January 8, 2018

Managed Lanes Can Reduce Traffic Congestion in Texas

Robert Krol

Senior Affiliated Scholar

Over the last 10 years the Texas economy has grown twice as fast as the U.S. economy. But with prosperity comes greater urban congestion. Texas will have to build more roads, but that is no silver bullet for congestion problems in Houston or Dallas.There is a promising solution to relieve congestion that has been used in parts of Texas, as well as in Florida, Virginia and Utah: Adding more lanes to urban highways with tolls that vary based on the volume of traffic.

Highway congestion is costly. Drivers waste time and fuel. As deliveries take longer, congestion drives up the cost of doing business. Inrix Research estimates that over the next 10 years, congestion costs in Dallas and Houston will equal about $28 billion and $24 billion, respectively. It will cost drivers in Austin almost $8.5 billion in wasted time and fuel. These estimates include the related environmental damage caused by vehicles sitting in traffic.

Congestion occurs because drivers don't pay to use limited highway space - resulting in overuse. The solution is to charge a toll for using the road, or better yet, for an under-used carpool lane. The toll should be highest during peak drive times and lower the remainder of the day. Electricity users in some areas are familiar with similar pricing schemes that apply higher rates during peak energy consumption times.

Gov. Greg Abbott and groups such as "Texans Uniting for Reform and Freedom" recently came out against the use of tolls to reduce urban congestion. They argue that tolling represents double taxation, because drivers also pay fuel taxes to fund highways. This opposition led the Texas Transportation Commission to vote in December to exclude any project that uses tolls from the state's Unified Transportation Program.

However, those concerned with "double taxation" would be well advised to consider lowering the fuel tax and instead expanding tolls on selected highway lanes. Most taxes discourage economic activity, reducing efficiency and prosperity. Tolls have just the opposite effect: By reducing congestion, they result in a more efficient use of highways and, therefore, a more prosperous community.

With time-of-use tolls, drivers shift less-essential trips to off-peak driving times. In addition, tolls increase carpooling and encourage the use of public transit. This pulls cars off the highways during rush-hour, resulting in faster travel times for everyone. Tolls may even end up reducing the number of new lanes the state must build.

Variable tolls can be levied to optimize driving speeds to maximize the number of cars that can pass in a specific amount of time. This means more cars can get through on the same number of lanes.

Some people worry that tolls take a larger percentage of a low-income driver's budget than that of a high earner. But this is also true of the fuel and sales taxes currently used to fund highways. Toll tax credits can also help offset costs for the poor.

The downside? People hate paying tolls. Some may not even notice if their fuel taxes go down to make up the difference.

That's where adding managed lanes, as opposed to toll roads, comes in. Adding them to existing highways is cost-effective and fair. They allow drivers to pay to use a faster lane, while still allowing free use of the road. Every driver who chooses tolled lanes means one fewer clogging traffic in regular lanes.

As fuel economy continues to improve, Texas gasoline tax revenues will shrink. Politicians will face difficult choices - either raise the fuel tax or find money elsewhere. A better approach is to charge drivers for using roads or lanes. If done right, it's a win-win situation: less congestion and a much more sustainable source of highway revenue, all for about what we already pay in fuel taxes.