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Issue 6 - Technology & Cities - October 2004

HOT OR NOT: Are New Toll Lanes a Fair Price to Pay for Driving?

by Brian J. McCabe

The trip on Route 91 between Southern California’s Riverside and Orange Counties is an archetypal American commute. Orange County is one of the region’s employment capitals, and Riverside is its bedroom community. On an average day, 250,000 cars navigate the five-lane stretch of highway between the two. Experts predict that by 2015 the daily traffic flow will increase to 400,000.

Traffic plagues Route 91, which doesn’t particularly set it apart from hundreds of highways across the country. But commuters on Route 91, unlike most drivers across America, have an alternative. For a fee–up to $5.50 at peak times–they can cruise at 65 miles per hour along the 91 Express Lanes running down the median of the freeway. These high occupancy toll (HOT) lanes ensure commuters a ten-minute trip down a stretch that may take up to 45 minutes for their fellow commuters in the old-fashioned free lanes. The idea is relatively simple: HOT lanes offer commuters a congestion-free alternative, charging a variable price depending on the time of day and level of congestion. Tolls are highest during the afternoon rush hour on Thursdays and Friday, and they drop off as low as one dollar during off-peak periods.

Following California’s lead, lawmakers in Houston have already set up HOT lanes on the Katy Freeway, and local governments in congested regions around Washington, D.C., and Atlanta are considering following suit.

But innovation in the sacrosanct realm of the American road inevitably breeds controversy. While HOT lanes have proliferated across the country, their popularity has been challenged by a growing cadre of vocal critics who argue HOT lanes are environmentally unsustainable and socially unjust, forcing policymakers to take a second look.

Variable pricing schemes are nothing new to American consumers. Mobile phone companies are the most popular example, using variable pricing to regulate usage during peak and off-peak hours. As prices rise, demand for peak calls lowers, which helps phone companies regulate the quantity of users during these periods. Airlines and trains use similar pricing tactics to prevent unmanageable spikes in demand on busy travel days. “Every other form of transportation,” suggests Robert Poole of the free-market Reason Policy Institute, “offers several levels of service and quality at different prices. This includes government-run railways and privately run airlines. Why should only highways be restricted to offering one-size-fits-all?”

The 91 Express Lanes offer a wide range of prices, set at the level necessary to keep demand low enough for a quick trip at any time of day. When they opened in 1995, prices ranged from $0.20 to $2.50 for the privilege of commuting congestion-free. As demand rose over the years, so did the price. By the end of 2003, noontime commuters along the 91 Express Lanes paid tolls of $1.70. During the morning rush hour, tolls peaked at $3.60. For the evening rush, the toll had risen to $5.50. As a purely market-driven phenomenon, the only ceiling to continued toll increases is public demand. Based on both extensive fieldwork and travel surveys with former and current commuters, a recent study completed by California Polytechnic State University (Cal Poly) suggests that commuters would be willing to pay up to $16 to save an hour of commuting time. The 91 Express Lanes, according to the Cal Poly study, saved the average commuter about 30 minutes over the non-toll roadway–suggesting that the prices could inch upward further towards the $8 mark without making the lanes significantly less successful. These tolls generate new revenue sources for the construction and maintenance of roadways.

Critics, however, have dubbed the lanes “Lexus Lanes,” claiming that they allow the wealthiest commuters to bypass stalled traffic. This argument has been adopted by national organizations, like the American Automobile Association, as well as local community groups protesting the lanes’ development. An editorial in The Capital, a daily newspaper from Annapolis, Maryland, opposed its state’s HOT lanes proposal: “It’s different–and unpalatable–to set up a system of first-class traffic lanes for the affluent, while the rest poke along in bumper-to-bumper traffic in second class. It’s one thing for private businesses to vary services depending on how much is paid. But a state that is charging everyone the same taxes should … be working on cutting congestion for all.”

But Orange County Supervisor Bill Campbell retorts, “You do see expensive cars in the express lanes, but it is mainly the working class.” The Cal Poly study supports Campbell’s observation. It suggests that commuters’ decisions about whether to pay up or stay in the slow lane were “very closely related” to time savings, but only “moderately” related to price savings. It also found that, since the lanes’ completion, the number of users has risen steadily, but the number using it for a majority of their peak trips has declined. Users who make twenty trips or more each month comprise only twelve percent of the express lanes’ overall users. Most are discriminating in their usage, taking advantage of the congestion-free alternative occasionally, but using the regular lanes for the majority of their trips.

Rather than becoming exclusive passageways for California’s wealthiest drivers, the lanes have evolved into a form of “congestion insurance” for drivers from across the economic spectrum, according to Poole. Commuters “choose to pay [to use the 91 Express Lanes] on those occasions when it’s worth it to them to get to their destination on time,” he said. “Significant numbers of people in the bottom half and bottom quarter of the income distribution use the HOT lanes in that manner because there are many circumstances in their lives when the toll is less than the value of time saving.”

Regardless of the users’ demographics, the lanes’ opening has eased congestion on the regular non-toll lanes. By moving some of the congestion-causing vehicles onto the toll lanes, congestion is eased for all commuters. Moreover, commuters have been encouraged to change their travel behaviors with the introduction of HOT lanes. Ellen Lee of the Orange County Transportation Authority notes, “Congestion pricing induces motorists to alter their travel plans. Some drivers will be able to modify their schedules so they use the road at less busy times.”

While both the wealthy and the working class take advantage of HOT lanes, this equitable roadway sharing is unlikely to placate environmentalists who maintain that HOT lanes promote suburban sprawl and encourage automobile dependency. The Maryland chapter of the Sierra Club wrote, objecting to proposed HOT lanes in Maryland and along the Capital Beltway, “HOT lanes might actually increase sprawl pressures. Right now, commuting delays form one of the principle controls on the spread of development farther and farther from urban cores. With the ability to buy road access [on HOT lanes], Marylanders with money can move to the country and commute easily to the city.” The organization also noted, “Any policy that encourages people to drive only worsens the air quality problems our urban areas face.”

But not all environmental groups have come out against HOT lanes. In testimony before Congress last year, Michael Replogle, transportation director at Environmental Defense, called HOT lanes “a promising option for unclogging roads.” In his testimony, however, Replogle cautioned that misappropriation of collected tolls could be detrimental to the environment. “If HOT lane revenues … are dedicated solely to building more highways … then the net impact of this financing system is likely to be increased traffic, pollution, sprawl, and unequal access to opportunities and public facilities that hurt those without cars.”

Environmental Defense’s cautious endorsement of HOT lanes has put them in a takes-all-kinds political coalition that also includes congressmen from both parties, right-leaning non-profits, and local government officials. Last year, Rep. Mark Kennedy, a Republican from Minnesota, introduced the Freeing Alternatives to Speedy Transportation (FAST) Act in Congress to promote HOT lanes nationwide. The Reason Policy Institute, a libertarian think tank, has been one of the most vocal proponents of HOT lanes. The National Taxpayer’s Union endorsed HOT lanes, citing their potential to increase roadway capacity without increasing the burden on America’s taxpayers. Local governments across the country envision new sources of income from HOT lanes to offset the notoriously steep costs of developing transportation infrastructure.

The debate about roadway pricing has arrived on America’s doorstep at an important juncture in automobile history. For decades, policymakers have largely relied on taxes from gasoline to fund investment in roadways. But Poole notes, “The U.S. fuel tax as a dedicated funding source may not remain the principal highway funding source beyond the next fifteen to twenty years.” Revenues from transportation-related taxes are failing to keep apace with the needs of the transportation system. Meanwhile, the growing scarcity of fossil fuels and the concomitant turn toward alternative power in vehicles may eventually render the fuel tax an obsolete source of roadway funding. Knowing the political infeasibility of raising taxes, policymakers are on the prowl for alternative streams of income to fund transportation infrastructure. HOT lanes are the latest discovery in their search.

The question remains how many drivers outside of notoriously congested Southern California will pay for their right to drive and, if so, at what price. As HOT lanes replace traditional highway lanes throughout America, planners and policymakers will watch closely to find out.