The responsibility for building and maintaining highways in the United States rests with state departments of transportation in each of the 50 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. Other (locl contribution, ond proceed, nd micellneous) 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 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. 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. 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. In 1919, Oregon became the first state to impose a motor fuel tax to finance roadway construction. 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, which they financed through tolls. 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 case- by-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 collection of tolls. 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. 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, 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 (SEP- 15) program, which is intended to encourage the formation of public- private 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. 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 off- peak) 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. 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. 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.