feb. 17, 2006); and Transportation Research Board, “Special Report 285: 

The Fuel Tax and Alternatives for Transportation Funding” (Washington, D.C.: 2005).

15Highway user tax receipts, such as motor fuel taxes, are deposited into the Highway Trust 

Fund and distributed to the states according to formulas based on vehicle miles traveled, 

motor fuel used on highways, and other factors, which are specified in law. GAO, Surface 

and Maritime Transportation: Developing Strategies for Enhancing Mobility: A National 

Challenge, GAO-02-775 (Washington, D.C.: Aug. 30, 2002).
Page 16 GAO-06-554 Highway Finance

real terms of revenues generated by federal and state motor fuel tax rates 

since 1990.

Figure 3: Combined Federal and Average State Motor Fuel Tax Rates

Note: Tax rates are in 2004 inflation-adjusted dollars. Totals for 1992, 1995, 1996, 2000, and 2003 are 

rounded. State average gas tax rate is a “weighted average.” 

Even if federal and state motor fuel tax rates were to keep pace with 

inflation, the growing use of fuel-efficient vehicles and alternative-fueled 

vehicles would, in the longer term, further diminish fuel tax revenues. 

Although all highway motorists pay fuel taxes, those who drive hybridpowered or other alternative-fueled vehicles consume less fuel per mile 

than those who drive gas-only vehicles. As a result, these motorists pay less 

fuel tax per mile traveled. According to the U.S. Energy Information 

Agency, hybrid vehicle sales grew twentyfold between 2000 and 2005 and 

Sources: GAO analysis of DOT and FHWA data. 

38.20

19.98

18.21

44.92

22.21

22.71

44.41

22.17

22.24

43.72

21.92

21.79

42.78

21.50

21.27

42.39

21.35

21.04

42.35

21.54

20.81

42.76

22.25

20.51

41.12

21.05

20.07

41.09

21.49

19.60

39.24

19.97

19.27

38.52

19.63

18.88

37.50

19.10

18.40

37.82

18.97

18.85

39.97

22.16

17.80

0

10

20

30

40

50

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Federal gas tax rate

State average gas tax rate

Total gas tax rate

Cents per gallon

Federal motor fuels tax

Average state motor fuels tax
Page 17 GAO-06-554 Highway Finance

will grow to 1.5 million vehicles annually by 2025. In the past five years, 

hybrid vehicle sales grew in the United States twentyfold, from 9,400 in 

2000 to over 200,000 in 2005. Moreover, the U.S. Energy Information 

Agency projects that hybrid vehicle sales will grow to 1.5 million annually 

by 2025. Sales of alternative-fueled vehicles, such as alcohol-flexible-fueled 

vehicles, are projected to increase to 1.3 million in 2030, with electric and 

fuel cell technologies projected to increase by 2030 as well. 

As concerns about the sustainability of traditional roadway financing 

sources grow, tolling can potentially target investment decisions by 

adhering to the user pays-principle. National roadway policy has long 

incorporated the user pays concept, under which the costs of building and 

maintaining roadways are paid by roadway users, generally in the form of 

excise taxes on motor fuels and other taxes on inputs into driving, such as 

taxes on tires or fees for registering vehicles or obtaining operator licenses. 

This method of financing is consistent with one measure of equity that 

economists use in assessing the financing of public goods and services, the 

benefit principle, which measures equity according to the degree that 

readily identifiable beneficiaries bear the cost. As a result, the user pays 

concept is widely recognized as a critical anchor for transportation policy.16

Increasingly, however, decision makers have looked to other revenue 

sources—such as income, property, and sales tax revenues—to finance 

roads. Using these taxes results in some sacrifice of the benefit principle 

because there is a much weaker link to the benefits of roadway 

expenditures for those taxes than there is for fuel taxes.17 Tolling, however, 

is more consistent with user pay principles because tolling a particular 

road and using the toll revenues collected to build and maintain that road 

more closely link the costs with the distribution of the benefits that users 

derive from it. Motor vehicle fuel taxes can provide a rough link between 

costs and benefits but do not take into account the wide variation in costs 

required to provide different types of facilities (i.e., roads, bridges, tunnels, 

interchanges) some of which can be very costly.

Tolling can also potentially lead to more targeted, rational, and efficient 

investment by state and local governments. Roadway investment can be 

16Texas Transportation Institute, 2005 Urban Mobility Report (College Station, TX: May 

2005).

17Brookings Institution, Improving Efficiency and Equity in Transportation Finance 

(Washington, D.C.: April 2003).
Page 18 GAO-06-554 Highway Finance

more efficient when it is financed by tolls because the users who benefit 

will likely support additional investment to build new capacity or enhance 

existing capacity only when they believe the benefits exceed the costs. 

When costs are borne by nonusers, the beneficiaries may demand that 

resources be invested beyond the economically justifiable level. Tolling can 

also provide the potential for more rational investment because, in contrast 

to most grant-financed projects, toll project construction is typically 

financed by bonds sold and backed by future toll revenues, and projects 

must pass the test of market viability and meet goals demanded by 

investors. However, even with this test there is no guarantee that projects 

will always be viable.18

A tolling structure that includes congestion pricing can also help guide 

capital investment decisions for new facilities. As congestion increases, 

tolls also increase and such increases (sometimes referred to as 

“congestion surcharges”) signal increased demand for physical capacity, 

indicating where capital investments to increase capacity would be most 

valuable. At the same time, congestion surcharges would provide a ready 

source of revenue for local, state, and federal governments, as well as for 

transportation facility operators in order to help fund these investments in 

new capacity that, in turn, can reduce delays. Over time, this form of 

pricing can potentially influence land-use plans and the prevalence of 

telecommuting and flexible workplaces, particularly in heavily congested 

corridors where external costs are substantial and congestion surcharges 

would be relatively high.

Tolling can also be used as a tool for leveraging increased private-sector 

participation and investment. In March 2004, we reported that three 

states—California, Virginia, and South Carolina—had pursued privatesector investment and participation in major highway projects. Since that 

time, Virginia has pursued additional projects, and Texas has contracted 

with a private entity to participate and invest in a major highway project.19

Tolling can be used to enhance private participation because it provides a 

mechanism for the private sector to earn the return on investment it 

18As we reported in 2004, three of the four toll road projects that were built with private 

participation and investment and were open to traffic at that time were not financially 

successful. See GAO, Highway and Transit: Private Sector Sponsorship of and Investment 

in Major Projects Has Been Limited, GAO-04-419 (Washington, D.C.: Mar. 25, 2004).

19In addition, the City of Chicago and the State of Indiana have contracted with private 

entities to operate existing facilities.
Page 19 GAO-06-554 Highway Finance

requires to participate. Involving the private sector allows state and local 

governments to build projects sooner, conserve public funding from 

highway capital improvement programs for other projects, and limit their 

exposure to the risks associated with acquiring debt.20

In the Long Term, Tolling 

Holds Promise for 

Addressing the 

Transportation Challenges 

Ahead

Federal and state policymakers have begun looking toward future options 

for long-term highway financing. For example, SAFETEA-LU established 

the National Surface Transportation Infrastructure Financing Commission 

to study prospective Highway Trust Fund revenues and assess alternative 

approaches to generating revenues for the Fund. SAFETEA-LU also 

authorized a study, to be performed by the Public Policy Center of the 

University of Iowa, to test an approach to assessing highway use fees based 

on actual mileage driven. This approach would use an onboard computer to 

measure the miles driven by a specific vehicle on specific types of 

highways. A few states have also begun looking toward the long-term 

financing options. Oregon, the first state to enact a motor fuel tax, is 

sponsoring a study on the technical feasibility of replacing the gas tax with 

a per-mile fee. During 2006, volunteers will have onboard mileage-counting 

equipment added to their vehicles and will, for one year, pay a road user fee 

equal to 1.2 cents a mile instead of paying the state’s motor fuel tax.

But beyond the questions of financing and financing sources, broader 

issues and challenges exist. As the baby boom generation ages, mandatory 

federal commitments to health and retirement programs will consume an 

ever-increasing share of the nation’s gross domestic product (GDP) and 

federal budgetary resources, placing severe pressures on all discretionary 

programs, including those that fund defense, education, and transportation. 

Our simulations show that by 2040, revenues to the federal government 

might barely cover interest on the debt—leaving no money for either 

mandatory or discretionary programs—and that balancing the budget 

could require cutting federal spending by as much as 60 percent, raising 

taxes by up to 2 1⁄2 times their current level, or some combination of the 

two. As we have reported, this pending fiscal crisis requires a fundamental 

reexamination of all federal programs, including those for highways. This 

reexamination should raise questions such as whether a federal role is still 

needed, whether program funding can be better linked to performance, and 

whether program constructs are ultimately sustainable. It is in this context 

20GAO-04-419.
Page 20 GAO-06-554 Highway Finance

that tolling has promise for addressing the challenges ahead. In particular, 

we have suggested that a reexamination of the federal role in highways 

should include asking whether the federal government should even 

continue to provide financing through grants or whether, instead, it should 

develop and expand alternative mechanisms that would better promote 

efficient investments in, and use of, infrastructure and better capture 

revenue from users. 

States’ Use of Tolling to 

Address Funding 

Shortfalls, Finance 

New Capacity, and 

Manage Congestion Is 

Expanding; but for 

Some States, Tolling Is 

Not Viewed as Feasible 

According to our survey of state transportation officials, there are toll road 

facilities in 24 states and plans to build toll road facilities in 7 other states. 

Tolling grew in the 1940s and 1950s, but after a period of slower growth, 

states’ tolling began to expand again in the 1990s. The 5 states that began 

tolling after 1990 are currently planning additional toll roads. Officials in 

states that have toll roads or are planning toll roads indicated that their 

primary reasons for using or considering the use of a tolling approach were 

to address transportation shortfalls, finance new capacity, and manage 

congestion. Transportation officials in some states, however, told us that 

tolling is not now seen as feasible because there is little need for new tolled 

capacity, tolling revenues would be insufficient, and they would face public 

and political opposition to tolling.

Nearly Half of the States 

Have Operating Toll Roads, 

and More States Are 

Planning Toll Roads

Currently, there are toll road facilities in 24 states throughout the United 

States, and there are plans to build toll road facilities in 7 additional states. 

Figure 4 shows the states that have at least one existing toll road, according 

to our survey of transportation officials from all 50 states and the District of 

Columbia and our review of FHWA toll-related programs. (See app. III for 

the survey questions.) 
Page 21 GAO-06-554 Highway Finance

Figure 4: Existing Toll Road Facilities

Tolling grew in the 1950s, slowed for several decades, and again began to 

expand rapidly in the 1990s. Five states—California, Colorado, Minnesota, 

South Carolina, and Utah—opened their first toll roads from 1990 to 2006 

and, according to our survey of state transportation officials, all five are 

currently planning, or in some stage of building, at least one new toll road. 

Large states that have recently built toll roads, such as California, Florida, 

and Texas, are also moving ahead with plans to build and expand systems 

of tolls. In Texas, for example, the DOT’s Turnpike Authority Division is 

developing a proposed multiuse, statewide network of transportation 

Source: GAO.

Existing toll road facilities

Not surveyed

No existing toll road facilities

Pa. 

Ore. 

Nev. 

Idaho 

Mont. 

Wyo. 

Utah 

Ariz. N.Mex. 

Colo. 

N.Dak. 

S.Dak. 

Nebr. 

Tex. 

Kans. 

Okla. 

Minn. 

Iowa

Mo. 

Ark. 

La. 

Ill. 

Miss. 

Ind. 

Ky. 

Tenn. 

Ala. 

Fla. 

Ga. 

S.C. 

N.C. 

Va. 

Ohio 

N.H. 

Mass. 

Mich. R.I. ( ) 

Calif. 

Wash. 

Wis. N.Y. 

Maine 

Vt. 

W.Va. 

Alaska

Hawaii 

Conn. ( ) 

N.J. ( ) 

Del. ( ) 

Md. ( ) 

D.C. ( ) 
Page 22 GAO-06-554 Highway Finance

routes that will incorporate existing and new highways called the TTC,21

while three other regional toll authorities22 in Austin, Dallas, and Houston 

are also planning toll roads. In California, a state legislative initiative in 

1989 led to the development of toll roads in Orange County, including the 

State Route 91 Express Lanes and State Route 125 in San Diego. And in 

Florida, the DOT-run Florida Turnpike Enterprise operates nine tolled 

facilities that include almost 500 miles of toll roads and is studying the 

feasibility of implementing tolling to manage congestion on other facilities, 

including Interstate 95 in Miami-Dade County.

According to our survey of state transportation officials and our review of 

state applications to FHWA tolling pilot programs, a total of 23 states have 

plans to build toll road facilities.23 (Fig. 5 summarizes the status of states’ 

plans for highway tolling.) Eleven of these states have received the 

required environmental clearances and have projects that are under design 

or in construction. The remaining 12 states do not have projects that have 

proceeded this far, but do have plans to build toll road facilities, according 

to their respective state transportation officials. Of these 23 states, 

• 16 have existing toll roads and are planning additional toll roads,24 and

21Plans for TTC include TTC 35, which is projected to parallel Interstate 35 and Interstate 69.

22The Central Texas Regional Mobility Authority in the Austin area, the Harris County Toll 

Road Authority in the Houston area, and the North Texas Tollway Authority in the Dallas 

area.

23In our count, we included affirmative responses to our survey questions regarding (1) 

planned toll road facilities that were in design/right-of-way or construction and (2) plans for 

toll road facilities that were not yet in design or construction but for which an 

environmental review and Record of Decision had been completed. We compared the 

responses to these questions with information obtained from our interviews with state DOT 

officials and from state applications to FHWA’s tolling programs, including the Interstate 

System Reconstruction and Rehabilitation Pilot Program and the Value Pricing Pilot. In four 

instances, data from these sources were inconsistent. We contacted DOT officials in these 

states to resolve these inconsistencies and adjusted the survey results accordingly. 

24The 16 states include California, Colorado, Delaware, Florida, Georgia, Illinois, Indiana, 

Maine, Maryland, Minnesota, Pennsylvania, South Carolina, Texas, Utah, Virginia, and West 

Virginia.
Page 23 GAO-06-554 Highway Finance

• 7 are planning their first toll roads.25

Figure 5: Planned Toll Road Facilities

25The 7 states include Alabama, Arkansas, Mississippi, Missouri, North Carolina, Oregon, 

and Washington.

Source: GAO.

Pa. 

Ore. 

Nev. 

Idaho 

Mont. 

Wyo. 

Utah 

Ariz. N.Mex. 

Colo. 

N.Dak. 

S.Dak. 

Nebr. 

Tex. 

Kans. 

Okla. 

Minn. 

Iowa

Mo. 

Ark. 

Ill. 

Miss. 

Ind. 

Ky. 

Tenn. 

Ala. 

Fla. 

Ga. 

S.C. 

N.C. 

Va. 

Ohio 

N.H. 

Mass. 

Mich. 

Calif. 

Wash. 

Wis. N.Y. 

Maine 

Vt. 

W.Va. 

Alaska

Hawaii 

Toll roads in design or under construction 

Planned toll roads

No planned toll roads

R.I. ( ) 

Conn. ( ) 

N.J. ( ) 

Del. ( ) 

Md. ( ) 

D.C. ( ) 

Not surveyed

La.
Page 24 GAO-06-554 Highway Finance

Some States Use Tolling to 

Address Funding Shortfalls, 

Finance New Capacity, and 

Manage Congestion; Other 

States Find Tolling Not 

Feasible or Have Made 

Other Choices

Officials in most states planning toll roads indicated that the primary 

reasons for considering a tolling approach were to address what state 

officials characterized as transportation funding shortfalls, to finance and 

build new capacity, and to manage congestion. States that are not planning 

to build toll roads have found that tolling is not feasible or have made other 

choices.

States Use Tolling to Address 

Transportation Funding 

Shortfalls

Transportation officials indicated that one of the primary reasons for using 

or considering a tolling approach was to respond to what the officials 

described as shortfalls in transportation funding. In Georgia, for example, 

an official told us that tolling has become a strategy because there is a 

significant gap in transportation funding, and the motor fuel tax rate is the 

lowest in the country, 7.5 cents per gallon. In North Carolina, where the 

North Carolina Turnpike Authority was established in 2002, an official told 

us that traditional funding is not adequate to address transportation needs. 

North Carolina has estimated that, over the next 25 years, it will need $85 

billion in new transportation projects to accommodate the state’s growth. 

With a projected shortfall of $30 billion and what the official described as a 

lack of political will to increase motor fuel tax rates, the state has adopted 

tolling as one strategy to address transportation needs. In Utah, state 

transportation officials have estimated a $16.5 billion shortfall through 

2030 in funding for highway projects and are considering tolling, along with 

other funding alternatives. Finally, an official told us that, in spite of a 

motor fuel tax rate increase in 2003 and a $200 million bonding program, 

Indiana has a 10-year, $2.8 billion shortfall in highway funding and is 

viewing tolling as one financing tool to close the gap. The Indiana DOT has 

operated the Interstate 80/Interstate 90 Indiana Toll Road for 50 years and 

would like to apply that experience in operating toll roads to new roads.

In other states, transportation officials conducted financial assessments on 

specific highway projects and determined that, to complete the projects, 

tolling would be required as a source of revenue. For example, in Missouri, 

a funding analysis performed by the Missouri DOT found that the estimated 

construction costs for the Interstate 70 reconstruction exceed the available 

federal, state, and local funding sources, and the project cannot be 

advanced without tolling or other revenue increases. Missouri DOT 

estimates that the Interstate 70 reconstruction project will cost between 

$2.7 and $3.2 billion and that, with a current funding shortfall of $1 billion
Page 25 GAO-06-554 Highway Finance

to $2 billion annually, tolling is being actively considered to close that gap.26

Likewise, studies by the Texas DOT determined that tolling would be 

required on particular highway projects. For example, reconstructing a 

23-mile portion of Interstate 10 near Houston was estimated to cost $1.99 

billion. Available federal, state, and local funds amounted to $1.75 billion, a 

shortfall of $305.2 million. The Harris County Toll Road Authority invested 

$238 million for the right to operate tolled lanes within the facility. In 

addition, the Texas Transportation Commission, which oversees the state 

DOT, ordered that all new controlled-access highways should be 

considered as potential toll projects that will undergo toll feasibility 

studies. The commission views tolling as a tool that can help stretch limited 

state highway dollars further so that transportation needs can be met. 

Moreover, states are looking for whatever financial relief tolling can 

provide. In some states, tolling is being considered, even though toll 

revenues are expected to only partially cover the costs of particular 

projects. In Mississippi, for example, the state DOT indicated that tolling 

may be advanced if toll revenues cover 25 percent to 50 percent of a 

facility’s cost. In Arkansas, tolling is being considered if toll revenues fund 

as little as 20 percent of the initial construction costs, provided tolls pay for 

operations and maintenance.

To identify state characteristics that are linked with state decisions to toll, 

we performed a correlation analysis to examine the relationship between 

those decisions and various state demographic and financial 

characteristics. Although certain characteristics in a state’s finances and 

tax policies might be related to financial need, our correlation analysis 

found only limited relationships between various state financial and 

demographic measures and states’ decisions to toll or not to toll. For 

example, although we found a slight inverse relationship between a state’s 

decision to toll and the level of its motor fuel taxes, this relationship is not 

strong enough to conclude that states planning toll roads are more likely to 

be the ones with lower motor fuel tax rates than other states. However, we 

found that both the size of the state, whether measured by population or by 

VMT, and whether it is growing rapidly, again measured by population or 

VMT growth, are directly related to states’ decisions to toll. (For more 

information on the results of our correlation analysis, see app. II.)

26The Interstate 70 reconstruction project has been approved as one of the slots in the 

Interstate System Reconstruction and Rehabilitation Pilot Program. Federal approval is 

necessary for states to toll interstate highways.
Page 26 GAO-06-554 Highway Finance

States Use Tolling to Finance 

New Capacity

According to transportation officials, states are using or considering a 

tolling approach to finance new capacity that cannot otherwise be funded 

under current and projected transportation funding scenarios. Such new 

capacity may be in the form of new highways or new lanes on existing 

highways. For example, in Colorado, the state DOT is studying the 

investment of $3 billion in increased highway capacity, with 10 percent, or 

$300 million of the investment, coming from federal, state, and local 

governments and the remainder coming from tolls. With a $48 billion 

shortfall projected through 2030 and the percentage of congested lanemiles projected to increase by 161 percent, tolling is being considered. 

Projections by the state DOT in Colorado suggest that revenues are 

sufficient to allow for only spot improvements on a few transportation 

corridors over the next 25 years and, without tolling, none can undergo a 

major upgrade, and new capacity cannot be added.

Some states are using tolling to supplement their traditional motor fuel tax 

transportation funding through private-sector involvement and investment. 

Tolling is being used as a means to gain access to private equity and to shift 

the investment risk, in part, to the private sector. Currently, 18 states have 

some form of public-private partnership (PPP) legislation, allowing for 

innovative contracting with the private sector. Many of the 18 states have 

PPP programs that were established to allow for toll concession 

agreements to finance highway projects. For example, Oregon and Texas 

are specifically looking to attract private investment as a new source of 

financing. The TTC, as shown in figure 6,27 is being financed, in part, 

through a series of PPPs. The Texas DOT has contracted with CintraZachry to develop a long-term development plan for the corridor, which 

includes the potential to construct and operate the first 316-mile portion of 

TTC 35, from Dallas to San Antonio. Cintra-Zachry has pledged an 

investment of $6 billion and a payment of $1.2 billion for the right to build, 

operate, and collect tolls for up to 50 years on the initial segment of TTC 35. 

In Oregon, the Office of Innovative Partnerships and Alternative Funding—

an Oregon DOT office empowered to pursue alternative funding, including 

27This is a conceptual illustration that shows a complete build out. TTC will be phased in as 

transportation demand warrants and private sector funding makes it feasible. Since it will 

be developed based on transportation demand, it is conceivable that not all elements will be 

developed concurrently and may not be located adjacent to each other as shown in the 

illustration. Depending on environmental and engineering factors, transportation modes 

may diverge. Input from the ongoing public meetings will help determine plans for the TTC. 

Two projects are being pursued by Texas DOT, TTC 35 and TTC 69. Both are under 

environmental review, and neither right-of-way acquisition nor construction has been 

federally approved.
Page 27 GAO-06-554 Highway Finance

private investment through tolling—has received proposals from the 

Oregon Transportation Improvement Group, a consortium led by the 

Macquarie Infrastructure Group, to complete two tolled facilities in the 

Portland area. In both Texas and Oregon, the projects were approved under 

SEP-15, which enabled the two states to waive certain federal requirements 

and to negotiate with the project developers before awarding contracts. 

Acceptance of the projects under SEP-15 does not commit federal-aid 

funding for the projects, and FHWA retains the right to declare the project 

ineligible for federal-aid funds at any time during the SEP-15 process until 

there is formal FHWA project approval.

Figure 6: Conceptual Drawing of the Trans Texas Corridor

Growing freight traffic is also prompting some states to consider using tolls 

to pay for capacity enhancement. Examples include Interstate 81 in Virginia 

and Interstate 70 in Missouri. According to the original design of Interstate 

81, built beginning in 1957, truck traffic would account for 15 percent of 

traffic on the highway; truck traffic now accounts for up to 35

Source: Texas Department of Transportation.
Page 28 GAO-06-554 Highway Finance

percent, and traffic levels are expected to double by 2035. Interstate 70, 

originally designed to carry up to 14,000 vehicles per day in rural areas, 

now carries up to 58,000 per day, and truck traffic, which was intended to 

be 10 percent of total traffic, is now 25 percent. Both interstates are major 

freight routes where truck traffic is expected to continue to increase. In 

2003, the Virginia DOT received FHWA conditional provisional approval 

under the Interstate System Reconstruction and Rehabilitation Pilot 

Program to toll vehicles other than cars and pickup trucks (freight trucks 

and buses) on Interstate 81. Likewise, for Interstate 70, the Missouri DOT 

received conditional provisional approval in July 2005 to participate in the 

same pilot program. In certain cases, proposals for truck-only toll (TOT) 

lanes seek to manage congestion while increasing capacity by diverting 

trucks from passenger routes to dedicated lanes. TOT lanes are being 

considered on heavy freight routes, including Interstate 81 in Virginia, TTC 

in Texas (see fig. 7), and routes throughout the Atlanta Metropolitan Region 

in Georgia.

States Use Tolling to Manage 

Congestion

While growing congestion and traffic volumes have increased the demand 

for additional highway capacity, transportation officials told us that tolling 

is being considered as a tool to manage congestion. Applying tolls that vary 

with the level of congestion—congestion pricing—can reduce congestion 

and the demand for roads because tolls that vary according to the level of 

congestion can be used to maintain a predetermined level of service. Such 

tolls create additional incentives for drivers to avoid driving alone in 

congested conditions when making driving decisions. In response, drivers 

may choose to share rides, use public transportation, travel at less 

congested (generally off-peak) times, or travel on less congested routes, if 

available, to reduce their toll payments. 

Tolling for congestion management can take the form of HOT lanes, which 

are adjacent to nontolled lanes. HOT lanes are used to manage congestion 

by creating a tolling structure that varies toll prices according to the level 

of congestion. Such a tolling structure can reflect the external costs that 

users of the facility impose on others. In some cases, HOV lanes that had 

been underused have been converted to HOT lanes, allowing HOVs to 

continue to use the lane as an HOV lane but allowing single-occupancy 

vehicles to use the lane provided they are willing to pay a toll. In 5 of the 23 

states planning toll roads, efforts to manage congestion on existing 

capacity is prompting tolling. California, Colorado, Texas, Virginia, and 

Washington all have HOT lane projects planned that will use variably priced 

tolls to alleviate congestion by managing the level of traffic. All of these 

states have received grants under FHWA’s Value Pricing Pilot to either 
Page 29 GAO-06-554 Highway Finance

develop or implement the projects. In California, the State Route 91 

Express Lanes, as shown in figure 7, opened in 1995, and the Interstate 15 

Express Lanes, opened in 1998, have dedicated, tolled lanes where the flow 

of traffic is managed through toll prices that vary daily and hourly. Tolls on 

State Route 91 range from as little as $1.10 to as much as $8.50. During 

periods of heavier demand and congestion, toll prices are higher so that 

fewer people will use the lanes, and a consistent flow of traffic can be 

maintained. In Texas, the Katy Freeway in Houston was originally designed 

to carry 80,000 vehicles per day. With traffic now exceeding 200,000 

vehicles per day, the Texas DOT, in cooperation with FHWA, opened HOV-3 

lanes (lanes that could only be used by carpools of 3 or more passengers) 

to vehicles with two passengers who pay a toll as express toll lanes in 1998. 

Texas DOT is also building managed lanes, scheduled to open in 2009, that 

will have peak toll pricing between 6:00 a.m. and 11:00 a.m. and between 

2:00 p.m. and 8:00 p.m. The result, in both cases, is a system in which 

commuters pay a toll for access to less congested lanes. More recently, in 

Minnesota, where Minneapolis and St. Paul have been experiencing rapid 

growth in congestion and, according to the Minnesota DOT, HOV lanes 

were underused, the state legislature authorized the conversion of the 

Interstate 394 HOV lanes to HOT lanes. The Interstate 394 MnPASS optional 

toll lanes project opened in May 2005 with “dynamic pricing” to adjust tolls 

from anywhere from 25 cents to $8.00, according to traffic levels.
Page 30 GAO-06-554 Highway Finance

Figure 7: California State Route 91 Express Lanes and Toll Rates

Note: Shading represents varying toll prices.

In some states, tolling or variable pricing—in which toll rates differ 

depending on conditions such as the time of day or location—is used 

specifically to manage freight congestion. In October 2005, for example, the 

Delaware DOT launched an initiative designed to address problems with 

freight congestion on the Delaware Turnpike (Interstate 95) by encouraging 

trucks to travel at night. Tolls on trucks between 10:00 p.m. and 6:00 a.m. 

are 75 percent less than tolls during more congested daytime hours. 

Another effort that incorporates variable pricing, but is not a traditional 

form of facility-based tolling, is a road user fee system that is being 

developed with an FHWA Value Pricing Pilot grant by the Oregon Office of 

Innovative Partnerships and Alternative Funding in cooperation with 

Oregon State University. The system assesses mileage-based fees in place 

of motor fuels taxes, and the fees vary for miles traveled during rush hour 

and within cordoned downtown areas.

Toll prices by time of day 

(Eastbound – Friday) 

as of February 2006 

$0.00 

 0.00 

 2.70 

 4.20 

 4.20 

8.50 

 7.75 

 7.00 

 4.60 

 4.25 

3.85 

 2.45 

$1.80 

10:00 a.m.

11:00 a.m.

Noon

1:00 p.m.

2:00 p.m.

3:00 p.m.

4:00 p.m.

5:00 p.m.

6:00 p.m.

7:00 p.m.

8:00 p.m.

9:00 p.m.

10:00 p.m.

Source: Orange County Transportation Authority. 

Toll lanes and HOV3+ (left) and general traffic lanes (right) 
Page 31 GAO-06-554 Highway Finance

Many States Find That 

Tolling Is Not Feasible or 

Have Made Other Choices

The reason most frequently cited by state transportation officials for not 

tolling is that tolling is not feasible. More specifically, there is little need for 

new tolled capacity, tolling revenues would be insufficient, or there is 

public and political opposition to tolling as follows:

• Little need for new tolled capacity. Transportation officials in many 

states indicated that low traffic volumes, a lack of congestion, and low 

demands for additional capacity make tolling impractical. In states such 

as Montana, North Dakota, South Dakota, and Wyoming, the population 

density and percentages of urban vehicle miles traveled are too low to 

support tolling.

• Insufficient revenues. In some states, tolling is not considered 

because toll revenues would not cover the costs of projects. In some 

cases, the issue involves traffic volumes that are so low that a tolling 

approach would be impractical. In those states, transportation officials 

explained that even if a tolling approach were to be considered, tolls 

would have to be prohibitively high to fund capacity enhancements and 

would likely result in traffic diversion to nontolled, alternative routes. 

For example, a transportation official in Kansas told us that there are 

few routes in Kansas that have a high enough level of traffic to make 

them viable for tolling. Therefore, opportunities for tolling are limited 

under the classic definition of feasibility, for which toll revenue must be 

adequate to fund construction, maintenance, and operations of a facility. 

Under this definition, most roads would not generate sufficient revenues 

from tolls to fund new highway capacity. In other cases, where traffic 

volumes are higher, transportation officials told us that a tolling 

approach is not even considered unless it can be demonstrated that the 

project will be self-sustaining. In Massachusetts, for example, an 

evaluation of HOT lanes determined that the toll rates people would be 

willing to pay would not raise enough revenue to fund the capital 

expenses to construct the facility.

• Public and political opposition. Officials from many states that are 

not pursuing tolling mentioned some form of public or political 

opposition to toll roads that has dissuaded transportation professionals 

from pursuing tolling. The public or political opposition is so strong, 

according to officials in some states, that tolling is studied only with 

great caution and sensitivity, if at all. While some states mentioned the 

lack of a tolling culture as a reason for not tolling, other states that have 

tolled roads for years cited the long-standing presence of toll roads as a 

reason for not planning to expand tolling. In New Jersey, New 
Page 32 GAO-06-554 Highway Finance

Hampshire, and Ohio—states with long-established toll roads—state 

officials said the presence of tolls has instilled public opposition to 

them. For example, New Jersey officials told us that opposition to new 

toll roads is strong because many state border crossings and major 

highways are already tolled. In other cases, DOTs face political 

opposition to tolling. In Mississippi, where other toll projects are still 

being considered, the state DOT withdrew its application to toll 

Interstate 10 under the Interstate System Reconstruction and 

Rehabilitation Pilot Program in response to political opposition. 

States that do not toll and are not planning to construct toll roads have also 

chosen options other than tolling to finance highway construction and 

maintenance. For example, 13 states that are not planning toll roads have 

used “GARVEE bonds” as grant anticipation financing to borrow funds and 

pledge future federal-aid highway revenues for repayment. South Carolina 

used state infrastructure bank loans and federal credit assistance, along 

with state and local funds, for its “27 in 7 Accelerated Program” through 

which it is completing $5 billion worth of highway infrastructure capacity 

and improvements in 7 years, compared with the 27 years it estimated 

would be needed under conventional financing means. A smaller number of 

states, such as Iowa and Tennessee, have remained committed to a 

primarily pay-as-you-go approach, building new capacity only when money 

becomes available through motor fuel tax revenues or other state revenues.

States That Are 

Considering and 

Implementing a Tolling 

Approach Face Two 

Broad Types of 

Challenges

Drawing on our analyses of states’ experience with tolling and on a review 

of selected published research on tolling, we have identified two broad 

types of challenges that transportation officials have encountered when 

attempting to implement tolling: (1) the difficulty of obtaining political and 

public support in the face of opposition from the public and political 

leaders and (2) the difficulty of implementing tolling given a lack of, or 

overly restrictive, enabling toll legislation; concerns about potential traffic 

diversion resulting from toll projects; and a need to coordinate with other 

states and regions when toll projects cross jurisdictional boundaries. (See 

fig. 8.) While these two broad types of challenges may make a tolling 

approach difficult to adopt or implement, states have nevertheless 

identified specific ways to resolve or mitigate the challenges. We discuss 

the strategies that states have used to address tolling challenges in the 

following section of this report. 
Page 33 GAO-06-554 Highway Finance

Figure 8: Challenges to Tolling

Garnering Political and 

Public Support Is the Most 

Often Cited Challenge to 

Tolling

State transportation officials who are implementing or are considering 

implementing tolling say that garnering political and public support is 

perhaps the greatest challenge to tolling. Some studies have also reported 

this challenge. For example, in a recently issued report, the Transportation 

Research Board cited studies that identified the unpopularity of toll roads 

and public skepticism as fundamental obstacles to employing a tolling 

approach.28 The report identified the inconvenience of paying tolls, being 

forced to pay twice, and inequities that a tolling approach would produce 

as the most commonly expressed objections.29 The Congressional Budget 

Office noted in its report that opponents of toll roads often charge that 

such roads are unfair to motorists with low incomes who may not be able 

to afford them. This concern is intensified if it involves trips to work and 

the motorist has few alternatives.30 In a policy brief issued by the Brookings 

Institution, the author notes that a drawback of tolls is that people think 

these tolls would be just another tax, forcing them to pay for something

Challenges in obtaining support 

• Tolls amount to another tax 

• Tolls produce inequities

− geographic 

− income 

− user 

Implementation-related challenges

• Coordinating

• Securing legislative authority

• Addressing impact of diversion

Source: GAO analysis of information provided by state transportation officials.

• Projects are not self-sustaining 

28Transportation Research Board, “Special Report 285: The Fuel Tax and Alternatives for 

Transportation Funding” (Washington, D.C.: 2005).

29At the same time, the study acknowledged that the evidence on public opinion is mixed 

and that some toll roads find public acceptance.

30Congressional Budget Office, CBO Memorandum: Toll Roads: A Review of Recent 

Experience (Washington, D.C.: February 1997).
Page 34 GAO-06-554 Highway Finance

they have already paid for through gasoline taxes.31 We have also noted in 

prior work that political opposition to tolling has been substantial because 

of concerns about equity and fairness.32 According to our analysis, a 

number of factors influence public and political perceptions about tolling. 

(See fig. 9.)

Figure 9: Challenges to Tolling

Double taxation arguments. The most frequent objection to tolls is the 

argument that motorists traveling on toll roads are being asked to pay 

twice; that is, a new roadway toll is being levied in addition to existing 

taxes. States have a number of dedicated sources of revenues that are used 

to finance highway capital programs. According to transportation experts, 

the public generally believes that transportation costs are already being 

paid for through motor fuel, property, and sales taxes, as well as license 

and registration fees, and in the case of trucks, special tire taxes and 

weight-distance fees. Therefore, new road user fees, such as tolls, are often 

viewed as new taxes. 

Transportation officials in a number of states reported that concerns about 

double taxation limited their consideration of a tolling approach to varying 

degrees. In Wisconsin, where tolling is not being implemented, a 

transportation official told us that the public understands that the fuel 

31The Brookings Institution, Policy Brief: Traffic: Why It’s Getting Worse, What 

Government Can Do (Washington, D.C.: January 2004).

32GAO-03-735T.

Challenges in obtaining support 

• Tolls amount to another tax 

• Tolls produce inequities

− geographic 

− income 

− user 

Implementation-related challenges

• Coordinating

• Securing legislative authority

• Addressing impact of diversion

Source: GAO analysis of information provided by state transportation officials. 

• Projects are not self-sustaining 
Page 35 GAO-06-554 Highway Finance

excise tax and other user fees are used to fund highway construction. 

Therefore, the public would view tolling as another tax being imposed on 

them. This type of concern can be compounded when tolls are being 

proposed for an existing facility. For example, in Missouri, consideration of 

tolling to pay for Interstate 70’s reconstruction faced opposition, in part, 

because the public believes that the interstate highway has already been 

paid for, according to state DOT officials. Missouri citizens generally regard 

tolls as government’s way of making users pay again, according to state 

transportation officials. This view is supported by Missouri’s history of 

commitment to free roads. Citizens in Texas have voiced similar arguments 

against tolls. In Houston, for example, plans to convert State Highway 249 

to a tolled road have met with some resistance on the grounds of double 

taxation. At the public hearing organized to hear views on the conversion, 

officials estimated that an overwhelming majority of those in attendance 

were against the conversion because they felt that the road had already 

been paid for. Strong opposition can arise even before a roadway has been 

completed. A proposal to toll a nearly completed portion of U.S. Route 183 

north of Austin was retracted after citizens expressed strong opposition. 

Transportation officials told us that these citizens believed that since the 

road was nearly complete, introducing tolls would amount to double 

taxation.

Projects are not self-sustaining. Transportation officials told us that 

they often find it difficult to demonstrate that tolling is reasonable and 

necessary because revenues collected from toll projects usually do not 

fully cover project costs. In Oregon, for example, a financial analysis of toll 

proposals indicated that the proposals under consideration would not be 

economically feasible through the collection of tolls alone, according to 

transportation officials. A private consortium was selected to negotiate 

with the state DOT for the purpose of advancing the projects. However, in 

the view of this consortium, the new toll road can be financially viable only 

if existing parallel roads are tolled. In some states, transportation officials 

stated toll projects are not even considered unless it can be demonstrated 

that the project will be self-sustaining. In Kentucky, for example, a 

transportation official told us that traffic volumes alone can rarely 

financially sustain rural roads through tolling and emphasized that it would 

be difficult to garner public support for a toll project that required partial 

subsidization. A transportation official in Arkansas told us that while 

tolling is considered if revenues fund at least 20 percent of initial 

construction costs, a toll project would only be considered if it can be 

shown that toll revenues would cover all operations and maintenance 

costs. In Florida, toll proposals must pass a financial feasibility test and 
Page 36 GAO-06-554 Highway Finance

prove that the proposed projects will be self-sustaining before the projects 

are further considered for advancement. According to Florida Turnpike 

Enterprise officials, the standard for feasibility is that by the twelfth year of 

operation, projected revenues must cover at least 50 percent of operating 

costs and debt service and by the twenty-second year of operation, 

projected revenues must cover all costs and debt service. 

Concerns about inequities. Another objection to the use of tolling 

involves concerns about the inequities that the approach would produce. 

According to our review, groups that could be adversely affected by tolling 

often object, as follows, on the basis of geographic inequity, income 

inequity, and user inequity: 

• Geographic inequity. Concerns about geographic inequity reflect 

the belief that certain regions will benefit disproportionately from a 

tolling approach while other regions will be unfairly disadvantaged. 

Using a tolling approach to address a transportation need in one part 

of a state might free up federal and state funding that might have 

otherwise been used to address that need. This available federal and 

state funding could then be used to support roads in another part of 

the state, creating an unfair burden on those motorists that are being 

tolled. In Florida, for example, there have been concerns about the 

distribution and use of funds collected for projects in one region 

(southern Florida) being distributed to and used for projects in 

another region of the state (northern Florida). In the 1990s, three 

southern counties—Palm Beach, Broward, and Dade—secured 

legislation that would require the Florida Turnpike Enterprise to 

calculate the dollar amount collected in those counties and 

determine how much of that amount was returned to the counties to 

be used on their facilities. As a result, the Florida Turnpike 

Enterprise created a formula to implement that law, reflecting the 

need to balance collections in those counties with what is being 

spent on facilities in those counties. 

• Income inequity. Concerns about the unequal ability of lowerincome and higher-income groups to pay tolls are often cited by 

transportation experts as an important political barrier to the
Page 37 GAO-06-554 Highway Finance

acceptance of a tolling approach.33 Those opposing tolls on the basis 

of income inequity argue that since tolls would represent a higher 

portion of the earnings of lower-income households using the tolled 

road, tolling imposes a greater financial burden on them and, 

therefore, is unfair. In Maryland, this concern resulted in removing 

HOT lanes from consideration in state transportation plans, 

according to FHWA. In June 2001, the governor decided to remove 

HOT lanes from the state transportation plan because of the 

perceived inequity of linking an easier commute with a person’s 

ability to pay. However, in the following year, the governor’s office 

initiated a revised feasibility study of value pricing that included 

investigating and addressing the equity issues that were raised 

earlier, while encouraging the air quality and congestion relief 

benefits of HOV lanes.

• User inequity. User inequity involves the belief that some classes of 

system users are being unfairly disadvantaged. The trucking industry, 

freight industry, and businesses may view tolling in this light. For 

example, a transportation official in Virginia told us that a proposal 

to toll only trucks on Interstate 81 is generally viewed by truckers as 

an unfair burden being imposed on them. This transportation official 

also noted that if the proposal is implemented, truckers will seek 

alternative routes to avoid the tolls. In Missouri, officials 

representing fuel marketers, fuel retailers, gas stations, and 

convenience stores told us that they consider a tolling proposal 

unfair. According to the industry officials, these businesses have 

spent millions of dollars on their exit locations along the interstate 

and believe they have paid their fair share of taxes. Consideration of 

a tolling approach to enhance mobility on the interstate could 

potentially have an adverse impact on these businesses because 

some customers may choose alternative routes.

General views on government. According to transportation officials 

with whom we spoke, public opposition to tolling can be exacerbated by a 

33Transportation Research Board, “Special Report 285: The Fuel Tax and Alternatives for 

Transportation Funding” (Washington, D.C.: 2005) and Road Value Pricing: Traveler 

Response to Transportation System Changes (Washington, D.C.: October 2003); Brookings 

Institution, Traffic: Why It’s Getting Worse, What Government Can Do (Washington, D.C.: 

January 2004); Congressional Budget Office, CBO Testimony: Congestion Pricing for 

Highways (Washington, D.C.: May 6, 2003) and CBO Memorandum: Toll Roads: A Review 

of Recent Experience (Washington, D.C.: February 1997); and GAO-03-735T. 
Page 38 GAO-06-554 Highway Finance

mistrust of government generally. They said that when government 

proposes tolls as a way to finance transportation, the public generally 

considers the tolls as a new tax. 

This mistrust can also be directed specifically at state transportation 

departments. For example, in 1992, the Missouri DOT proposed a 15-year 

plan that included a number of promised projects that would be 

undertaken with an increase in the state’s gas tax. However, according to 

state transportation officials, after gaining support for the increase, the 

state DOT did not deliver the promised projects as scheduled. These 

officials said this failure to deliver contributed to the public’s mistrust of 

the DOT and its resistance to attempts by the DOT to secure toll authority 

over the years. In some states, concerns about the cost and management of 

major highway and bridge programs have reflected dissatisfaction with the 

performance of state transportation departments. For instance, as we 

reported in 2002, a legislative commission in Virginia reported on cost 

overruns and schedule delays in the state’s highway program in 2000 and 

found that cost estimates prepared for projects were substantially below 

the final costs. This commission identified a potential funding gap of 

around $3.5 billion in the state’s $9 billion, 6-year transportation plan. Such 

concerns about past performance can present challenges for transportation 

officials who are attempting to advance a tolling approach. 

Mistrust can also extend to private entities involved in toll road 

development. As we reported in 2004, states engaging private-sector 

sponsorship and investment can relinquish political control over their 

ability to set toll rates and to carry out infrastructure improvements on 

competing publicly owned roadways. For example, California could not 

make any improvements along State Route 91—a project privately financed 

with a combination of equity, bank, and institutional debt—until the year 

2030 because a noncompete clause created a 1.5 mile protection zone along 

each side of the corridor. According to officials from the Orange County 

Transportation Authority, public pressure on the state DOT to improve the 

nontolled portion of the road motivated the county to purchase the road 

back from the private consortium. 
Page 39 GAO-06-554 Highway Finance

State and Local 

Transportation Officials 

Face Formidable Challenges 

in Implementing Tolling 

Approaches

In some states, transportation officials told us that they face challenges in 

implementing toll projects. (See fig. 10.) We identified the following three 

implementation-related challenges:

• Secure legislative authority to toll.

• Address the impact of traffic diversion caused by tolling.

• Coordinate with other states or regions. 

Figure 10: Challenges to Tolling

Secure the authority to toll. Not having, or having restrictions built into, 

enabling toll legislation poses a challenge for some transportation officials 

as they develop tolling options. They told us that limited legislative 

authority for tolling hampered their ability to consider a full range of 

options to address the transportation needs in their states. Ultimately, 

these transportation officials sought methods other than tolling to address 

transportation needs or delayed the development of an identified toll 

project as they pursued tolling legislation.

Missouri’s experience illustrates the challenges transportation officials face 

when the state DOT does not have the statutory authority to use a tolling 

approach to advance a project. State transportation officials are 

considering turning Interstate 70 into a toll road to finance capacity 

improvements. However, voters would first have to approve an amendment 

to the state constitution to put toll roads under the state DOT’s 

jurisdiction—a measure that voters rejected in 1970 and 1992. To avoid 

another rejection, state DOT officials are exploring alternative financing 

Challenges in obtaining support 

• Tolls amount to another tax 

• Tolls produce inequities

− geographic 

− income 

− user 

Implementation-related challenges

• Coordinating

• Securing legislative authority

• Addressing impact of diversion

Source: GAO analysis of information provided by state transportation officials. 

• Projects are not self-sustaining 
Page 40 GAO-06-554 Highway Finance

methods under existing authority, including the use of a nonprofit 

corporation to build, operate, and maintain the toll project. Transportation 

officials emphasize, however, that under this option, the entity would not 

be able to spend state highway revenues for the project—the same 

restriction that would prevent the state DOT from advancing a toll 

project—because state funds can be used only for the purposes 

enumerated in the state constitution, and toll roads were not one of those 

purposes. 

Restrictions in enabling legislation can also hamper attempts to implement 

toll projects. For example, in the mid-1990s, the Minnesota legislature 

authorized a study of public-private partnerships and tolling as one 

approach to address congestion and leverage state transportation 

investments. In conjunction with that study, the state DOT requested 

public-private partnership tolling proposals and received five proposals in 

response from private firms. Ultimately, the state DOT recommended a 

proposal to build Trunk Highway 212 as a toll facility and proceeded to 

complete a development agreement with a private partner. However, the 

proposal was vetoed under the provision of the enabling legislation that 

gives veto authority to local units of government affected by a project. As a 

result, the Trunk Highway 212 project is now being completed under 

traditional methods and, according to transportation officials, is taking 

longer to complete due to funding limitations. New legislation, passed in 

2003, eliminated the local veto authority for converting HOV lanes to HOT 

lanes on existing facilities, giving transportation officials more flexibility to 

implement a tolling approach. This legislation, which followed a DOT study 

of HOV lane usage on Interstate 394, authorizes the conversion of the HOV 

lanes on Interstate 394 to HOT lanes to improve their efficiency. 

Subsequently, through a design-build-operate agreement, a private partner 

was secured to bring resources to the table and run the operation. 

Address concerns about traffic diversion. Traffic diversion resulting 

from tolling may adversely affect people, municipalities, and businesses. 

Concerns about such diversion have surfaced in comments by 

municipalities, businesses, and the trucking industry on a proposal to toll 

trucks on Interstate 81 in Virginia, according to state transportation 

officials. Affected Virginia municipalities have suggested, for example, that 

trucks will leave the interstate to avoid tolls and wind up on local roads. 

Such diversion has the potential to create congestion, increase accident 

and fatality rates, and increase the municipalities’ costs of maintaining 

these roads. The affected municipalities have also expressed concerns 

about the potential negative effects on economic development that may 
Page 41 GAO-06-554 Highway Finance

result from the loss of business along toll routes. According to a recently 

completed study that considered a number of different proposals, traffic 

diversion is likely to occur if Interstate 81 is tolled.34 The study estimated 

that up to one in four trucks would divert to nearby parallel routes if a high 

toll rate35 was applied to commercial vehicles. 

Concerns about traffic diversion are not limited to new toll roads. The Ohio 

Turnpike opened in the 1950s and, in the 1990s, traffic studies revealed that 

commercial vehicles were increasingly diverting onto parallel untolled 

roads, creating safety and other concerns. In response, the governor 

released the Northern Ohio Freight Strategy in October 2004, which 

included a policy to reduce tolls on commercial vehicles in order to 

redirect traffic back to the Ohio Turnpike. Subsequent traffic studies 

revealed this strategy was mostly successful.

Coordinate on projects that involve multiple states or jurisdictions.

Coordination among states and regional jurisdictions is likely to become a 

growing issue because increasing traffic congestion in metropolitan areas 

is likely to require regional solutions. Without good coordination with 

neighboring jurisdictions, individual jurisdictions may find it difficult to 

solve traffic congestion. Even if one jurisdiction manages to reduce 

congestion within its system, it may simply shift that congestion to an 

adjacent jurisdiction. Yet numerous factors could make coordination 

difficult. For example, the need for coordination is especially critical if 

states adopt separate tolling legislation with varying, perhaps incompatible, 

provisions and begin tolling. Other potential challenges include ensuring 

the interoperability of toll collection facilities when toll proposals involve 

more than one state, addressing differences in state toll legislation, and 

mitigating geographic inequities by fairly apportioning the anticipated 

benefits and disadvantages of toll projects among all stakeholders.

Oregon’s experience illustrates how some of these issues might present 

challenges for transportation officials who are attempting to advance 

interstate toll projects. Oregon officials cited differing statutory authorities 

34U.S. DOT, Federal Highway Administration, and the Virginia Department of Transportation, 

I-81 Corridor Improvement Study: Tier 1 Draft Environmental Impact Statement, 

November 28, 2005.

35The study estimated that 12 percent would divert to nearby parallel routes if a low toll rate 

was applied to commercial vehicles. The study used a high toll rate of $0.07 per mile per axle 

and a low toll rate of $0.04 per mile per axle.
Page 42 GAO-06-554 Highway Finance

between Oregon and neighboring Washington as a potential coordination 

issue. In Oregon, transportation officials have the authority to enter into 

PPPs when advancing a tolling approach, while their counterparts in 

Washington do not yet have the authority to do so if proposals for 

partnerships are unsolicited. As a result, stakeholders involved with the 

Columbia River Crossing Project on Interstate 5, which Oregon officials are 

attempting to pursue as a toll project with a private partner, are seeking to 

promote legislation in both states that will provide explicit authorization to 

advance the project. The Oregon officials also noted that coordination 

would be necessary to address geographic inequities that might arise from 

the project, explaining that more of the toll revenues could come from 

Washington, since motorists there commute into Portland. Transportation 

officials in both states will need to take this into account as they work 

towards an equitable apportioning of the project’s costs and benefits. 

Three Broad Strategies 

Can Help State 

Transportation 

Officials Address 

Challenges to Tolling

As shown in figure 11, our review of state practices in implementing tolling 

suggests three broad strategies that can help transportation officials 

address challenges to its adoption and implementation. These strategies 

have both short-term and long-term relevance for states as they consider 

new transportation finance options to supplement traditional approaches. 

Transportation officials in states that are currently implementing or 

considering tolling as a means to raise revenue or mitigate congestion can 

consider these strategies in the short term to build support and smooth 

implementation of the tolling approaches under consideration. In the 

longer term, transportation officials in states that are not currently tolling, 

but choose to begin to do so, can consider these strategies to build support 

for tolling. 

Figure 11: Strategies to Address Challenges to Tolling

Source: GAO analysis of information provided by state transportation officials.

Develop an institutional framework that facilitates tolling

Provide leadership to build support for projects that have addressed tolling challenges

Select a tolling approach that provides tangible benefits to users
Page 43 GAO-06-554 Highway Finance

Develop an Institutional 

Framework That Supports 

Tolling

The first strategy that transportation officials can consider involves 

developing an institutional framework that facilitates tolling. In developing 

such a framework, transportation officials can consider building support 

for a tolling approach with the public and decision makers in the state and 

securing enabling tolling legislation. (See fig. 12.) Developing such a 

framework through these two means involves identifying and articulating 

the goals to be achieved by the tolling approach in the context of larger 

state policy goals.

Figure 12: Strategies to Address Challenges to Tolling

Building support. Building support for a tolling approach includes two 

interim steps—establishing a rationale for tolling and defining the 

underlying motivations for its use. Together, these steps provide a basis for 

gaining political and public support before seeking and securing adequate 

tolling legislation. 

Establishing a solid rationale for tolling involves linking the specific 

reasons, or goals, for tolling with state policy goals for transportation.36 For 

example, linking a tolling goal, such as managing congestion, to a broader 

state goal, such as using existing infrastructure more efficiently, can 

provide a basis for its use. Similarly, a tolling goal of supplementing 

transportation funding with new revenues could contribute to a broad state 

36This discussion of tolling goals assumes that the approach makes economic sense and is a 

viable and reasonable option for making transportation improvements in the state. It also 

assumes that all options under consideration for transportation improvements have been 

assessed in an adequate context. When it is determined that a tolling approach is a viable 

and reasonable option for making transportation improvements and should, therefore, be 

made available as another tool to finance transportation, the development of tolling goals 

can help transportation officials strengthen their case for tolling.

Source: GAO analysis of information provided by state transportation officials.

Develop an institutional framework that facilitates tolling

Provide leadership to build support for projects that have addressed tolling challenges

Select a tolling approach that provides tangible benefits to users
Page 44 GAO-06-554 Highway Finance

policy goal of funding investment in transportation systems with revenues 

generated directly from users. 

Articulating the underlying motivations for using a tolling approach can 

also help transportation officials build support for and accomplish broader 

transportation goals and tailor tolling goals to accomplish those ends. For 

example, consideration of a tolling approach might be motivated by a 

desire to accomplish other goals, such as finding a replacement for the gas 

tax or attracting private investment for transportation. Irrespective of the 

motivations that guide the development of the goals, advocates of tolling 

have to make a compelling case for its use to build public acceptance for it 

and make it politically viable. Goal setting can help transportation officials 

articulate the motivations for using the approach, identify the goals to be 

achieved by its use, and demonstrate how the tolling goals will tie into 

broader state goals. Such a process can help decision makers formulate a 

transparent and comprehensive rationale for the use of tolling and gain 

public and political support for it. 

Secure legislative authority. Securing tolling legislation is the next step 

in developing an institutional framework for tolling. Although there are 

common reasons for tolling, the form legislation takes in each state often 

depends on the motivations for using the approach and ultimately the goals 

to be achieved through it. Our review of legislative efforts in Texas, 

Virginia, Oregon, and Florida illustrates how legislation evolved in 

response to different motivations and tolling goals. Following are some of 

these legislative efforts:

• Leveraging transportation dollars. Texas enacted legislation that 

provided for a broader application of tolling than currently existed 

and established a funding mechanism that supported a broader use of 

tolls in the state’s transportation system.37 This legislation facilitates 

tolling by realizing two goals—to expand the use of tolling and to 

leverage tax dollars by allowing state highway funds to be combined 

with other funds to build toll roads. This combination of funds makes 

toll roads more feasible, since the entire cost of the project does not 

have to be repaid with tolls. Virginia’s Public-Private Transportation 

372003 Tex. Sess. Law Service, Ch. 1325. The bill provided for the establishment of the TTC, 

establishment of guidelines for the creation of Regional Mobility Authorities, use of PPPs, 

provision of toll equity money for new toll projects, and application of tolls on nontolled 

roads. 
Page 45 GAO-06-554 Highway Finance

Act of 1995 (PPTA) allows qualifying local governments and certain 

other political entities to enter into agreements authorizing private 

entities to acquire, construct, improve, maintain, and operate 

qualifying transportation facilities. The public entities may either 

solicit or accept unsolicited proposals from private sources. Privatesector sponsorship and investment in transportation projects could 

help states realize both an established tolling goal to accelerate 

project delivery and a goal to leverage tax dollars by securing private 

investment in transportation projects.

• Operating like a business. In some cases, there is a motivation to 

“reinvent government” by operating in a more businesslike manner. 

Public agencies of all types have pursued innovation and best 

practices found in the private sector to improve the costeffectiveness and timeliness of product delivery. A goal that 

embodies these motivations can take many forms in legislation. In 

Florida, for example, legislation was passed in 2002 that turned the 

Florida Turnpike, operated by the Florida DOT, into a business 

organization as a way to preserve, improve, and expand the turnpike 

system. State decision makers were interested in operating the 

turnpike as a business for the state and employing private-sector 

methods in the areas of management, finance, organization, and 

operation. The goals for the enterprise are to increase revenues, 

expand capital program capabilities, and improve customer service. 

• Transitioning to a new system of transportation finance. The 

sustainability of the current financing system has been called into 

question, and as we have reported, a fundamental reexamination of 

the present system will be necessary to increase the costeffectiveness of spending and to mitigate congestion.38 Some 

transportation experts believe that shifting to a fee structure that 

more directly charges vehicle operators for their actual use of roads 

would improve the operation of the road system and better target 

investment. For example, Oregon’s efforts to explore mileage charges 

provide some insights into how legislation can be developed to carry 

out such an ambitious goal. A road user fee proposal, passed by the 

state legislature in 2001, created a user fee task force to design a 

method of charging drivers for their use of the state’s roads as an 

38GAO, 21st Century Challenges: Reexamining the Base of the Federal Government, GAO05-325SP (Washington, D.C.: February 2005).
Page 46 GAO-06-554 Highway Finance

alternative to the current system of gas taxes. The task force 

proposed the eventual imposition of a mileage fee in place of existing 

gas taxes and pilot testing for the mileage fee as the first step toward 

implementation. An institutional framework, such as the framework 

under development in Oregon, can help states that are seeking to test 

or implement new methods of highway financing to realize such 

goals. 

Provide Leadership to Build 

Support for Individual 

Projects and Address 

Tolling Challenges in 

Project Design

The second strategy that can facilitate the use of tolling involves 

implementing two interrelated and critical components: (1) providing 

leadership to build support for and advance individual projects and (2) 

addressing challenges to tolling in project design. (See fig. 13.) We have 

found that having a strong advocate or advocates—committed both to 

building support for projects and to ensuring that the projects move 

forward—is crucial to the success of a project. A corollary to providing 

committed leadership is ensuring that leaders endorse those projects that 

most effectively address challenges to tolling in project design. 

Figure 13: Strategies to Address Challenges to Tolling

Providing leadership. Although leadership can take different forms, our 

review revealed that a strong advocate can help build support for a toll 

project. Transportation agency representatives or political leaders are 

likely candidates to move a project to public acceptance. For example, in 

Texas, the Governor and key legislators took the lead in developing and 

supporting initiatives that would facilitate the use of tolling to finance 

highway construction. Their efforts led to the enactment of legislation that 

enabled the state DOT to invest in toll projects. In Indiana, the Governor 

and the DOT Commissioner have supported tolling as an approach to 

finance transportation projects by promoting it in the media and in the 

Source: GAO analysis of information provided by state transportation officials.

Develop an institutional framework that facilitates tolling

Provide leadership to build support for projects that have addressed tolling challenges

Select a tolling approach that provides tangible benefits to users
Page 47 GAO-06-554 Highway Finance

legislature. However, in some instances, public distrust of political and 

governmental agencies may require a leader to emerge from another arena. 

For example, in Minnesota, a task force of state and local officials, citizens, 

and business leaders was convened in 2001 to explore a range of road 

pricing options, including the conversion of HOV lanes to HOT lanes, and 

make recommendations to elected officials. Since tolling had been fairly 

controversial in the past, decision makers believed that a task force would 

provide a more credible and independent voice to the general public. 

Ultimately, the task force supported HOV to HOT conversions, and with the 

Governor’s support and the passage of legislation authorizing the 

conversion, the Interstate 394 HOT lanes project was implemented. 

As a spokesperson for a project, a leader can explain to the public how 

tolling will address a state’s particular transportation situation. Through 

the communication of essential ideas and values that a toll proposal 

encompasses, support for the project can be solidified. Communicating the 

benefits that tolling can provide for motorists, such as increased efficiency, 

travel time savings, and choices about when and where to drive, could 

increase the likelihood of buy-in from the public and political leaders. For 

example, after examining congestion pricing options in Minnesota, a task 

force of state legislators, mayors, as well as business, environmental, and 

transportation leaders recommended that the state should proceed with a 

demonstration project. This led to the passage of legislation in 2003 

supporting the conversion of HOV lanes on Interstate 394 into optional toll 

lanes, which would allow solo drivers to access the HOV lanes for a fee. 

With the help of a communications consultant, a project team led by the 

University of Minnesota’s Hubert H. Humphrey Institute worked to address 

the concerns of the public and communicate the benefits of the project to 

the general public. The primary benefits of the project that were conveyed 

included free access and priority for carpools and bus users, premium 

speeds in express lanes that are maintained by tolls that vary with demand, 

and access to the express lanes to single-occupancy vehicles willing to pay 

a toll. Surveys conducted prior to project implementation revealed that 69 

percent of those surveyed were aware of and understood the purpose of 

the project, and 64 percent believed that allowing single-occupancy 

vehicles to use the carpool lanes by paying a toll was a good idea. A leader 

can also stress that tolls can help make up for shortfalls in public funds, 

allowing needed highway improvements to be completed sooner. 

According to some transportation officials, this point is particularly 

relevant when the public does not share a state transportation leader’s view 

of the state’s needs, or of the challenges associated with addressing those 

needs within the current fiscal environment, or both.
Page 48 GAO-06-554 Highway Finance

One effective way to communicate the benefits of tolling is through 

organized public education, outreach, and marketing efforts. Through such 

efforts, the public can be informed about the transportation situation in the 

state and the various options that are available to address transportation 

needs. For example, in California, strong political figures, as well as state 

and local officials, acted as champions for individual toll projects. Seeking 

to maximize the efficiency of the transportation system through congestion 

pricing, these leaders and officials promoted two congestion pricing 

projects—the Interstate 15 project and the State Route 91 project—using 

public education and outreach to inform the public about the objectives of 

the projects and to demonstrate how the objectives would be achieved. 

Addressing challenges. In identifying toll projects to promote, 

responsible leaders will likely be interested in projects that mitigate the 

challenges to tolling. Therefore, addressing concerns about double 

taxation, inequity, diversion, and coordination in project design can help 

transportation officials build support for toll projects and secure 

committed advocates for the projects.

When considering a tolling approach, transportation officials can identify 

ways to effectively address identified challenges and gain a better 

understanding of the potential impact of the approach through data 

collection and analysis. Understanding the potential effects of a toll project 

on traffic flows, specific groups, business activity, and commercial 

transportation can be particularly useful to transportation officials as they 

build measures into the project’s design to address identified challenges. 

Table 2 includes examples of questions and data needs that transportation 

officials might consider as part of their data collection and analysis.

Table 2: Questions That Can Be Considered When Planning and Designing Toll Projects

Question Purpose

How will traffic be diverted and who will suffer? Analyzing how tolls would affect personal, business, and commuting trips could 

help decision makers estimate the extent to which traffic would be diverted. From 

these estimates, transportation officials can develop strategies to address the 

impact of this diversion on affected groups.

To what extent will tolls meet the project’s goals? Determining the extent to which tolls will meet the project’s financial and other 

goals could help project sponsors make decisions about setting the proper toll. If 

tolls are too low, they will not generate enough revenue to pay for the project or, in 

the case of congestion pricing, they will not divert sufficient traffic to relieve 

congestion. 
Page 49 GAO-06-554 Highway Finance

Source: GAO analysis of relevant literature.

a

Transportation Research Board, Curbing Gridlock: Peak-Period Fees to Relieve Traffic Congestion

(Washington, D.C.: January 1994).

To address general objections to tolling, transportation officials can also 

consider potential arguments that might be raised on the grounds of double 

taxation and inequity and think about ways to address these arguments. 

Addressing these types of concerns is complex because the fairness of 

shifting to tolling depends on the fairness of the existing system of finance 

and on how it would be changed by a shift. It can be argued, particularly in 

states where sales and property taxes are important sources of financing 

for the transportation system, that the existing system is not very equitable. 

In contrast, a tolling approach raises revenues directly from those users 

willing to pay for the service. Furthermore, the economics literature 

suggests that concerns about inequity can be mitigated to some degree if 

revenues are distributed in a way that addresses those concerns.

Transportation officials can address concerns about double taxation and 

inequity during project design as a way to counter potential opposition on 

these grounds. Setting goals for a project that reflect its intended purpose 

and addressing any key challenge that could affect the achievement of the 

goals can help transportation officials directly respond to the concerns. For 

example, if the project goal is to use a tolling approach to relieve 

congestion, transportation officials could set the toll to reflect the external 

Who loses and how do we compensate them? Analyzing the effects that a toll project might have on specific groups enables 

transportation officials to address many questions about the equity consequences 

of the project. The data that could be collected include important household and 

lifestyle characteristics, including (but not limited to) income, residential location, 

commuting patterns, number of vehicles, number of workers, family size, annual 

travel, and employment type and location. Without these data, it would be difficult 

to estimate the consequences for the groups that could be most affected. Analysis 

would provide better estimates of the extent to which a tolling approach would shift 

drivers to carpools and transit and would provide more insight into how transit 

operators might be able to expand service and how transit service might benefit 

lower-income users.

How will the project affect business activity and 

commercial transportation?

Given the importance of transportation to the economy of metropolitan areas and 

the widespread perception that congestion increases business costs, 

transportation officials could consider examining the impact of tolling on business 

activity and commercial transportation when considering the use of a tolling 

approach. However, this can be difficult for transportation officials because little is 

known about the magnitude of congestion costs.a Factors affecting this include the 

logistics patterns of firms; the frequency, origin, and destination of trips; and the 

ability of firms to adapt to congestion without affecting costs. Research on how a 

tolling approach would affect commercial carriers operating on those facilities 

could also provide some insights.

(Continued From Previous Page)

Question Purpose
Page 50 GAO-06-554 Highway Finance

costs associated with peak period use of the road, and the toll revenues 

could be dedicated to maintaining, operating, and adding capacity to the 

facility. This approach might convince users that the toll is not just another 

tax that would be used for other purposes. In contrast, if the project goal is 

to address inequities, revenues could be distributed quite differently. 

Revenues could be distributed to disadvantaged groups in the form of tax 

rebates or improvements in roads and transit in certain areas. If businesses 

in specific areas are adversely affected by a project, toll revenues might be 

used to improve transportation services in those regions. For the Interstate 

394 HOT lanes project, state decision makers established the project goals 

of improving efficiency and maintaining free-flow speeds for transit and 

carpools using the converted HOV lanes. These goals led to decisions on 

how the toll revenues would be distributed. The law requires that half of 

the excess revenues generated from HOT lane facilities be used to improve 

and maintain transit service.

Addressing the coordination issues involved in designing regional and 

multistate projects is perhaps more daunting. No ideal institutional 

mechanism appears to be available for managing a regional program; 

nevertheless, some states have created new institutions to address 

interstate coordination issues. For example, Oregon and Washington 

formed a bistate task force to coordinate planning for improvements that 

cross state borders. The task force includes officials from both state 

governments, representatives from the affected metropolitan planning 

organizations (MPO), members of the business community, and residents 

of each state. The task force is charged with considering all modes of 

transportation that could potentially ease congestion and improve capacity 

on Columbia River crossings. The two states are jointly conducting 

environmental impact studies on highway expansion and transit 

improvements. The Oregon and Washington DOTs, the Portland and 

Vancouver MPOs, and the transit authorities from both states are jointly 

leading this study on the impact of capacity enhancement. Involving 

officials from both states in evaluating the project can help ensure that 

projects are equitable and effective in addressing the needs of both states. 

Select a Tolling Approach 

That Provides Tangible 

Benefits to Users

When proposing a tolling approach, transportation officials should 

consider promoting one that will produce tangible benefits to users while 

justifying both the costs of the project and the fees that users will be 

required to pay for the service. (See fig. 14.) The prospect of such benefits 

increases the likelihood of the project’s acceptance and can help allay 

general objections to tolling. 
Page 51 GAO-06-554 Highway Finance

Figure 14: Strategies to Address Challenges to Tolling

Although tolling can take different forms and decisions about its use are 

state specific, transportation experts have noted that projects that use 

congestion pricing offer predictability and choice to the user and may be 

less likely to arouse fierce opposition than projects that offer no new 

benefits or choice.39 For example, HOT lane projects, which include both 

priced and free lanes, offer the benefit of faster trip times for a price in 

HOT lanes and the choice of a “free,” but probably slower, trip in general 

purpose lanes. Pricing the entire facility might result in more efficient 

rationing of limited space on congested roads,40 but congestion tolls on 

entire facilities or networks tend to meet with resistance despite their 

economic efficiency. HOT lanes, on the other hand, may be less likely to 

encounter resistance because they offer premium service for those willing 

to pay the fee. While actual experience with road pricing in the United 

States is still fairly limited, proponents of HOT lanes cite several benefits as 

follows:41

39GAO-03-735T; Transportation Research Board, “Special Report 285: The Fuel Tax and 

Alternatives for Transportation Funding” (Washington, D.C.: 2005); Reason Foundation, 

Building a Case for HOT Lanes: A New Approach to Reducing Urban Highway 

Congestion (Los Angeles, CA: April 1999); and FHWA, A Guide for HOT Lane Development 

(Washington, D.C.: March 2003).

40Economists say that in deciding to drive on a congested highway, each road user is 

inherently imposing external costs on other road users by causing delay. A congestion toll 

requires motorists to take account of those costs.

41Federal Highway Administration, A Guide for HOT Lane Development (Washington, D.C.: 

March 2003); Transportation Research Board, Road Value Pricing: Traveler Response to 

Transportation System Changes (Washington, D.C.: October 2003); Reason Foundation, 

HOT Networks: A New Plan for Congestion Relief and Better Transit (Los Angeles, CA:

February 2003) and Building a Case for HOT Lanes: A New Approach to Reducing Urban 

Highway Congestion (Los Angeles, CA: April 1999); and Senate Committee on Environment 

and Public Works, Testimony on Peak-Hour Traffic Congestion, March 19, 2002.

Source: GAO analysis of information provided by state transportation officials.

Develop an institutional framework that facilitates tolling

Provide leadership to build support for projects that have addressed tolling challenges

Select a tolling approach that provides tangible benefits to users
Page 52 GAO-06-554 Highway Finance

• First, according to reports and studies issued by FHWA, the 

Transportation Research Board, the Reason Foundation, and the 

Brookings Institution, they provide a premium service for a fee to those 

travelers who have a special need and are willing to pay the fee. 

Through variable pricing, traffic flows freely even during the height of 

rush hours. The use of price and occupancy restrictions to manage the 

number of vehicles traveling on them enables HOT lanes to maintain 

volumes consistent with uncongested levels of service.

• Second, studies and reports issued by FHWA and the Reason 

Foundation note that HOT lanes reduce traffic congestion in the 

general-purpose lanes by diverting some solo drivers to the HOT lanes, 

thereby benefiting those drivers who use conventional lanes.42

• Third, according to FHWA and others, HOT lanes can make better use of 

underutilized carpool (HOV) lanes, thereby alleviating political pressure 

to decommission them. HOT lanes may provide an opportunity to 

improve the efficiency of existing or newly built HOV lanes by filling 

excess capacity that would not otherwise be used. At the same time, 

HOT lanes continue to serve as HOV lanes for carpools and buses. 

• Finally, reports and studies issued by FHWA and the Reason Foundation 

note that HOT lanes generate revenue for transportation improvements. 

Tolls can generate revenue for highway and transit improvements, such 

as Bus Rapid Transit.43

HOT lanes have been implemented on Interstate 15 in San Diego, State 

Route 91 in Southern California, the Katy Freeway and U.S. Route 290 in 

Houston, and Interstate 394 in Minneapolis. These cases illustrate how 

transportation officials have advanced projects seeking to achieve the 

42If diversion of traffic to HOT lanes reduces peak-period congestion in the general purpose 

lanes, the lower congestion may attract additional peak-period drivers in those lanes. These 

drivers might be people who previously used alternative routes, traveled at other times of 

day, or used mass transit to avoid the congestion, but who would prefer to use the general 

purpose lanes at peak periods if congestion in those lanes at those hours were reduced. The 

result may be as much congestion as before the HOT lanes were open because only when 

congestion returns to that level will other potential users of the general purpose lanes at 

peak periods no longer have this new incentive to switch to those lanes. For additional 

information, see Anthony Downs, Brookings Institution Policy Brief #128: Traffic: Why 

It’s Getting Worse, What Government Can Do (Washington, D.C.: January 2004).

43Bus Rapid Transit refers to frequent bus service operating in special lanes.
Page 53 GAO-06-554 Highway Finance

potential benefits that may result from the approach. For example, to 

guarantee free-flowing traffic, toll prices on the Interstate 15 HOT lanes 

project are set dynamically, changing every 6 minutes to keep traffic 

flowing freely in the HOT lanes. In providing motorists with choice and 

providing premium services, the State Route 91 Express Lanes provide a 

level of emergency and safety surveillance that, according to surveys 

conducted by the private firm operating the toll facility, some drivers 

choose to pay to use the toll lanes even when there is no congestion on the 

adjacent free lanes. To optimize the use of existing infrastructure, more 

productivity was sought on the Katy Freeway. HOVs are defined as cars 

with three or more people during certain peak hours. The Katy Freeway 

QuickRide program allows cars with two persons to use the HOV lanes if 

they pay a toll. Daily use by paying users has been between 150 and 200 

vehicles for peak periods, and peak hour travelers using the facility save an 

average of 18 minutes compared with travelers on the nonpriced lanes.44

Finally, linking the conversion of the HOV lanes to transit to increase 

mobility and equity was taken into account on the Interstate 394 and 

Interstate 15 projects. Toll revenues generated on the Interstate 394 HOT 

lanes are designated for facility and transit improvement and a large 

portion of surplus revenues on Interstate 15 are used for new bus service.

Concluding 

Observations

As congestion threatens the nation’s mobility at a time when motor fuel 

taxes—the principal source of funding for highway improvements—have 

not kept up with rising costs, federal and state policy has generally been 

not to increase motor fuel taxes, and state and local decision makers are 

increasingly looking to a range of alternative mechanisms, including tolling, 

to advance their surface transportation programs. Over half the states have 

either adopted tolling or are seriously considering tolling—and this number 

may increase. A tolling approach can, under the right circumstances, be an 

attractive choice to state or local governments because of the range of 

potential benefits—generating new revenues, managing congestion, 

financing new capacity—that it may provide. But these potential benefits 

come only by honestly and forthrightly addressing the challenges that a 

tolling approach presents. State and local governments may be able to 

address these challenges by pursuing strategies that focus on developing an 

institutional framework that facilitates tolling, by demonstrating 

leadership, and by pursuing toll projects that provide tangible benefits to 

44North Central Texas Council of Governments, Regional Value Pricing Corridor 

Evaluation and Feasibility Study (Arlington, TX: June 2005).
Page 54 GAO-06-554 Highway Finance

users. While perhaps not applicable to every state to the same degree or in 

the same way, these strategies form a basis for overcoming potential 

impediments to tolling and developing a meaningful and effective tolling 

approach that best suits the environment in each state. 

In the twenty-first century, demographic trends will drive mandatory 

federal spending commitments and potentially overwhelm the ability of the 

federal government to deliver and grow its discretionary programs. This 

looming crisis requires a fundamental reexamination of existing 

government programs and commitments, and state and local governments 

will be challenged to consider new ways of delivering their programs. 

Regardless of the demand for highway improvements, sustained, long-term, 

large-scale increases in federal highway grants and state and local spending 

seem unlikely. In this context, a tolling approach is more than just finding 

new sources of money. Should states choose to undertake it, a tolling 

approach has the potential to promote efficiency in the use of 

infrastructure, allocate costs to users and capture revenue from 

beneficiaries, stimulate private financing and investment, and provide costeffective solutions to mobility challenges if viewed as fair and equitable by 

the public.

Agency Comments and 

Our Evaluation

We provided a draft of this report to the Department of Transportation for 

review and comment. Officials from the Department indicated that they 

generally agreed with the report and provided technical clarifications, 

which we incorporated as appropriate.

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies of this report to congressional 

committees with responsibilities for transportation issues; the Secretary of 

Transportation; and the Administrator, Federal Highway Administration. 

We will also make copies available to others upon request. In addition, this 

report will be available at no charge on the GAO Web site at 

http://www.gao.gov.
Page 55 GAO-06-554 Highway Finance

If you or your staff have any questions about this report, please contact me 

at heckerj@gao.gov or (202)512-2834. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made key contributions to this report are 

listed in appendix IV.

JayEtta Z. Hecker

Director, Physical Infrastructure Issues
Page 56 GAO-06-554 Highway Finance

Appendix I

Objectives, Scope, and Methodology AAppenednxidexiIs

The objectives of this report were to examine (1) the promise of tolling to 

enhance mobility and finance highway transportation, (2) the extent to 

which tolling is being used in the United States and the reasons states are 

using or not using this approach, (3) the challenges states face in 

implementing tolling, and (4) strategies that can be used to help states 

address the challenges to tolling. We noted where federal programs have 

played a role in state tolling decisions and projects, but we did not evaluate 

the effectiveness of those programs. 

To examine the promise of tolling to enhance mobility and finance highway 

transportation, we reviewed reports and studies issued by federal agencies 

and academia, as well as articles from relevant trade journals; relied on 

perspectives gained from our past work on transportation finance; and 

analyzed relevant studies and reports issued by transportation experts. To 

identify the issues related to the transportation system in terms of funding 

and mobility, we analyzed data on population patterns and growth from 

U.S. Census reports and vehicle miles traveled and motor fuel tax trends 

from the Federal Highway Administration’s (FHWA) Highway Statistics

reports for 1982 to 2004. We also analyzed data from the 2005 Urban 

Mobility Report1

 to determine congestion levels and congestion costs for 

selected cities in the United States. To supplement the information 

obtained through our literature review, we interviewed officials of the 

American Automobile Association; International Bridge, Tunnel and 

Turnpike Association; the American Association of State Highway and 

Transportation Officials; and the Environmental Defense Fund.

To determine the extent to which tolling is being used in the United States, 

we designed and administered an Internet survey of state department of 

transportation (DOT) officials and performed a correlation analysis to 

examine the extent to which state financial and demographic 

characteristics are associated with their status on using tolling. (For more 

information about the correlation analysis, refer to app. II.) Our review 

focused on toll roads and therefore, did not include toll bridges and 

tunnels. 

Survey. The questionnaire asked about each state’s current and planned 

toll road facilities. We sent the questionnaire to the directors of state DOTs 

in 49 states and Washington, D.C. We did not send a questionnaire to the 

1

Texas Transportation Institute, 2005 Urban Mobility Report (College Station, TX: May 

2005).
Appendix I

Objectives, Scope, and Methodology

Page 57 GAO-06-554 Highway Finance

Louisiana DOT because we administered our survey only a few weeks after 

Hurricane Katrina struck New Orleans and the Gulf Coast. 

To minimize nonsampling error, such as measurement errors that can be 

introduced when respondents do not understand questions or when they 

do not have information to answer a particular question, we undertook 

several quality assurance steps. Our social science survey specialists 

designed draft questionnaires and conducted pretests with state DOT 

officials in four states. During these pretests, we assessed the extent to 

which respondents interpreted questions and response categories 

consistently, the time respondents needed to complete the survey, and the 

extent to which respondents had the information needed to answer the 

survey questions. Using the results of these pretests, we revised the 

questionnaire.

We administered the survey to the directors of state DOTs via the Internet 

during September and October 2005, e-mailing the directors a Web link to 

our questionnaire and requesting that they or their designees complete it. 

We received responses from 49 states and Washington, D.C.—a 100 percent 

response rate. We analyzed the data using statistical software. 

We compared the responses to key survey questions with information 

obtained from our interviews with state DOT officials and from state 

applications to the FHWA’s tolling pilot program. In four instances, data 

from these sources were inconsistent. We contacted DOT officials in these 

states to resolve these inconsistencies and adjusted the survey results 

accordingly. 

Semistructured interviews. To determine the reasons states use or do 

not use tolling, the challenges to tolling, and the strategies that have been 

used to address the challenges, we conducted semistructured interviews 

with state transportation officials from all states except Louisiana, and 

interviewed stakeholders in six states that we visited to determine the 

reasons states use or do not use the approach, the challenges to using the 

approach, and the strategies that have been used to address the challenges. 

We did not gather information directly from the public. 

We developed a set of questions to ask in semistructured interviews of state 

transportation officials to gain more detailed information on states’ reasons 

for tolling or not tolling and the challenges states face in tolling. Having 

visited 6 states and interviewing transportation officials there, and 

excluding Louisiana, we conducted semistructured interviews from the 
Appendix I

Objectives, Scope, and Methodology

Page 58 GAO-06-554 Highway Finance

remaining states. We did not interview transportation officials in Louisiana 

because our semistructured interviews were conducted shortly after 

Hurricane Katrina struck New Orleans and the Gulf Coast. To determine 

the appropriate state official to interview in each state, we relied on 

information from FHWA Division Administrators for the respective states. 

After gathering the information from FHWA, we contacted and interviewed 

the state officials and conducted our interviews. We analyzed the data from 

the semistructured to identify major themes.

Site visits. To supplement information from our survey and 

semistructured interviews, we visited six states that were in various stages 

of planning or constructing diverse types of toll projects. We selected the 

states for their diversity in terms of geography, transportation needs, and 

tolling plans. The states were Minnesota, Mississippi, Missouri, Oregon, 

Texas, and Virginia. We visited those six states to obtain more detailed 

information on the challenges states are encountering and the strategies 

states employ or are considering employing to toll. We judgmentally 

selected four states where tolling was either planned or under way and two 

states where tolling had been proposed and rejected by a vote of either the 

citizens or the legislature. During our site visits, we interviewed state, local, 

and FHWA officials. 

To identify strategies that can be used to address the challenges to tolling, 

we analyzed the results of our review on tolling efforts and built on the 

perspectives gained from our past work on federal investment strategies. 

We also analyzed reports and studies issued by transportation experts and 

academia on finance reform to identify broad strategies that can be used to 

help transportation officials adopt and implement a tolling approach.

We performed our work from June 2005 through June 2006 in accordance 

with generally accepted government auditing standards. 
Page 59 GAO-06-554 Highway Finance

Appendix II

Correlation Analysis ApendxiI

To identify state characteristics that are linked with states’ decisions to toll 

roads, we performed a correlation analysis that examined the relationship 

between those decisions and various state demographic and financial 

characteristics. These characteristics included, but were not limited to, 

population; per-capita income; gross state product; vehicle miles traveled; 

capital expenditures on highways; and local, state, and federal highway 

trust fund appropriations. To perform this analysis, we updated the data 

that we had collected from the Federal Highway Administration (FHWA) 

and Bureau of Economic Analysis (BEA) for our previous reports,1

 and 

converted them to inflation-adjusted 2004 dollars using BEA’s chain-type 

price index for gross domestic product (GDP), as well as its state highway 

and streets chain-type price index. For those characteristics that 

represented measures of change, we used the changes in these factors from 

1990 to 2000 to be consistent with the years when the U.S. Census of 

Population and Housing was conducted and, for those characteristics that 

represented measures of levels, we used data from 2002. We chose 2002 

because data for some characteristics were not available for more recent 

years. We divided states into two groups, tolling and nontolling, based on 

information gathered from our state survey and FHWA documentation. We 

considered the associations between tolling and nontolling with each 

demographic or financial characteristic singly and did not control for the 

effects of other characteristics on these tolling decisions (as we would do 

in a multivariate analysis). For this reason, the results of our correlation 

analysis indicate a simple statistical relationship between tolling status and 

a study characteristic and do not imply causality. Interactions may be more 

complex when multiple characteristics are simultaneously associated with 

tolling status. In addition, our results may be sensitive to how we defined 

tolling status.

Although certain characteristics in a state’s finances and tax policies might 

be related to financial need, our correlation analysis found only limited 

relationships between various state demographic and financial measures 

and whether states are and are not planning toll roads. (See table 3.) For 

example, we found the following:

• There is wide variation in state motor fuel tax rates among the states, 

ranging, as discussed earlier, from 7.5 cents to 28.1 cents per gallon in 

1

GAO, Trends in Federal and State Highway Investment, GAO-03-744R (Washington, D.C.: 

June 18, 2003) and GAO, Federal-Aid Highways: Trends, Effect on State Spending, and 

Options for Future Program Design, GAO-04-802 (Washington, D.C.: Aug. 31, 2004). 
Appendix II

Correlation Analysis

Page 60 GAO-06-554 Highway Finance

2002, and we investigated whether state motor fuel tax rates are 

correlated with decisions to toll. While a slight inverse relationship 

exists between a state’s decision to toll and the level of its motor fuel 

taxes, the slightness of this relationship suggests that states planning 

toll roads are not much more likely to be the ones with lower motor fuel 

tax rates than other states. 

• While state incomes vary greatly, a state with higher motor fuel tax rates 

is also more likely to have higher fuel tax revenues as a percentage of its 

gross state product than states with lower motor fuel tax rates. As with 

fuel tax rates, a slight inverse relationship exists between a state’s 

decision to toll and the level of its fuel tax revenues as a percentage of 

its gross state product. However, the slightness of this relationship 

suggests that states planning toll roads are not much more likely to be 

the ones with lower fuel tax revenues as a percentage of their gross 

state product than other states.

• The extent to which motor fuel taxes are disbursed to nontransportation 

uses could contribute to what state officials characterized as general 

shortfalls in highway funding. The relationship between states planning 

toll roads and the use of motor-fuel tax revenue is only slight, suggesting 

that states planning toll roads are not much more likely to have more of 

their fuel tax revenues used for nontransportation programs than other 

states. 

Although there appears to be little relationship between state finance and 

tax policy characteristics and tolling, our analysis indicates that there are 

some other factors that are related to states' decisions on tolling. For 

example, both the size of the state, whether measured by population or by 

vehicle miles traveled (VMT), and whether it is growing rapidly, again 

measured by population or VMT growth, are directly related to states’ 

decisions to toll. These relationships are consistent with statements made 

by state transportation officials on the use of tolling to fund highways due 

to increasing demand for highway travel. In addition, our analysis revealed 

a relationship between federal funding and a state’s decision to toll. Each 

state collects federal motor fuel taxes that are deposited into the Highway 

Trust Fund and receives grants through the federal-aid highway program 

according to formulas specified in law. The states that are planning toll 

roads are moderately associated with the federal-aid “donor states”—those 

states that contribute more to the Highway Trust Fund than they receive in 

federal highway grants. Thus, donor states are statistically more likely to be 
Appendix II

Correlation Analysis

Page 61 GAO-06-554 Highway Finance

planning toll roads than donee states—those states that receive more in 

grants than they collect.

Table 3: Results of Correlation Analysis

Source: GAO.

Note: Data from 2002 were used in the correlation analysis, except for the percentage change in 

population and the percentage change in vehicle miles traveled, both of which measure values in 2000 

against values in 1990. Motor fuel tax rates were expressed in 2004 dollars. It is worth noting that the 

correlation coefficient indicates a statistical association between the study variable and 

tolling/nontolling status of a state without controlling for the effects of other characteristics on these 

tolling decisions as in a multivariate analysis. 

a

1=yes, 0=no.

b

We did not include data for the District of Columbia.

Factors

Decision to tolla

correlation coefficient

(number of observations)

Motor fuel tax rate (in cents per gallon) -0.052

(51)

Fuel tax revenue as percent of gross state 

product

-0.005

(51)

Percent of fuel tax revenues used for 

nonhighway purposes

-0.095

(50)b

Population 0.309

(51)

Percentage change in population 0.140

(51)

Vehicle miles traveled (in millions) 0.368

(51)

Percentage change in vehicle miles traveled 0.295

(51)

Highway Trust Fund apportionment/payment 

ratio

-0.319

(51)
Page 62 GAO-06-554 Highway Finance

Appendix III

Survey Questions ApendxiI

Current Toll Road Facilities Question 1:

Are there any toll road facilities in your state? Please do not count any 

tolled bridges or tunnels as toll roads.

1. Yes

2. No (Skip to question 10.)

Question 2:

Are any of these facilities new roads that were built on new alignments?

1. Yes

2. No

Question 3:

Were any of these facilities previously untolled?

1. Yes

2. No

Question 4:

Are any of these facilities new lanes added to roadways that were 

previously untolled?

1. Yes

2. No

Question 5:

Are any of these facilities HOT lanes (in which single occupancy vehicles 

can gain access to HOV lanes by paying a toll)?

1. Yes

2. No

Question 6:

Do any of these facilities charge tolls that vary by time of day?

1. Yes

2. No

Question 7:

In what year did the first toll road facility in your state open to traffic? 

(Please do not consider facilities that opened before 1938.)

Question 8:

In what year did the most recent toll road facility in your state open to 

traffic? (Please do not consider facilities that opened before 1938.)
Appendix III

Survey Questions

Page 63 GAO-06-554 Highway Finance

Question 9:

Which of the following agencies participate in managing the toll

road facilities in your state?

1. State Department of Transportation

2. Public toll authority

3. Other state agency

4. Local or regional government agency

5. Private entity

Planned Toll Road Facilities

Question 10:

Are there plans in your state to build any toll road facilities for which an 

Environmental Review and a Record of Decision have been completed?

1. Yes

2. No (Skip to question 19.)

Question 11:

Are any of these facilities in the design or right-of-way stage?

1. Yes

2. No

Question 12:

Are any of these facilities in the construction phase?

1. Yes

2. No

Question 13:

Are there plans for any of these facilities to be new roads built on new 

alignments?

1. Yes

2. No

Question 14:

Are there plans to toll a roadway that is currently untolled?

1. Yes

2. No

Question 15:

Are there plans for any of these facilities to be new lanes added to 

roadways that are currently untolled?
Appendix III

Survey Questions

Page 64 GAO-06-554 Highway Finance

1. Yes

2. No

Question 16:

Are there plans for any of these facilities to be HOT lanes (in which single 

occupancy vehicles can gain access to HOV lanes by paying a toll)?

1. Yes

2. No

Question 17:

Are there plans for any of these facilities to charge tolls that vary by time of 

day?

1. Yes

2. No

Question 18:

Which of the following agencies would participate in managing these 

planned toll road facilities?

1. State Department of Transportation

2. Public toll authority

3. Other state agency

4. Local or regional government agency

5. Private entity

Final Questions Question 19:

Are there plans in your state to build any toll road facilities for which an 

Environmental Review or a Record of Decision have NOT been completed?

1. Yes

2. No
Page 65 GAO-06-554 Highway Finance

Appendix IV

GAO Contact and Staff Acknowledgments ApendxiIV

GAO Contact JayEtta Z. Hecker (202)512-2834

Staff 

Acknowledgments

In addition to the individual named above, Steve Cohen, Assistant Director; 

Mark Braza; Jay Cherlow; Bess Eisenstadt; Simon Galed; Moses Garcia; 

Bert Japikse; Terence Lam; Liz McNally; and Don Watson made key 

contributions to this report.

(544101)
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