New Road Financing System for U.S. Metropolitan Areas

This paper discusses a broad congestion pricing approach that could replace federal and state fuel taxes and possibly other taxes used to finance transportation needs in congested metropolitan areas. The approach may be implemented in the near term because technologies needed to implement it are already deployed extensively. The approach involves converting existing freeways (all lanes) into premium-service, free-flowing highways that provide fast, frequent, and inexpensive express bus service, while charging all vehicles a variable toll—except authorized buses and certified vanpool vehicles. The toll would vary by level of demand and would be set high enough to guarantee that excessive demand will not cause a breakdown of traffic flow. Sketch-planning analysis for the five most congested U.S. metropolitan areas suggests that implementing the concept could provide sufficient revenue to replace the fuel tax and potentially other transportation taxes, while providing large economic benefits. Public acceptance would be a major hurdle but could be achieved with careful system design along with a major public education and outreach campaign