Thursday, June 30, 2011

Do the toll roads make a profit?

In comparison to my earlier post about the operational profits of high speed rail, I thought it might be useful to take a gander at various toll roads in America and see whether they made a net profit; that is, revenues in excess of operational, depreciation, tax, and interest expenses; since the major complaint I've run into is persons complaining that high speed rail ought to repay its capital investment costs as well. I'm specifically breaking out interest in order to help illustrate the capital costs, but annual net deficits or profits are based on the totality of revenues and expenses as reported by the toll road.

Operating income: $81,668,000
Interest expense: $112,817,000
Annual net deficit: $19,690,000

Operating income: $94,669,000
Interest expense: $132,418,000
Annual net deficit: $10,702,000

Operating income: $31,366,289
Interest expense: $95,419,612
Annual net deficit: $60,068,817

In addition to toll revenue (from some of the highest in the country, with a full length trip from I-25 S to I-25 N costing 31.8¢ per mile), E-470 also received more than 8.6 million dollars in vehicle registration fees.

Operating income: $229,583,106
Interest expense: $116,887,849
Annual net income: $132,199,306

Operating income: $258,200,000
Interest expense: $377,500,000
Annual net deficit: $111,200,000

Note that the numbers here may be deceptive. According to Tollroad News, "one reason NTTA was able to build the TX121 Sam Rayburn Tollway so cheaply was that they took over a half-built pike from TxDOT and excluded TxDOT's costs from their figure for Project Costs." There may, therefore, be additional depreciation and interest costs not properly accounted for.

Operating income: $5,688,946
Interest and amortization: $66,745,615
Annual net deficit: $127,139,586

In this case, I ignored 63 million dollars in outside capital contributions and transfer payments in recording the net deficit. This does not materially affect the matter as it only offset half the losses. It is also interesting to note that in 2009, after depreciation, the CTTS ran a negative operational income, a result not seen in any of the earlier examined figures regarding high speed rail.

Pennsylvania Turnpike, 2010, page 24
Operating income: $71,359,000
Interest expense: $263,749,000
Annual net deficit $162,295,000

In 2009, the PA Turnpike had a negative operational income. The annual net deficit figure I've used is after eliminating transfers to PennDOT and likewise ignoring capital contributions. It is quite possible, however, that the PA Turnpike would run a net profit were it not for the revenue bonds funding transfers to PennDOT under Act 44.

EBITDA: $138,800,00
Operating income: $59,100,000
Interest expense: $268,000,000
Net annual deficit: $260,800,000

Total revenues: $209,348,000 (includes 2.1 million in gas tax allocations)
Total expenses: $199,701,000
Interest expense: $30,730,000
Net annual profit: $9,647,000

Much of the revenue for the Ohio Turnpike comes from commercial vehicles which represent 20% of the traffic and 53% of its revenue collection. As a result, increased intermodal competition from railroads, such as the new CSX intermodal yard, may represent a major threat to the sustained profitability of the Ohio Turnpike.


  1. Perhaps the argument that can be added is that a toll road which does not make a profit is underpriced relative to demand (unless this lack of profitability is due to financial hijinks à la the PA TPK).

    I wonder what a comparison with European toll roads would yield? Some in Europe are even private.

  2. Steve Stofka wrote: "A toll road which does not make a profit is underpriced relative to demand".

    This may be true, but it is unlikely if the toll road is privately operated. In that case, it is unprofitable because the demand is not high enough to support the full cost of construction and operations.

    The real problem for some of these toll roads (at least for the ones in California, which I know personally), is that there are "free" alternatives. You can take 91 or I-5 in Orange County without paying a toll, for most trips, instead of paying for these toll roads.

    If all highways were taxed, some of these toll roads would become more profitable, because they could charge much higher tolls and still keep their "customers". But perhaps people would start taking the bus or carpooling instead.

  3. Tolls are currently being proposed to fund the Ohio River Bridges Project in Louisville, Kentucky.

    The "Bridges Authority" as they like to call themselves, are quite confident that they'll be able to maintain a high level of traffic on the new bridges because they're also tolling our existing bridge (I-65 Kennedy Bridge). That way they ensure that there are only two "free" alternatives but there's no question those alternatives with be embroiled in constant gridlock. So yes, our tolled Bridges Project might be able to pay for itself, maybe, but only as a tremendous burden on our ordinary working citizens that have no choice but to pay the tolls. And the effect on our regional economy, oh, no study has been done on that, nor is one planned, it's moving at the speed of business, Mitch Daniel's style on this one. Ugh. Head>Desk.

  4. Anytime someone argues against tolls because it would slightly diminish mobility it's a Head Meet Desk moment for me.

    We, as a nation, are overly mobile--if you own a car. Yes, having a high degree of mobility is a good thing. But what about when the mobility is attained at the cost of the hidden subsidies incurred by the maintenance of our Interstates? Ours is the only limited-access highway anywhere in the world that has no base toll on it whatsoever. What about if you don't have a car? don't want to drive? Are we highly mobile by train? bike? on foot?

    ...Freedom of mobility means mobility choice, too. Being super-mobile only in one mode is a Faustian bargain with insidious consequences.