Michigan could raise billions from toll network, state study says

Michigan road groups want EV owners to pay up for avoiding gas tax

While owners of gas driven vehicles are paying the state gas tax at the pump, electric vehicle drivers are not paying it when they pump more electricity into their cars.

(FOX 2) - The state of Michigan is expanding possibilities for how to pay for its road repairs, considering a potential system of road tolls on its highway network to raise funds by the end of this decade.

Implementing a toll system "could generate significant transportation revenue" for the state that would be enough to repair Michigan's roads, a Michigan Department of Transportation-funded study looking at their feasibility said.

The report came up with potential toll roads on Michigan highways, including several spots along the border and around major metro regions in Michigan. It also determined Michigan could generate close to $3 billion in revenue if the entire highway system was tolled.

Technology has also made electronic tolling easier to put in place and more convenient to use.

But such a network would still be tough to build, requiring a litany of social, technical, financial, and regulatory factors be considered before it could be implemented.

The state of Michigan is already preparing for a steep drop in revenue as more drivers adopt electric vehicles and stop paying the state and federal gas tax. The shortfall has prompted the governor to consider a road usage charge for EV owners.

Gretchen Whitmer has said every option is on the table for paying for Michigan's roads.

But barriers remain for many ideas.

In an effort to better understand the roadblocks to building out a road toll system in Michigan, MDOT commissioned a report with engineering firm HNTB and several other consulting companies.

What highways would get tolls in Michigan?

The study determined 31 separate interstates and other major highways where tolls could be built. After that, it screened each location to see if it fit specific criteria like meeting a minimum length of road, minimum number of traffic, if the highway services enough economic activity, and if more than 50% of the highway route had been reconstructed since 2015.

From there, the study narrowed down its list of realistic toll sites to 14 routes. They include:

I-69
I-75
I-94
I-96
I-196
I-275
I-696
US-23
US-131
M-6
M-10
M-14
M-39
M-59

Many of the routes that were left out included business routes, I-375, I-475, US-10, and US-127.

As far as deployment goes, the soonest any toll system could be implemented would be within five years. By 2028, the study says just under 100 miles of highways could be tolled. The state would scale up the number of routes from there.

How much would Michigan tolls cost drivers?

The study reviewed three different pricing scenarios on a flat rate across the state: $0.04 per mile, $0.06 per mile, and $0.08 per mile. Tolls would be calculated by total miles.

For instance, a drive from Detroit to Muskegon would cost roughly $7.38 under the 4 cents/mile rate. It would be just over $11 under the 6 cent rate and $14.76 for the 8 cent rate.

The study notes Michigan doesn't get a lot of out-of-state traffic, but if a driver were to go from Indiana to Ontario it would cost as much last $16.28 on I-69. The drive to Sault Ste. Marie would be as much as $21.68. To travel from Ohio to Sault Ste. Marie would be $31.64 for the nearly 400-mile route.

According to the study, the rate of vehicle miles traveled (VMT) are expected to increase over the next 30 years. However, the rise of electric vehicles is leading to a decrease in fuel tax revenue and, by 2030, Michigan could lose $200 million in revenue vs. 2020. A decade later, that number would be $500 million.

The study's total gross revenue was reduced by 5% to account for potential lower rates or rebates. The discounts would be made available for frequent travelers, low-income drivers, drivers in certain geographic areas, high occupancy vehicles (HOV), and a combination of programs.

Michigan could raise almost $3B per year in toll revenue

If the state were to implement the toll road plan in its entirety, the study states it could generate between $1.5 to $2.8 billion in gross revenue each year.

The traffic and revenue analysis part of the study considered adding tolling on all limited access highways in the state and at different rates.

According to the study, three interstates – I-69, I-75, and I-94 – would account for a majority of the revenue. This shouldn't be surprising as these highways cross the entire state.

Based on the value of the dollar in 2020 for the highest toll rate per mile, I-94 alone would bring in $600 million.

Breaking down the revenue, the 4 cents per mile scenario was less feasible than the 6 cents per mile possibility.

If Michigan were to implement a toll system at 6 cents per mile on a 1,200-mile toll system,the state revenue would be near $2 billion. Of that revenue, 26% would go towards toll operation and maintenance, 9% would be for the roads operation and maintenance, 5% would be for the discount program.

That leaves 60% for the state by 2030.

What's the soonest Michigan could install tolls?

According to a sibling study that looked at the implementation of a tolling system, the soonest the project could be complete is the beginning of 2028.

But a lot would need to happen over the next five years for that date to become a reality.

Beyond just further studies, there would need to be state legislation, environmental reviews, design processes, testing, financing, and of course construction. But under the implementation study's timeline:

99 miles would be tolled by 2028
156 miles in 2029
324 miles in 2030
482 miles in 2031
545 miles in 2032

What are some barriers to tolls in Michigan?

Michigan is the fifth state to consider a tolling network on its existing highways in the last decade, with Connecticut, Indiana, Minnesota, and Wisconsin commissioning similar studies.

A project of this magnitude, according to the study, has the potential to fill any gap in funding that Michigan could experience in its near future when it comes to its roads. But there are numerous factors that must be considered when deploying such a network.

Drivers may seek alternative routes to avoid tolled roads if it costs too much to travel on. Michigan also doesn't have a large influx of out-of-state drivers that would pay into the toll system.

There could also be a big variance in toll rates between commercial and non-commercial vehicles, depending on the road since some routes experience much more traffic than others.

A toll network could also put a bigger burden on drivers that pay a federal and state gas tax, likely requiring some form of discount program to help low-income and in-state drivers.

Installing tolls wouldn't be cheap either. While federal programs are available to help with the costs, the study says a full installation would cost approximately $10 billion.

And then there would be a need for a tolling authority to oversee operations, as well as additional traffic enforcement and privacy concerns. Technology has made using toll systems easier, but come with skepticism from drivers over how their personal information could be used.