High Occupancy Toll (HOT) Lanes and Transit
On November 10, 2012, Los Angeles opened the first of two planned HOT lanes on I-110 between downtown Los Angeles and its' southern suburbs (the second HOT lane, on I-10 from downtown Los Angeles to the east, is scheduled to open in the winter of 2013). These lanes were paid for with the assistance of $210 million in federal grant money that became available when New York City's attempt to introduce a Manhattan congestion charge failed, and allow motorists driving alone to pay a toll to access the lanes which are currently restricted to transit and carpoolers. Money generated from the tolls will go towards upkeep of the freeways and improved transit service along the freeway. While viewed favorably by most economists, there are two major arguments against them, neither of which are valid.
Debunking Two Arguments Against HOT Lanes
The first argument, espoused by people like California Republican representative Gary Miller, is that since taxpayers already have paid to build the freeway they should not have to pay again to drive on it. Gary Miller's argument is clearly nonsensical. It is akin to arguing that once you buy a car you should never have to pay for an oil change because you already paid for the car, or that once you buy a house you should never have to pay for a plumber or a house painter since you already paid money for the house. The cost of paying for the lanes only paid for the initial construction; it did not pay for maintenance. While theoretically gas taxes should pay for the maintenance, the fact that the federal gas tax has not been raised since 1993, in conjunction with the increased fuel economy of cars, has meant that for the past few years funding from the general budget has had to be redirected to the transportation trust fund to ensure its solvency. Someone has to pay for the upkeep of the roads, and it seems better that the people using the roads should pay rather than the general automobile driver.
The second argument, brought up by people like Democrat representative Maxine Walters, is the so-called "Lexus Lane" argument: since only rich people will be able to afford to drive on it, HOT lanes are unfair to the poor. Maxine Walter's argument is simply not born out by the facts. Studies like this one have shown that everyone benefits from HOT lanes, not just the wealthy, because their existence offers them a choice to pay extra for a speedier trip when the purpose of the trip is extremely important, like a job interview. I do not usually agree with Robert Poole and the Cato Institute, both of whom are anti-transit, but in this case they make a good point for HOT lanes. In addition, the fact that some of the toll proceeds will go towards the operation of improved bus service along the respective corridors means that low income people who cannot afford cars will still benefit from the lanes. More importantly, the fact that not everyone can benefit equally from something does not mean that we should not do anything at all. It is too bad that the "Lexus Laners" do not spend their time arguing against inequality in housing or medical care, both of which are more essential to life than being able to drive on an expressway at a higher speed.
The True Test of HOT Lanes: Allowing Tolls to be Optimally Set
The true obstacle to HOT lane success will be if political interference in operation of the lane means that the tolls can not be optimally set. For example, if the maximum toll, or ceiling, is too low that means people that would be willing to pay more to use the lane will be stuck in traffic; and if the minimum toll, or floor, is set too low not enough vehicles will use the lane which will result in an inefficient volume of traffic. To my knowledge every HOT lane has a toll floor and toll ceiling that vary based on time of the day but true economic efficiency demands no such floor and ceiling. Why should a HOT lane not be free at 3 A.M. or cost $50 to use at 5 P.M.? Let us allow the consumers to decide how much their commute time is worth to them and not politicians.
HOT Lanes and Transit
What do HOT lanes have to do with transit? In the case of Los Angeles, some of the $18-20 million that Metro expects the lanes to raise annually will go to support increased bus service along the corridor. For example, in the I-110 corridor the funds will go to pay for increased Torrance Transit service and increased frequency on the Metro Silver Line. It is unclear what kind of expanded bus service the I-10 corridor, which already has extensive service, will have but perhaps the money can go to subsidize the existing service, thereby allowing increased bus service in other areas.
What is clear is that using proceeds from HOT lanes to support transit is a promising way for cities to increase funding for public transportation . In addition to Los Angeles, San Diego used part of the proceeds from converting a section of carpool lanes on I-15 to HOT lanes to inaugurate new express bus service and eventually bus rapid transit. As HOT lane revenues become more predictable I expect that the use of revenues to fund transit will increase. While some toll revenues come in higher than expected, some toll revenues are lower, as the owners of a series of private toll roads in Orange County, CA have found out recently. In a novel example of a highway "death spiral", the Toll Roads Authority, in response to a declining number of people driving on its roads, has raised tolls, which resulted in even more people forgoing its pavement, etc. They have made the mistake of not allowing the tolls to be optimally set. The market rate for tolls, like the market rate for parking, may be too low to allow for profit by a private operators. Because of this fact, there will always be a place for government in parking lots and toll roads.