Use of Toll Revenues in Financing Highway Projects

Gao ID: RCED-86-130 April 1, 1986

Pursuant to a congressional request, GAO reviewed how states raise additional local revenues to finance specific highway projects.

GAO found that: (1) legislation has been introduced to modify the current federal no-toll policy and give states greater flexibility in financing highway projects; (2) each state's constitution determines how tolls can be used as a highway funding mechanism; (3) because of growing financial constraints and increasing repair and rehabilitation costs, states do not like to eliminate existing toll roads because the roads provide constant revenues; (4) under the legislative proposals, states would be allowed to use trust fund revenues along with toll revenues to construct new toll roads and reconstruct existing toll roads; and (5) federal participation on any federal-aid highway system would not exceed 50 percent of the project costs. GAO also found that: (1) under existing law, once the indebtedness for a federal-aid toll highway has been paid, the road must be made toll-free and turned over to state control; (2) if a state wishes to continue operating a toll road after outstanding obligations are paid, the excess toll revenues must be used for other public highway construction projects, but states are not required to repay federal funds; (3) the proposed legislation would permit states to place tolls on any existing or new federal-aid highway, without limitation; and (4) changing the federal law that prohibits tolls on federally supported routes could make toll financing a more viable alternative for building new highways.

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