Are toll roads the answer to funding roads?

In the future, Michigan’s interstate and freeway system may look similar to other states like Illinois, Ohio and Pennsylvania.

Users of stretches of Michigan’s freeways, including U.S. 131 between Cadillac and Grand Rapids, could be charged a toll. Nothing is certain at this point, but toll roads are an option the Michigan Legislature could look at to help solve the funding issues of Michigan’s deteriorating infrastructure.

Michigan Statewide Tolling Study, which started in late 2020, studied tolling on all 1,922 miles of limited-access highways in Michigan and included a screening process to determine appropriate corridors for a more detailed study in the Strategic Implementation Plan. The corridors studied in this Strategic Implementation Plan included nearly 550 miles and are made up of parts or all of I-69, I-75, I-94, I-196, I-275, I-696 and M-14.

What was found was tolling could generate enough revenue to fully fund the life-cycle costs of the tolled roadways, but would require a careful approach to implementation. The tolls would be collected at highway speeds using modern technology. This would include a set of two gantries over a roadway with toll collection equipment.

This transition to toll roads would be done in three different phases or tiers. The first tier would be deployed in five to seven years and includes part or all of I-69, I-75, I-94, I-196, I-275, I-696 and M-14. The second tier would be deployed in seven to 14 years and includes parts of I-75, I-94, I-96 and U.S. 23. The third and final tier would be deployed in 15 or more years and includes I-69, I-75, I-96, U.S. 23, U.S. 131, M-6, M-14 and M-59.

To collect a payment, two options would be used. First, a person could use a transponder, toll devices placed on a vehicle windshield, or video tolling where a photo is snapped of the vehicle as it passes under the gantries and a bill mailed to the registered owner of the vehicle.

The total program cost including roadway, bridge and toll systems from 2026 to 2031 would be $8.5 billion, funded by toll revenue bonds. After 2031, the report showed toll revenue would fund all ongoing construction, operations and maintenance in addition to the debt service on the bonds.

It also was estimated that Michigan could generate between $1.5 billion and $2.8 billion in annual gross toll revenue if the entire limited access highway system was tolled. That was determined using scenarios where 4, 6 or 8 cents were charged per mile.

Currently, Michigan has toll facilities in operation including the Ambassador Bridge, Blue Water Bridge, Detroit-Windsor Tunnel, Grosse Ile Toll Bridge, Sault Ste. Marie International Bridge and the Mackinac Bridge. There also are several in development including the Gordie Howe International Bridge, Independence Bridge and Liberty Bridge.

The study was conducted per Public Act 140 of 2020 and Public Act 73 of 2022. These acts required the Michigan Department of Transportation to have a third-party consulting firm conduct a feasibility analysis and strategic implementation plan. That analysis, however, is not a recommendation to toll or not toll, but rather a data-driven analysis of feasibility.

While there is potential for there to be the revenue generated, there also is potential for traffic diversions from a tolled to a non-tolled route. The benefits of the tolled route would be faster travel times, more reliable travel times or better roadway conditions.

While the tolls have some local road commissions excited about the potential for more revenue the tolls could present, it also comes with apprehensive about what impact diversion could have on local roads.

Wexford County Road Commission Manager/Engineer Karl Hanson said he likes the idea that more money could go into the coffers once the tolled roads become self-sufficient, but he also has concerns about diversion rates being high once a toll is implemented on U.S. 131.

“The reason the freeways were put in initially was to move traffic and eliminate congestion in the urban and developed areas. To take the truck and commercial traffic off the smaller roads,” he said. “The diversion rates will depend on the area and the type of roads you have to avoid the tolls. I think in Wexford County we would have a strong diversion rate.”

For him, the issue will be the wear and tear on local roads, congestion and safety.

Osceola County Road Commission Manager Mike Mattzela said that historically the Northern Michigan road commissions have been underfunded so the chance for additional revenues once the toll roads become self-sufficient would be welcomed. He said it could provide the chance for his agencies and others across the state to hire more workers.

Compared to 10 to 15 years ago, Mattzela said employment numbers at his agency are down, but it is true across the state. The potential funding boost the tolls could provide could help get his agency back up to past employment levels, both in the field and in the office.

“One of the things we are facing here is the need for qualified people. We are fighting with the utility companies, contractors and businesses for labor,” he said. “To get labor, you have to pay salaries that are going to make it worthwhile to come here, and we are struggling to do that. That will only get worse if (Osceola County) gets that potash plant and the EV factory is built in Mecosta County.”

Mattzela also said there are questions about how things are going to pan out if electric vehicles start outnumbering gasoline-fueled vehicles. How is that lost revenue from the gas tax going to be replaced?

Recently, leaders from the newly formed Coalition on Electric Vehicles and Transportation Revenue released information from the new report entitled, “The Impact of Electric Vehicle Adoption on Road Funding in Michigan.” The coalition includes county road agencies, and governmental and industry stakeholders.

The report showed that from 2019 to 2021, Michigan roads did not receive $50 million in state gas tax that was expected to come because electric vehicles pay reduced or no state gas tax. The report also anticipated electric vehicles represent 15 to 25% of new vehicle sales in Michigan by 2030, which could result in a shortfall of $95 million under current policy conditions.

If drivers of internal combustion engines continue to bear the entire tax burden of local road maintenance via the gas tax, Michigan will be in an even worse position to restore the deteriorating infrastructure. For this reason, the members of the Coalition on Electric Vehicles and Transportation Revenue are calling for a pilot project that will move the state toward a new revenue collection system for electric vehicles.

The electric vehicle report does not recommend on specific policy but does outline multiple solutions. These include an annual flat registration fee for electric vehicles, mileage-based user fees, per kilowatt-hour fees, miles at registration fees and toll roads.

County Roads Association of Michigan CEO Denise Donohue said the time to act is now to ensure road funding is there in the future.

“Michigan put the world on wheels, and 100 years later we continue to lead the world into a new and exciting future for mobility. But we need to act now to ensure we have the road funding needed to drive that future,” Donohue said. “That’s why we are calling on lawmakers and the governor to launch a pilot project that gives us the answers we need about a future-forward road funding model for EVs.”