HOT lanes a great idea but not for subsidizing transit

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Appeared in the Toronto Sun

Kathleen Wynne, the new Premier of Ontario, recently stated her willingness to consider implementing new methods to raise revenue to help fund expansion of public transit. Furthermore, the 2013 Ontario Budget presented by Minister of Finance Charles Sousa Thursday, specifically indicates that “the Province is committing to convert select high-occupancy vehicle (HOV) lanes in the Greater Toronto Hamilton Area (GTHA) into high-occupancy toll (HOT) lanes as a potential option in this regard.” A plan on the conversion is to be brought forward by the end of the year.

The general idea behind HOT lanes is that existing HOV lanes are underutilized while regular lanes are over utilized. Allowing vehicles with a single occupant to pay a toll to use the less congested HOV lane increases the number of vehicles using the HOV lane. The conversion of existing HOV lanes to HOT lanes is a welcome transportation policy innovation for the Toronto region, and has worked well in the United States. But expensive transit dreams are not the best use of the resulting revenues given Ontario’s current fiscal situation.

HOT lanes offer benefits in their own right. As some drivers will choose to pay the toll to use the HOT lane to reduce their commute time, congestion in regular lanes will likely decrease as well (albeit temporarily). And then there’s the access to at least some full-speed roadways: the toll charged usually changes based on the current number of vehicles using the lane in an effort to keep traffic in the lane moving at the specified maximum speed limit.

HOT lanes will not provide the same congestion relief achievable through more extensive pricing schemes such as congestion charges for vehicles entering the downtown core, or electronic road pricing on all lanes, both approaches favored by transportation analysts. However, HOT lanes are more politically feasible as they only affect the behaviour of the drivers who are willing to pay the toll for a shorter commute. Drivers not willing to pay the toll can continue to use the regular lanes for no charge, and car pools, motorcycles, and buses can continue to use the HOT lane for no charge.

Many jurisdictions in the United States implemented HOT lanes starting in the mid-1990s. As of the end of last year, there were 12 HOT lanes operational across the U.S., with another 18 in development. Evidence from the HOT lanes in Orange County, California suggests that HOT lanes are not just “Lexus lanes” for the wealthy. Drivers of all income groups use the HOT lanes, just not every day. And while HOT lanes use increases with annual household income, more than 40 per cent of users had a household income less than $60,000. Clearly, many lower and moderate income drivers also benefit from HOT lanes or else they would not choose to use them.

But HOT lanes should not be viewed as a cash cow for Toronto’s transit dreams. First, they won’t generate much revenue. Maximum revenue from a HOT lane in the U.S. is around $40 million in a good year. In comparison, Stockholm’s congestion pricing system, which covers all vehicle trips on all lanes in and out of the downtown core, raises about $70 million annually net of operating expenses. The GTHA’s plans call for a $50 billion investment in public transit infrastructure expansion over the next 25 years. The annual revenue potential from HOT lanes is just a drop in this bucket.

There is no reason for HOT lane revenue to be earmarked for transit. Ontario currently is facing dire fiscal straits, so any decision to earmark HOT lane revenue to fund expensive transit projects needs to be evaluated in light of the next best use of that money, which could be a small part in a suite of measures to reduce the government’s budget deficit. Dedicating HOT lane revenue to existing highway maintenance and improvements, a use that benefits those who would actually pay the tolls, is an equivalent amount of money that the government does not need to borrow to finance the budget deficit.

HOT lanes are a politically feasible way to use our highway resources more efficiently and the government of Ontario is rightly committing to them. However, HOT lanes are not a panacea for traffic congestion or government revenue woes.

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