Maryland tolls on I-95 will lose money

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New Maryland toll lanes will lose money
by Ben Ross
December 8, 2014
Greater, Greater

New toll lanes that opened Saturday on I-95 promise to be a financial debacle for Maryland. In all probability, the tolls won't bring in enough money to pay the extra cost of building toll lanes rather than widening the highway without tolls.

I-95 express toll lanes cross the Baltimore Beltway. MdTA rendering.

Over the next six years, the state expects tolls to bring in about $5 million a year after subtracting the costs of toll collection. The official forecast is that traffic on I-95 will grow 1% per year and that much of the added traffic will wind up on the toll lanes, resulting in net toll revenues will reach nearly $10 million in 2025.

But since 2006, traffic volumes on I-95, like elsewhere in Maryland and around the country, have been flat. The revenue growth predicted for the 2020s is hardly something to bank on.

Dividing a highway into parallel toll and free lanes is expensive. Ramps, dividers, medians, and toll collection equipment all run the bill up. In 2003, when Governor Robert Ehrlich decided on the widening project, construction cost estimates came in at $370 million for free lanes and $645 million for toll lanes, a difference of $275 million. Planners eliminated some ramps to save money, but the project's total price tag still soared to $1.08 billion. No one recalculated the extra cost of building pay lanes, but it surely wound up well north of $200 million.

The Maryland Transportation Authority, which operates the state's toll roads, pays interest rates of 4% and up on long-term bonds. That means $5 million a year in revenue will pay back less than $125 million of capital costs.
Even if the hoped-for traffic growth materializes and revenue grows to $10 million a year after 2025, it won't cover the extra costs of tolling.

This dismal financial picture comes as no surprise. It came up all the way back in 2006, and Greater Greater Washington examined it in more detail last year.

Why did Maryland ever undertake such a project? Since the tolls won't cover the extra construction costs that they require, tolls are clearly not a way to raise money. What toll lanes do accomplish is to push most drivers off the pay lanes and onto the crowded free lanes. That might be acceptable if the toll lanes paid for themselves, but in this case it's the majority that's getting stuck with the bill, subsidizing an affluent minority.

The difference between the project's tiny revenues and vast cost will be made up from tolls on facilities like the Harbor Tunnel and Bay Bridge, where everyone has to pay. These are Lexus lanes where Corolla drivers make the car payments.

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