Why Illinois Should Reevaluate Its Video Tolling (V-Toll) Subsidy

Tolls are levies with a limited base. This base is made up of drivers that pay user fees, in cash or via electronic transponder, in exchange for access to state-administered roads. In Illinois, every single toll is a function of three factors: vehicle characteristics, tollway entry point, and how far a driver goes on state-administered roads. It is commonly assumed that any toll violation, i.e., any failure to pay, results in a traffic ticket, administrative fees and state-imposed sanctions. Such an assumption, however, is only partly true due to overly forgiving Illinois state policies. Examples include the Traffic Ticket Exemption, the Video Tolling (“V-Toll”) Subsidy and the 50 Percent Toll Rate Discount. In addition, depending upon drivers’ usual method of payment, there also may be differential treatment of violations. The first possibility, which applies to most Illinois toll violators, is that some penalty will be imposed. The second possibility, which applies to toll violators with electronic payment transponders, is that there will be no consequences. So, what is the rationale for less-than-standard treatment of similarly situated toll violators? Perhaps it is that transponder users are presumed to want to pay tolls, in the absence of countervailing evidence, based on their past payment histories. Whereas cash users are not entitled to any such presumption due to a lack of verifiable payment histories. One result of such an overly forgiving policy, at least with respect to the V-Toll Subsidy, is that transponder users are given the benefit of the doubt and a $0.15 subsidy. Cash payers, conversely, are fully held to account and forced to offset the state’s incidental losses. This difference in treatment based on payment method may need to be reevaluated. Although there are few valid reasons to provide any V-Toll Subsidy, as most violations arise from preventable human errors, transponder users still have a right to receive it up to five times per month. This translates into 60 times in a single fiscal year. If the potential cost of this subsidy is expressed in dollar terms, Illinois pays up to $9 per user. $9 per user may not seem like much, at least for a U.S. state, until it is placed into its proper context. For example, there were at least 4.5 million transponder users in Fiscal Year 2018. If each user received the maximum subsidy, it would cost $40,500,000. Such a costly subsidy must be justified, ideally using information that is readily available to the U.S. public. Especially if one considers Illinois’s recent state budgetary issues, such as a general fund deficit of $7.8 billion at the end of Fiscal Year 2018. But, as of this writing, the state has not accurately computed the annual cost of its V-Toll Subsidy. Neither has the subsidy been justified on economic efficiency nor distributional grounds. Within this context, the Essay makes three contributions to U.S. local government law. It does so, initially, by computing the annual cost of the V-Toll Subsidy in Fiscal Year 2018. This Essay then goes beyond this computational work to show that overly forgiving state policies may have perverse incentives, which lead to modest, yet unjustified, losses. Lastly, it points out that even modest losses may prove to be significant in light of state budgetary issues.