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It's Not Too Late To Make T-REX A Success

Opinion Editorial
June 19, 2003

By Dennis Polhill, Tiffany Dovey

Anyone who’s ever had the misfortune of traveling on I-25, or rather, of
sitting in the parking lot otherwise known as Interstate-25, knows that as
you head from downtown to the Tech Center things go from bad to worse.
T-REX will add capacity. But, will the improvements increase mobility?

Before T-REX, three traffic lanes in each direction served I-25 through
the Tech Center. T-REX improvements add one traffic lane and light rail in
each direction for $1.7 billion. The November 1999 election authorized
rail on the condition that at least 60% of the cost be borne by the
Federal government. The highway portion is financed by debt called
Transportation Revenue Anticipation Notes (TRANS). By exhausting future
revenues for immediate projects, Colorado’s ability to address future
transportation needs has been hampered.

Will Tyrannosaurus Rex, the dinosaur predator, gobble up gridlock or feast
on taxpayers?

Colorado’s Highway Users Tax Fund gets 22 cents per gallon of gasoline to
finance the state’s 85,412 roadway miles. Another 18.4 cents goes to the
Federal government to finance Interstate highway construction. Since
completion of construction over a decade ago, Congress has used the funds
for items increasingly unrelated to the stated purpose. The remainder,
about 62%, eventually finds its way back to Colorado, but with strings.
Penalties are assigned for failure to adhere to Federal mandates, like the
$50,000,000 against Colorado for not lowering DUI blood alcohol limits to
0.08 percent.

Fuel economy and diversion of funds to projects that do not significantly
enhance mobility increasingly erode the ability of the gasoline tax to
finance transportation. HUTF strength will probably diminish by one-half
to three-quarters over the next 20 years. Politicians who advocate
comparable increases will quickly be out of office. What to do?

Is there an alternative to tax increases? Gas tax dependence should be
phased out and replaced with a better, more market-oriented user fee:
tolls. Because construction of the interstate system is finished, enormous
resource transfers between states is unneeded. The Federal gas tax can be
quickly and significantly reduced or reassigned to the states.

Rush hour traffic jams prove that the system has more value at some times
and flat rate tolls are inadequate. Variable rate tolls are effective at
allocating the scarce resource of available capacity. Before T-REX,
traffic counts show that 43% of the capacity was unused. The most
congested road in Colorado could have served nearly twice as many
vehicles. Adding one lane to three lanes increases capacity by 33%.
Because most light rail users are former bus riders, light rail does not
significantly help congestion. Given that I-25 traffic increases 2.6
percent per annum, growth will consume most of the new capacity before
T-REX opens.

How can variable tolls help? By making the new lane a restricted lane it
can be shared by high occupancy vehicles (HOV), bus rapid transit (BRT)
and others willing to pay a toll (thus, the term “high occupancy toll” or
HOT lane). As demand on the system changes, a variable toll rate is
displayed on a message board, allowing drivers to weigh the urgency of
their travel against the current toll. Varying the toll with demand,
insures that the road never becomes congested.

Tolls are a better user-fee than the gas tax because individuals
experience the cost for service at the time benefits are delivered. Under
the collectivist gasoline tax users who consume more of the system gain
disproportionate benefits at the expense of others. This phenomenon, known
as the “tragedy of the commons,” is avoided with variable tolls.

“Let Those Who Receive the Benefits Pay the Costs,” Independence Institute
Issue Paper 13-99 by Stephen R. Mueller and Dennis Polhill exhaustively
evaluated 22 possible configurations for I-25. The scenario being
constructed in T-REX would generate about $600 million after operating
expenses, if the new lane were a HOT lane.

By using the power of the market, congestion-free, free-flow travel is
also available to both carpoolers and single occupant drivers.

So, what are the options? Colorado can either proceed accepting that the
corridor will soon return to gridlock, or the new lane can be changed to a
restricted lane before it is opened. The restricted lane insures that
corridor users benefit because they will forever have a free-flow travel
option; Colorado gains a windfall of millions of dollars; and the corridor
benefits by moving more people more efficiently. Only in the political
world could this decision be tough.

Is the political control of transportation more important than allowing
users choice and providing higher service at lower cost?

Copyright 2003 The Independence Institute

INDEPENDENCE INSTITUTE is a non-profit, non-partisan Colorado think tank.
It is governed by a statewide board of trustees and holds a 501(c)(3) tax
exemption from the IRS. Its public policy research focuses on economic
growth, education reform, local government effectiveness, and
Constitutional rights.

JON CALDARA is President of the Institute.

Dennis Polhill is a Senior Fellow at the Independence Institute. Tiffany
Dovey is a graduate of the University of Washington and a summer intern at
the Independence Institute. This opinion editorial is a summary of a more
extensive discussion in Issue Backgrounder, soon to be posted on our
website IndependenceInstitute.org.

NOTHING WRITTEN here is to be construed as necessarily representing the
views of the Independence Institute or as an attempt to influence any
election or legislative action.

PERMISSION TO REPRINT this paper in whole or in part is hereby granted
provided full credit is given to the Independence Institute.