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New tolls on existing interstates are bad for business: tolling existing interstates would increase costs at many points in the supply chain.

Transportation funding in the United States is shaping up to be a key congressional issue in 2014. With the existing U.S. highway funding bill set to expire at the end of the year and the Highway Trust Fund projected by the Congressional Budget Office to become insolvent by September, Pres. Obama and many members of Congress will be focused on finding more money for America's interstates.

There is no shortage of funding ideas. The president recently unveiled a highway funding plan that would dedicate $302 billion over the next four years to transportation infrastructure, about half through corporate tax reform and the remainder through existing gas tax revenue. Rep. Earl Blumenauer (D-Ore.) has introduced legislation that would increase the gas tax, which has not been raised since 1993. Others have suggested a Vehicle Miles Tax, which would tax individuals based on every mile driven. Of course, others argue for more toll projects. Among those suggestions, one is particularly controversial: placing tolls on already-built, currently toll-free federal interstates.

At the inception of Federal Interstate Highway System in 1956, Congress decided to fund this system using a federal tax on fuel. Because the gas tax was not indexed to inflation, it has been stagnant and yields lower real revenue each year. Additionally, higher vehicle fuel efficiency has decreased the quantity of fuel demanded per vehicle mile, generating less tax per vehicle mile driven. This combination of factors has prevented federal transportation revenue from keeping up with new construction and ensuing maintenance needs.

Federal law currently prohibits the use of tolls on existing interstate highway lanes, with two exceptions. One is tolled roads that predate the creation of the Interstates Highway System, which were assimilated into the system and permitted to continue their tolling operations. The second is a federal pilot program created in 1999 that allows up to three states to place tolls on existing interstates lanes within their borders.

During the pilot program's life span, a few states have spent millions of dollars seeking Federal Highway Administration approval. However, not a single state has implemented new interstate tolls under the program as those proposals met heavy public opposition in reaction to demonstrated negative effects of those tolls.

However, as the transportation funding need has become more pressing, proponents of tolls are becoming more vocal by calling for a nationwide expansion of the pilot program, effectively lifting the ban on tolling existing interstates. They claim that interstate users are not adequately paying for the roads, and that tolling existing interstates will more effectively tie road funding to road use. These advocates, primarily the tolling industry, are lobbying federal legislators to overturn the tolling ban and pushing state legislators to utilize tolls to generate revenue.

To counterbalance these special interests, businesses and organizations from a wide variety of industries have formed the Alliance for Toll-Free Interstates. ATFI is a rapidly-growing organization united by the belief that a viable, sustainable solution to America's transportation needs must not include putting new tolls on existing interstates.

Growing Alliance

ATFI is focused on educating the public and policymakers about the negative impact that tolling existing interstates will have on citizens, businesses and the economy.

The alliance continues to recruit new members and encourages those who appreciate a non-tolled interstate system to join the cause. ATFI currently has more than 140 members, including associations such as the International Franchise Association, National Council of Chain Restaurants, Owner-Operator Independent Drivers Association (known as OOIDA), National Association of Truck Stop Operators (known as NATSO), American Motorists Association, as well as associations representing trucking companies, the moving and storage industry, vehicle manufacturers, motorcyclists and the vehicle rental industry. Individual business members are diverse and include Dunkin' Donuts, FedEx, McDonald's and UPS.

Alliance members that are part of the franchise industry are concerned about the economic impacts of traffic diversion and increased costs to the U.S. supply chain.

Costs to the Supply Chain

Tolling existing interstates would increase costs at many points in the supply chain. Retailers and restaurants that rely on the cost-effective shipment of goods will have to offset those costs through price increases and slimmer margins. Consumers will bear a share of the burden as well.

The Interstate Highway System is too important to the American economy to be burdened with new tolls. Jay Perron, IFA vice president of government affairs & public policy, said, "Since its inception, the Federal Interstate Highway System has facilitated unrestricted commerce and travel throughout the country. It is vital to the U.S. supply chain and has revolutionized the way America does business. Tolling existing interstates would reverse this progress, raising costs for travelers, businesses, and consumers, and harming the many businesses and communities located along interstate routes subject to new tolls."

At ATFI, we know that supply chain disruption is an unacceptable cost for a revenue collection system that is highly inefficient in the first place, sometimes losing up to 30 percent of revenue to administrative and collection costs.

Traffic Diversion

Interstate toll facilities also push traffic onto local and secondary roads, as some drivers take alternate routes to avoid the paying the toll. This traffic diversion will funnel customers away from businesses located along highways, including many franchises that rely on a customer base composed almost exclusively of interstate users.

Traffic diversion is not a theoretical phenomenon, but an empirically measurable consequence of putting a toll on a previously non-tolled road. A 2013 Economic Assessment of I-95 in North Carolina estimated that diversion from potential tolls on I-95 would cost North Carolina businesses located within a mile of I-95 approximately $1.1 billion dollars in revenue between 2014 and 2050.

The Fight Continues

The debate over using new tolls on existing interstates to fund transportation is only going to grow, and proponents will become increasingly aggressive.

ATFI asks that other businesses and organizations get involved to keep existing federal interstates toll-free. We encourage businesses to join the Alliance through our website www.tollfreeinterstates.com.

Miles Morin is director of membership and operations for the Alliance for Toll-Free Interstates. He can be reached at miles@tollfreeinterstates.com or 804-771-5331.
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Title Annotation:GOVERNMENT RELATIONS & PUBLIC POLICY
Comment:New tolls on existing interstates are bad for business: tolling existing interstates would increase costs at many points in the supply chain.(GOVERNMENT RELATIONS & PUBLIC POLICY)
Author:Morin, Miles
Publication:Franchising World
Date:May 1, 2014
Words:1017
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