Why States Toll: An Empirical Model of Finance Choice

This paper examines the question of why some states impose tolls while others rely more heavily on fuel and other taxes. A model to predict the share of street and highway revenue from tolls is estimated as a function of the share of non-resident workers, the policies of neighbouring states, historical factors, and population. The more non-resident workers, the greater the likelihood of tolling, after controlling for the miles of toll road planned or constructed before the 1956 Interstate Act. Similarly if a state exports a number of residents to work out-of-state and those neighbouring states toll, it will be likely to retaliate by imposing its own tolls. Decentralisation of finance and control of the road network from the federal to the state, metropolitan, and city and county levels of government will increase the incentives for the highway-managing jurisdiction to impose tolls.