How is your Highway 99 toll money spent? A big chunk goes to collecting the tolls

For each dollar motorists pay to drive through the Highway 99 tunnel, a full 30 cents will be spent just to collect the toll.

The state’s overhead costs start with toll gantries, cameras and laser scanners to read the car-mounted Good to Go passes. Another slice of toll income pays the billing contractors to capture vehicle data, recognize license-plate numbers as needed, bill the customers and track the money.

That leaves about $22 million a year, as of 2022, for transportation purposes, chiefly to repay $200 million in construction debt for the tunnel and ramps, plus their daily maintenance and a long-term equipment replacement fund.

Traffic Lab is a Seattle Times project that digs into the region’s thorny transportation issues, spotlights promising approaches to easing gridlock, and helps readers find the best ways to get around. It is funded with the help of community sponsors Madrona Venture Group and PEMCO Mutual Insurance Company. Seattle Times editors and reporters operate independently of our funders and maintain editorial control over Traffic Lab content.

Blame the state Legislature, which stumbled into a 2009 compromise to charge tunnel tolls before understanding either the revenue or the costs very well.

Or praise the Legislature, because members later agreed to a cheap toll policy to encourage more people to use the tunnel rather than congested surface streets.

Tolls, which started being collected Saturday, are expected to cover 6% of the $3.3 billion project costs, mainly funded through state gasoline taxes, federal highway grants, and a Port of Seattle contribution.

Toll-collection costs take 30% off the top mainly because rates set at $1 to $2.25 a trip are lower than other highways, said Carl See, fiscal analyst for the Washington State Transportation Commission, which sets toll charges.

Senate Transportation Committee Chairman Steve Hobbs, D-Lake Stevens, said he hopes the state can reduce the share of toll revenue going to overhead.

“I don’t know what to tell you. That’s what we’ve got. Over time, I hope we can lower that. It’s horrible — 30% is a very high cost,” Hobbs said.

Longtime Transportation Committee member Sen. Curtis King, R-Yakima, said he doesn’t buy the notion that tolls need to be around $2, and can repay only $200 million in debt. He thinks the revenue from tolls could be doubled and drivers would still pay. “It actually ought to be $400 million,” he said.

“The 30% (overhead) is way too high,” King said. “We need to find ways to lower it.”

Back when the tunnel was approved, Washington State Department of Transportation (WSDOT) assured lawmakers tolls could support $400 million in debt — the extra cost for a tunnel instead of a new viaduct. Tolls will reduce slightly the gas-tax burden on drivers across the state for the downtown Seattle highway. King voted for that compromise and still believes the tunnel was the better choice.

But in 2012, lawmakers reluctantly lowered the revenue goal to $200 million, when the agency admitted its higher goal would create congestion by diverting drivers onto downtown surface streets.

“The only thing I regret was DOT hasn’t done its homework,” King said.

He believes people would gladly pay $3 or $4 a trip to pass below downtown in two minutes, rather than lose 25 minutes on surface streets, or using I-5 a half-mile east.

Washington state’s average toll-collection cost is 18% for Highway 520, the Tacoma Narrows Bridge, the I-405 express toll lanes, and Highway 167 high-occupancy or toll (HOT) lanes combined. The I-405 tolls help the bottom line by generating triple the expected income, with tolls reaching the $10 maximum on many commute days.

From a financial standpoint, the gasoline tax is more efficient. It requires less than 1% overhead to collect more than $1 billion per year, which King describes as a half-cent per gallon, out of a total 67.8 cents per gallon for state and federal gas taxes.

Washington state is studying a vehicle-miles traveled fee to replace or supplement the gas tax that might require 10% to 12% collection costs, King said.

High overhead raises the question of whether tunnel tolls should have been scrapped. “Two hundred million is better than nothing,” King answered.

“Tolling is always going to be more expensive than collecting gas tax,” said Will Knedlik, president of the Washington State Good Roads & Transportation Association. “But the reality is tolling does something else: It brings economics to the system, in the form of a visible price signal at peak times. We need to discourage unnecessary trips at rush hour, and we need to be honest enough to say it.”

Tolls will also generate about $5 million yearly for maintenance, helping the tunnel pay its own way, unlike other new highways for which maintenance costs are ignored upfront.

Bob Poole, transportation director at the free-market Reason Foundation, said that even in the 20th century when toll collectors handled cash in tollbooths, the overhead was only 20 to 30%, so 30% “is amazingly high.” Nowadays with electronic collection widespread, the industry average is 8 to 13%, he said.

Can the state improve its return on toll collections?

As toll-lane volumes grow in the Puget Sound area, collection costs averaging 65 cents per user should decline, said Patty Rubstello, WSDOT urban mobility director.

Contractor payouts are basically fixed, not on a commission per trip. The state’s new toll-collection vendor, ETAN of Plano, Texas, will receive $16 million to launch its system, then $29 million to manage the five toll corridors for five years.

The simplest way for WSDOT to reduce toll overhead per trip is to encourage drivers to use the tunnel. That’s one reason the state is running television ads in the tunnel’s $4.4 million marketing campaign.

On the other hand, as impacts of global warming become more clear, environmental advocates call for driving less, converting to cleaner fuels, or both.

Nationally, about one-third of drivers divert when tolls are imposed, but that’s unlikely in Seattle with rates of $2.25 or less, Poole thinks.

“After the get-used-to-it period, I would probably say 15 to 20%,” said Poole, who worked on an I-405 lane-pricing panel.

As the region grows, WSDOT might even need to boost toll rates if tunnel traffic gets too busy, he said. Current schedules will boost tolls 3% in July 2022, then 3% every third year.

Poole compared Seattle traffic to I-405 on the Eastside: The Highway 99 tunnel will resemble express toll lanes where drivers buy an easier trip, while I-5 provides clogged lanes for free.