Talking Michigan Transportation

Study examines feasibility of tolling some Michigan roads

January 20, 2023 Michigan Department of Transportation Season 5 Episode 130
Talking Michigan Transportation
Study examines feasibility of tolling some Michigan roads
Show Notes Transcript

On this week’s Talking Michigan Transportation podcast, a conversation with Eric Morris, Michigan office lead for HNTB, the transportation consultant selected to complete a tolling study

Some 35 states have at least one facility with tolling. But that number is a little deceiving because Michigan would be counted in that total since there is tolling on big bridges and/or international crossings but no tolling on non-bridge road segments.

Morris says the experts analyzed all 31 highways in Michigan for the study and determined that 14 could become toll roads, including large portions of Interstates 75, 94 and 96.

As Bridge Michigan reported, any tolls would take years to implement and require approval from the Legislature and the governor, among numerous hurdles. 

Morris talks about the differences between various road user charge (RUC) options, including mileage-based user fees (MBUF) and tolling and how pilot programs seeking people to participate have been voluntary, so far, including one in Oregon that has generated a lot of discussion.

Other relevant links:

A 2019 Epic-MRA poll of Michigan voter views on tolling.

Some things the study will cover, including managed lanes and how they work.     

Why Michigan doesn’t have tolling. Some history.

Jeff Cranson: Hello and welcome to the Talking Michigan Transportation Podcast. I'm your host, Jeff Cranson. Today I'm going to be revisiting a topic that I've touched on a few times in the past couple of years on the podcast, and that's tolling. Ambitious, robust tolling study undertaken by HNTB, one of the nation's top transportation consulting firms wrapped up toward the end of 2022 and was provided to the previous legislature has asked for in the statute that created the tolling study. Today I’m going to talk with Eric Morris who is the practice leader for HNTB Michigan and he's been intricately involved in this and has a very good perspective and can set us straight on some of the facts that are laid out in the study what the findings were and also put it in context and I should say just to start with that some 35 states have at least one facility with tolling in this country. But that number is a little deceiving because Michigan would be counted in that total since there is tolling on big bridges and or international crossings. But there are no roadways with actual tolling. So, Eric, thank you for taking time to be here.

Eric Morris: Thank you, Jeff. Appreciate the opportunity. 

Cranson: So, my big take away and I’m eager to hear yours is that 31 highways in Michigan were analyzed and about half of those were determined could be feasible to have toll roads including portions of our big interstates or heaviest traveler states I-75, I-94, and I-96. What would you say about that? 

Morris: So, I would say the way that the study team undertook the challenge from the legislature as it was laid out in in the in the public act and the law that was signed was to look to see; is there a system or a network of freeways that could be feasible for tolling? From a social, technical and financial standpoint and when we were looking at it from a financial standpoint, which is a big consideration for tolling, alright, I mean this was born out of the conversation about road funding in general. We looked for a network or a system of roads that could be self-sustaining. And what we mean by self-sustaining is that the tolls collected on the roads would pay for the life cycle costs of those roads. Currently we pay for our transportation system largely through motor fuel tax and registration fees. And so is there a network of freeways that we could pull off and have a self-sustaining user fee or toll system? And so really that was the lens that we looked at and ended up coming up with a system that based on our financial projections and cost projections being mindful of users and functions of freeway. We came up with a network that could be feasible.

Cranson: So maybe we should do a reset right from the start because this was born out of decades of discussion about road funding. All the states are struggling with this one where most of the states that are actually doing very well with their road programs. They have tolling and have also been aggressive about raising their fuel taxes. Pennsylvania, obviously did a major boost to fuel taxes the last 10 years. Florida, Texas, politically conservative states have been really good about funding their roads. So why do you think it's been so difficult in in Michigan to find a long-term sustainable solution? 

Morris: Well, I don't want to stray out of my lane too much at being a trained engineer and not a political science major, but I think it's partly because those states have valued their transportation network. They're also growing States and growth generates a lot of opportunities that stagnation or shrinkage does not, right. And so, I think that's been an advantage for states like Florida and Tennessee and Texas. But the fact of the matter is we have aging infrastructure that needs to be cared for and protected because it supports our entire economy, right? Like when roads were first paved and when the gas tax was first born. It was for a niche group of owners of these newfangled things called automobiles that were having trouble getting through the rutted dirt roads and log roads and brick roads that existed or even bicycles with horses and buggies and so what the solution was at the time was to charge a motor fuel tax, which these new automobiles needed, and use that money to pave the roads and that funding system Jeff is still in place 100 years later and so our current funding system for transportation is incredibly antiquated. And there are a lot of merits to a user benefits user pays system. But the thing that I would couch with you in this whole paradigm that whether a person uses a roadway once or 100 times, that roadway has to be built and so it's the system that we have. We pay for our entire system on trips to the gasoline pump and registration fees. It's roughly a 50/50 split right now. But we are actively encouraging people to stop going to the gasoline pump. And so not only do we have a giant shortfall in the funding for our transportation system as a state, but the last report also that was done several years ago estimated at well over $2 billion a year. It has grown since then because the condition of our roads, it's gotten worse, and the cost of our roads has gone up. So not only do we have a delta in what we need to fund for the system, but now we're actively encouraging people to stop going to the gasoline pump. And so that funding that we do have is going to trail off. We need to find a new way. 

Cranson: And I think that's the best thing that can come out of this that we're having a conversation about alternatives that we've been talking about the same things for so long. In 2014, the Michigan legislature came very close to passing what would have been a more sustainable fuel tax solution than what we actually got out of the 2015 package. And then early on, we talked about it again a few years ago. But for the most part if this starts to move the conversation toward the future and what other states are looking at, that's a really good thing. But talk a little bit about your background and understanding that you've gained on these various systems and what various states do. About road user charge or VMT model like has been piloted in Oregon in some other States and compare that to tolling. 

Morris: Sure. So, what I would say there's a lot of talk about MBUF mileage-based user fees or ruck road user charging or VMT vehicle miles tax. They're all essentially a user fee for a proportional user fee for however many miles you drive on the roads. Then that determines your share of the fee. What I would say about tolling is tolling is a road user charge with the technology that we have today that's available today there's a lot of interest in road user charges because it is agnostic to the fuel economy of your vehicle, which is very much a positive. And there are some states that have been very progressive in how they've implemented it. Oregon, Utah, Virginia many states have pilots, but states like Oregon actually have what I would call production or permanent installations of it. However, I'm not aware of any implementations across the US that are anything but coluntary, meaning people have to volunteer to be part of the program. The inherent challenge with that is, generally speaking, taxpayers don't volunteer to pay more tax than they have to. And so, these programs, they're switching from a motor fuel stream to a user fee stream, right. So, they're switching how the fee is assessed, but they're not raising new revenues and in fact Oregon, which is the absolute gold standard for these implementations, still volunteered. There are 700 people or members of that program, roughly 700 people. It's a long way to go from 700 to 10 million residents of Michigan. So, in all of these whether it's tolling gas tax, registration fees or MBUF, the thing that I think is important to understand. Is that these are all options and there is no one silver bullet out there. The, the ultimate solution that's going to deliver the most value for the people of the state of Michigan is going to be some combination of those ideas and it's going to take really strong public discourse and then strong leadership out of our policymakers because nobody in the executive branch can make the determination to move forward with this versus that. It's going to take a partnership with legislative policy makers, executive policymakers to decide how we move forward.

Cranson: And the legislature has to view it as a choice or view that they put before the public as a choice. We can do this, or we can do this. Both these are going to raise funds, but it can't be this or nothing, because as you pointed out, if you ask the public you want to pay more, they're going to say no. 

Morris: So yeah, generally speaking, if you give somebody a choice of paying something or paying nothing, they generally choose to pay nothing, right? And so going back many years, I think that was one of the really intriguing parts of Prop A way back in the 90s, right. It was an either-or decision. It wasn't a yes or no decision. 

Cranson: Yeah, I'll link to that because that seems so ancient now to many people still fresh in my mind. I remember the fight and I remember how they got there. And it was actually, it turned out to be pretty smart. I think that there's a lot of criticisms now about what it did, especially in terms of property taxes. But I think over the long run, it worked out better than maybe a lot of people thought it would.

Cranson: We'll be right back. Stay tuned. 

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Cranson: Talk a little bit about what else you found in the study, I guess the scenario that jumps out at me would be drivers could be charged six cents per mile. So, I think Jonathan Osting in his analysis in Bridge magazine said that’s about $12 to get I-94 from where you cross in New Buffalo to Metro Detroit, so. A lot more for trucks obviously. 

Morris: Yeah, so that study looked at a variety of different toll rates. In the feasibility report, we kind of looked at some different scenarios and the one that what you're balancing is the revenue that raises cannot support the freeways, but then also as you raise the toll revenue, you're diverting more traffic off of the freeways onto the surface network. And so, you're trying to balance diversion and raise revenue. So, the team looked at 4, 6 and 8 cents a mile. And that that 6 cents scenario was the most feasible. What's key to understand about the work is it's not a feasibility is not a binary question. It's not yes or no, it's a spectrum because there are different things that you can do in terms of policies and toll rates and ways you collect that impact the feasibility and so, the way that we defined it in the report was freeways of even low feasibility and then think what wisdom or what approach would be most feasible. And so we found that 6 cents a mile for passenger cars. And about $0.24 a mile for an 18-Wheeler five axle semi-trucks was the most feasible scenario that best balanced diversion and the revenue generated and then coming out of that feasibility report. When we identified the most feasible network, then we started developing what we call an implementation plan. So basically, ask the question, OK, if the legislature someday gave this the thumbs up to do this and the governor agreed and signed it into law, what would be the playbook for how you would do that? And so that's what the implementation plan is, it looks into making some recommendations on which freeways would we start with? Which federal programs would we use? There are federal programs that have to be used. How would you go about phasing and financing this because tolling systems generally borrow the money up front and then pay those pays to do the work, and then pay those funds back with tolls. What sort of equity programs would we implement to acknowledge the fact that not everybody has the same capability to pay the tolls? And some economically disadvantaged communities might need some help. 

So, what equity programs would we put into place? And then what would be some of the benefits of a toll system if that would be done, such as toll credits that would be generated for the state to use as soft match for federal programs? But then what would some of the drawbacks be? What would be some of the drawbacks? There are some groups out there that are not a fan of tolling. There are some trucking groups that that don't agree with that because quite frankly, a toll system has a higher cost to collect the funds than a motor fuel tax does. What we found in our work was that it cost about 13% of the total revenues to collect and administer the system on a tolling basis. Motor fuel tax nobody's got a really hard number but somewhere in that 3 to 5% range right so it’s more costly to have a tolling system which incidentally is one of the challenges with a VMT or road user charge as we're envisioning as the cost to collect is higher with those as well. So, it's a series of trade-offs and then that implementation plan and feasibility study, really our job was to present all sides of the scenario and talk about what would be possible, but what would be the tradeoffs and you know put that forward for policymakers to make that decision. 

Cranson: So, let's get back to that equity discussion in a minute. So, I think it's very important, but first talk about the common thread in those roads that were deemed highly feasible. 

Morris: Well, the common thread, at least that I see, are the roads with the highest amount of traffic, right. They are the most traveled roadways in Michigan. That was interesting when we were doing our stakeholder engagement even before the law was passed. Legislators and people in the public kept using I-94 as the example, right? Like we'll say we tolled I-94, I think part of that was because I-94 back in the 50s was originally envisioned to be a toll road before it was part of the Interstate system. But also because of how busy and how much truck traffic it carries and how much traffic it carries, well, it was no surprise to anyone that the I-94 corridor across Michigan from a financial standpoint, was probably the most feasible corridor that we saw. 

Cranson: Well, it goes to the common view that tolling would never work in Michigan. Because we're a peninsula state. But I-94 actually feels like a pass through from, you know from Chicago and points West to another country. 

Morris: Basically, it is I-94 through Detroit is the quickest way to get from the Port of Halifax to Chicago, right. Goes right through Detroit and I-94. But even still, the thing that we need to be mindful of is that tolling is a user charge. It's a user fee. So, it charges whoever is driving on it, whether they live in Ohio or Indiana or Canada or Michigan, it doesn't matter where they're from. If they use the freeway, they use the freeway. One of the aspects of the legislation required us to assess who would be tolled in terms of percentages and broadly speaking, roughly we have about 10% out of state traffic on some of our roads. Closer you get to the borders, the higher that percentage goes up, the further away from the borders you get the lower that percentage.

Cranson: I'm surprised that number isn't higher when you think about the summertime and US-31 and US-131 and I-75 and US-127 and the number of people coming from on the West side of the state. I mean you travel anywhere from Saugatuck to Charlevoix, you see a lot of Illinois plates, obviously you see a lot of Ohio, Indiana plates headed up north to you know other parts. So, I'm surprised that 10% figure isn’t actually higher. 

Morris: That was actually one of the aspects of the study that was a little surprising to the team. Where we got you know based on the data and the analysis that we did on the data, we wanted to be very data-driven on the study. That was one of the things that surprised us a little bit as well.

Cranson:  So, let's go back to equity for a minute and what some other states have done some creative things and what you found would be the most practical application here if this were to be implemented? 

Morris: So, I will say that the overall industry trend is really heading towards being more interactive with the public and the users of the system to determine you know what sort of programs would deliver the most value for the communities that need it the most. In Virginia they have a toll relief program that is a somewhat income qualification based. So, one of the things that we looked at was an analogous program if you qualify for the Bridge card program in Michigan, maybe you would qualify for reduced or free tolls in Michigan. Something like that. Another program out in California, it actually put an Advisory Board together, and that Advisory Board provided recommendations to the toll authority about programs that would make a difference. And this could be transit subsidies or reduce tolls. Or, you know, say if you qualify for the program, maybe you get $25 preloaded onto your transponder every month to help offset that. So there's a variety of ideas out there to help different communities deal with the impacts of tolling, because there are impacts, but the best practices really are in getting out and engaging with the communities to understand what means the most, as opposed to an agency just sort of cooking up a program in their own walls and rolling it out without sort of communicating and testing that. In Michigan, I actually have broadly seen this on transportation projects. I see that happening more across the board, whether it's mega projects in Detroit like I-94 or I375 or I-75. I think Michigan has been a great leader. In reaching out to the communities and meeting people where they are to understand what's valued on those projects to be able to deliver that for those communities. And there's a ton of parallels to what would be recommended if a tolling system would be if it would be launched. 

Cranson: So, I think that this question came up during committee hearings and the legislation to advocate to the legislation that actually required MDOT to hire a consultant to conduct this tolling study. And it seemed even then that while there were concerns, the people that raised them were satisfied that you or whoever was going to end up you know taking over the study and implementing it were sensitive to those needs and we'll make sure that that's addressed. So, it sounds like you're confident that that will be part of this one way or another that there's not going to be an unfair burden on lower income people. 

Morris: If the legislator legislature made a decision to move forward with it, you know my recommendation, our firm’s recommendation and that's what's in the report is that the equity program needs to be a cornerstone or part of that program as a foundation otherwise I don’t believe it will be successful.

Cranson: Yeah. Is there anything else you want to say about the study? We're going to have plenty of time to delve further into it and talk about it and see if the legislature does pick up on this and start some more conversations or not. 

Morris: Yeah, that's I think that's the big take away for me, Jeff. I appreciate the opportunity to come on and talk with you here I really hope it spurs the conversation forward. I don't know what the answer is ultimately for Michigan. And in terms of continuing to invest in our infrastructure, I know we need to invest more than what we're currently doing and I just, I really hope that this study is thought provoking to people and spurs quality discussion and helps move our state forward in some form or fashion. 

Cranson: And I hope you know what the governor has done the past four years with the Rebuilding Michigan plan and a commitment to really making a huge dent in our decades long underfunding infrastructure. It provides some confidence that if given the resources you know we can do it, we can rebuild a lot of these major freeways and bridges and that's what's been going on. You know, when you have more resources, we'll do more of that. 

Morris: Absolutely. Yeah. 

Cranson: Well, thank you, Eric. I appreciate you taking the time to be here. 

Morris: Absolutely. Thank you for the opportunity, Jeff. 

Cranson: Hope you enjoyed this week's edition of the Talking Michigan Transportation Podcast. You can find show notes and more information at either the Buzzsprout site or on Apple Podcast. I also want to thank the people who work on this podcast and make it as good as it can be each week. Chiefly Randy Debler who does the audio editing. Also, Jacke Salinas, who puts the transcript together, Jesse Ball, who proofreads the show notes, and Courtney Bates, who posts the podcast on the various platforms.