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Transportation Funding & Financing

Toll Funding


Tolls are a direct user fee charged for use of facility capacity and services. Historically, toll roads played a prominent role in the provision of road transportation in the eighteenth and nineteenth centuries. In the first half of the nineteenth century, it is thought that private toll roads outnumbered public roads in the United States. Private investors formed tollway companies that improved, constructed, and maintained roads and, in turn, charged the public for their use.

In the late nineteenth century, toll road development tapered as toll evasion as well as rail travel increased. However, by the 1930s, some states began developing public toll road programs to respond to growth in automobile ownership, the rising needs of commerce, and the absence of significant Federal-aid for highways. While private tollway companies dominated the "turnpike" industry in the earlier centuries, the toll facilities of the twentieth century have largely been authorized, constructed, and managed by quasi-public authorities established by state and local governments. The pursuit of toll roads declined again after 1956, when the Federal-aid Highway Act established a Federal motor fuel tax to support the interstate highway system and prohibited tolling on new, Federally-funded highways.

Today, public funding constraints have fueled new interest in tolls as a revenue source to support transportation investment. Interest in toll roads today is largely an outgrowth of provisions in ISTEA (1991) and the more recent 1995 NHS Act that liberalized and incentivized the use of Federal-aid in conjunction with private resources for road development purposes. Public-private partnership development of toll roads has been the focus of most state DOT activities in privatization.

Federal support for tolling has also expanded through TEA-21, which continued ISTEA's Congestion Pricing Pilot Program as the Value Pricing Pilot Program and established the Interstate System Reconstruction and Rehabilitation Toll Pilot Program. SAFETEA-LU has also continued to fund these programs and established the Interstate System Construction Toll Pilot Program and the Express Lanes Demonstration Program. Further discussion on these programs and legislation is found in the Clearinghouse section on Legislation & Regulations.

Advantages Associated with Tolling

Today, many state transportation agencies see toll facilities as a way to close funding gaps for transportation projects in a time of constrained public resources. Specifically, tolling can promote the following benefits in transportation spending:

  • Fostering public-private partnerships by attracting private capital
  • Drawing on the public's willingness to pay direct user charges
  • Leveraging new sources of capital, such as additional debt
  • Freeing up traditional public resources for non-revenue-generating projects
  • Allowing additional transportation facilities to be developed more quickly than would be possible under conventional public procurement, funding, and ownership
  • Facilitating value pricing plans

Disadvantages Associated with Tolling

Toll facilities were traditionally associated with long queues and high emissions at collection points, but these disadvantages are disappearing with electronic toll collection at toll booths or in overhead gantries and/or the pavement. Still, toll roads and bridges face other challenges, including:

  • Costs of borrowing capital
  • Restricted availability because of the distance between access points
  • Disproportionate impacts of tolls on low-income motorists and associated equity issues
  • Negative public opinion that views tolls, on top of fuel taxes, as double taxation

Tolls as a Funding Source

Toll organizations use a variety of funding sources, although the two most common are toll charges and revenue bonds. These funding sources are closely linked, in that future toll revenues are typically pledged as the security for bonds issued to construct, maintain, expand, or operate the associated toll facility(ies) and are used to make bond principal and interest payments. Revenue bonds backed by tolls are discussed further in the Clearinghouse section on Bonding and Debt Instruments.

Increased use of tolling, not only to manage congestion but also to finance infrastructure improvements, has been encouraged by federal legislation, most recently SAFETEA-LU. This use of toll revenue as an innovative finance mechanism is discussed further in the Legislation and Regulations section of the Clearinghouse website as well as the FHWA Tolling and Pricing Program listed below under Resources.

One particular variation of tolling called pass-through tolling has seen use in the UK and elsewhere in Europe and the world, but aside from limited use in Texas, it has not been applied in the U.S. Pass-through tolls are fees based on roadway volume, paid not by motorists but by a public entity to a private concessionaire, delegating it responsibility for particular services related to the operation of the roadway. Pass-through tolls are discussed in greater detail in the Clearinghouse section on Financing.


Tolling and Pricing Program - FHWA Office of Operations
This site provides information about the tolling and pricing programs and provisions available under Title 23 and enacted by SAFETEA-LU.

Tolling Facilities in the United States - FHWA Office of Highway Policy Information
This report contains selected information on toll facilities in the U.S. including inventories and toll receipts.

Current Toll Road Activity in the U.S. - A Survey and Analysis
This database and white paper available on FHWA's Public Private Partnerships website presents comprehensive information on toll-based highway, bridge, and tunnel improvements from 1992 through 2008 including those planned for the future.

IBTTA: International Bridge, Tunnel and Turnpike Association
The IBTTA is the industry organization representing tolling entities and the engineering, construction, and financial corporations that support them. It has an international membership and maintains a member address directory and serves as an information clearinghouse and research center. It also conducts surveys and studies and publishes a variety of reports, statistics, and analyses.

This site is an informal clearinghouse for news and briefs on toll roads, turnpikes, toll bridges, toll tunnels, and road pricing.