OLR Bill Analysis
AN ACT CONCERNING THE PREPARATION OF A TOLLING PROPOSAL AND SUPPORT FOR TRANSPORTATION INFRASTRUCTURE.
This bill requires the Department of Transportation (DOT) to:
1. conduct studies and satisfy other conditions required under the National Environmental Policy Act (NEPA) in order to develop electronic tolling systems on state highways;
2. procure a program manager and any other necessary consultants to help develop toll systems; and
3. develop a tolling proposal, to the bill's specifications, and submit it to the legislature for approval.
The bill establishes a legislative hearing and approval process for DOT's proposal. Under the bill, the proposal is (1) approved upon a majority vote of both houses or (2) deemed approved if the legislature does not vote within the required timeframe.
After a proposal is approved, the bill authorizes DOT to build, maintain, and operate electronic tolls, or contract with a private entity (toll operator) to operate them. The bill includes toll implementation and administration language (§§ 3-9), which the bill specifies is not effective until a toll proposal is approved or deemed approved. The language covers contracting and procurement; toll collection and revenue; toll rates, discounts, and exemptions; enforcement and penalties; data privacy; and system interoperability. Under the bill, toll revenue must be deposited into the Special Transportation Fund (STF) and spent only as federal law allows (see BACKGROUND).
The bill also makes two transportation-related revenue changes. It requires that the Department of Revenue Services (DRS) commissioner begin diverting a portion of motor vehicles sales and use tax revenue to the STF in FY 19, rather than in FY 21. It also reduces the motor fuels tax by five cents over a five-year period, beginning after DOT starts collecting tolls and other conditions are met.
EFFECTIVE DATE: Upon passage, except that the sales and use tax provisions are effective July 1, 2018 and applicable to sales occurring on or after that date.
§ 2 — TOLLING PROPOSAL
The proposal DOT prepares must:
1. implement tolls on I-95, I-91, I-84, and the Merritt and Wilbur Cross parkways;
2. identify the specific locations where the proposed tolls may be charged (i.e., toll gantries);
3. include the (a) toll amounts that may be charged, including the use of value pricing and discounts, if any, and (b) time periods for peak and off-peak travel; and
4. estimate the toll system's capital and operating costs.
Legislative Approval Process
Under the bill, the DOT commissioner must file the toll proposal with the House and Senate clerks. The clerks must refer it to the Transportation Committee (1) within five days after receiving it or (2) if they receive it when the legislature is not in session, within five days after the first day of the next regular session.
The bill requires the Transportation Committee to hold a public hearing on the proposal within ten days after its referral. Within five days after the hearing, the committee must (1) hold a roll-call vote to approve or reject the proposal and (2) forward the proposal and the vote record to the General Assembly.
Within 30 days after the proposal is forwarded, the General Assembly may approve the proposal, in whole, or reject it. The proposal is:
1. approved, if a majority in both houses votes to approve;
2. rejected, if a majority in either house votes to reject; or
3. deemed approved, if both houses do not vote within the 30-day timeframe.
Under the bill, the 30-day timeframe does not start or end unless the legislature is in regular session. If the session adjourns before the 30th day and the legislature has not acted on the proposal, the proposal is deemed filed on the first day of the next regular session.
The bill allows the DOT commissioner to revise the proposal if it is rejected by the legislature. After revising it, he must submit it to the clerks, and it follows the same approval process as for the initial proposal.
Under the bill, once a toll proposal is approved or deemed approved, the DOT commissioner must also submit the proposal to the Federal Highway Administration (FHWA). The bill prohibits him from submitting a tolling proposal to the FHWA unless it is approved or deemed approved.
Under federal law, DOT may not implement tolls until it receives federal approval and executes a tolling agreement with the FHWA (see BACKGROUND).
§ § 3-9 — TOLL IMPLEMENTATION AND ADMINISTRATION
Upon the approval of DOT's tolling proposal, the bill allows DOT to implement electronic tolling in the state. Under the bill, an “electronic tolling system” records, monitors, collects, and enables payment of tolls. It includes transponders or other electronic transaction or payment technology devices or video toll transaction systems. If transponders or similar devices are used, the bill requires them to be placed in or on motor vehicles in the way DOT or a toll operator prescribes.
Tolling Agreements and Authorizations
Under the bill, DOT may:
1. enter into tolling agreements with the FHWA and other related agreements with other governmental entities to carry out its duties under the bill;
2. retain and spend money for technical, traffic, revenue, financial, legal, and other types of consultants and experts to help develop and implement tolls; and
3. procure, retain, and spend funds for toll operators, vendors, suppliers, designers, engineers, software designers, installers, contractors, and other personnel, and for other equipment, material, staff, and service to help develop and implement the tolling system.
The bill authorizes DOT and the Department of Motor Vehicles (DMV) to enter into reciprocal agreements with other states and jurisdictions, and with toll operators in other states, to share information on out-of-state vehicle owners who have used a tolled highway, including the name and address of the vehicle owner and the vehicle's make and license plate number. DOT, DMV, and the toll operator may enter into agreements with other states and toll operators for additional enforcement mechanisms to efficiently collect tolls from out-of-state residents.
The bill also allows DOT and the Department of Emergency Services and Public Protection to enter into an agreement to have state police enforce laws on tolled highways that they do not enforce elsewhere (e.g., laws on toll evasion). It gives state and local police the same powers on tolled roads as they have in their respective jurisdictions.
Toll Collection and Revenue
Under the bill, DOT may charge, collect, retain, and set the amount of tolls on highways or portions of highways, and retain and employ the assistance it needs to collect the tolls. Toll revenue (1) must be deposited into the STF, (2) cannot be commingled with other funds and revenues, and (3) must be spent only as federal law allows (see BACKGROUND).
The department must set the toll amounts to provide sufficient funding to cover specified costs, but it may consider the availability of funds from other sources in doing so. Under the bill, the revenue generated by tolls, plus such other available funding, must cover, at a minimum, the following costs:
1. owning, maintaining, repairing, rebuilding, improving, rehabilitating, using, administering, controlling, and operating tolled highways;
2. the principal, interest, and any redemption premium on notes or bonds relating to the tolled highways, as they become due and payable; and
3. creating and maintaining reserves established under laws on state highways and bridges to operate and maintain the tolled highways.
Tolls DOT establishes are not subject to supervision or regulation by any other commission, board, bureau, authority, state agency or political subdivision, except as otherwise provided by law.
Under the bill, tolls are not subject to, and are exempt from, the sales and use, excise, gross receipts, or similar taxes.
Toll Rates, Application, and Exemptions. The bill requires DOT to adopt implementing regulations, which must cover the following:
1. setting variable or dynamic toll rates that consider the day of the week and level of traffic congestion or anticipated congestion;
2. setting different fees depending on the type of vehicle, including its size, weight, occupancy, and number of axles;
3. setting reduced or discounted rates for users registered in Connecticut and equipped with transponders or similar technology whose owners have valid accounts with DOT or the toll operator;
4. exempting (a) law enforcement, (b) emergency personnel responding to emergencies, (c) state-owned or –leased vehicles, (d) public transit vehicles, and (e) high occupancy vehicles;
5. imposing surcharges, premiums, or additional fees on users without a valid transponder or similar technology; and
6. imposing administrative charges and penalties for late payment of, and evading, tolls.
Due Process. DOT's regulations must include procedures for due process that include notice, the right to challenge a toll and associated charges, the opportunity for a hearing and right to appeal, and procedures for enforcing administrative decisions.
DMV. The bill also requires the DMV commissioner, in consultation with the DOT commissioner, to adopt regulations to carry out its responsibilities under the bill.
Notice and Privacy
The bill requires DOT to notify drivers in advance of (1) the toll rates and (2) how to pay them. It must hold at least one public informational meeting near the proposed toll location before building a toll system, during which it must receive comments on the proposed toll, rate-setting methodology and user classifications.
Except as required by law or an administrative or court proceeding, all information relating to a specific transaction of a toll customer or to a “toll customer account” that specifically identifies the toll customer must be destroyed. In the case of a specific transaction, this information must be destroyed within one year after the later of the tolling transaction or toll collection, whether through normal processes or enforcement. In the case of a customer account, such information must be destroyed within one year after the collection of all tolls and fees the customer incurred, whether through normal processes, enforcement, or the account's closing. “Toll customer account” apparently refers to a billing account the customer establishes.
The bill prohibits DOT or a toll operator from selling or using any toll customer information or other data for commercial purposes unrelated to the charging, collection, and enforcement of tolls, administrative fees, and penalties. It exempts toll customer data and information from disclosure under the Freedom of Information Act and subjects toll operators to laws that apply to state contractors who receive confidential information. However, DOT may release customer information or other data that does not directly or indirectly identify a customer and is used for department-authorized research purposes.
Enforcement and Penalties
Under the bill, DOT, after notice and a hearing, may impose a civil penalty of up to $100 for each violation of the regulations related to not paying a toll, toll evasion, or any related fees. It may impose the penalty on (1) a vehicle's driver or (2) its owner or lessee if the vehicle was operated by someone else with the owner's or lessee's permission. The penalty also may be imposed on a vehicle's lessor. A copy of a motor vehicle rental agreement, lease, or other contract or affidavit identifying the lessee at the time of the tolling transaction is prima facie evidence that the person named in the agreement was operating the vehicle at all relevant times related to the toll.
The bill requires vehicle lessors to cooperate with DOT or the toll operator in providing any information about the lessee that DOT or the toll operator requests from the lessor's record (presumably the lease agreement or contract). DMV must provide DOT or the toll operator any information it needs to collect tolls and enforce penalties for nonpayment, toll evasion, or other violations, including information on the vehicle's owner and his or her address, and the vehicle's make and license plate number.
Toll System Interoperability
The bill requires that the tolling system be compatible with other electronic tolling systems in the state and comply with all state and federal interoperability requirements and standards, including system technology and fund transfers. (Interoperability refers to the ability of computer systems to exchange and use information.) The DOT and DMV commissioners must consult with the administrative services commissioner to ensure coordination and compatibility of information system technology and data. The bill specifies that, for purposes of interoperability, state laws on state information and telecommunications systems and geospatial information systems do not apply to electronic tolling systems. These include laws on, among other things, interagency agreements, legislative access to state agency records, and hiring of state employees by, and disqualification of, contractors and subcontractors.
§ 10 — GAS TAX REDUCTION
The bill requires the state treasurer to notify the DRS commissioner, in writing, when she determines that revenue credited to the STF (i.e., “pledged revenues”) exceed two and one-half times the debt service owed on transportation Special Tax Obligation (STO) bonds. It also requires the DOT commissioner to notify the DRS commissioner, in writing, of the date DOT begins collecting tolls, within 15 days after such collection begins.
The bill gradually reduces the motor fuels tax by five cents over five years (one cent in each fiscal year). The initial one-cent reduction starts on July 1 of the first full fiscal year following DRS' receipt of the later of the two above required notices.
Under the bill, DRS must calculate, for each fiscal year, the applicable tax rate per gallon of fuel and provide notice of the tax rate to each distributor, the policy and management secretary, and the Finance, Revenue and Bonding Committee chairpersons.
§§ 11 & 12 — SALES AND USE TAX REVENUE DIVERSION FROM CERTAIN MOTOR VEHICLE SALES
Current law phases in over five years a diversion of the motor vehicles sales and use tax to the STF according to a specified schedule that begins in FY 21. The bill phases in the diversion earlier, beginning in FY 19, and adjusts the schedule accordingly. Table 1 provides the amount of the diversion under current law and under the bill.
As under existing law, the revenue diversion applies to revenue from motor vehicle sales subject to the 6.35% rate or 7.75% luxury tax rate (generally for those costing more than $50,000).
Table 1: Schedule of Motor Vehicle Sales and Use Tax Diversion to STF
% of Revenue Diverted to STF
25 and thereafter
National Environmental Policy Act (NEPA)
NEPA requires federal agencies to consider the environmental effects of their proposals and actions, including the projects they fund (42 U.S.C § 4321 et seq.). Federal regulations specify the basic requirements for making decisions under NEPA, which include (1) assessing social, economic, and environmental impacts; (2) analyzing a project alternatives; (3) considering appropriate impact mitigation; and (4) providing opportunities for public participation (40 C.F.R. §§ 1500-1508).
Tolling and Federal Law
Although states are free to toll roads, bridges, and tunnels built without federal funds, federal law limits the imposition of tolls on existing federal-aid highways, especially interstate highways. But recent federal laws have expanded states' abilities to allow tolling in certain instances, such as when building new interstate routes or when adding a new lane to an existing interstate highway (23 U.S.C. § 129).
Federal law also has several pilot programs, such as the Value Pricing Pilot Program, in which participating states use “congestion pricing” to try to manage traffic flow and reduce traffic congestion. (Congestion pricing is the practice of charging higher tolls when traffic is heaviest and lower or no tolls at other times.) Connecticut is participating in the Value Pricing Pilot Program.
Toll Revenue Restrictions
Under federal law, toll revenue must be used first on the facility being tolled, including (1) debt service for the tolled road; (2) a reasonable return on investment of any private person financing the road; (3) road maintenance, operating, and improvement costs; and (4) if applicable, payments that the entity that controls tolling revenue owes to another party under a public-private partnership agreement (23 U.S.C. § 129(a)(3)(A)).
If the public authority with jurisdiction over the toll road has met the annual financial obligations related to the toll road and certifies that the road is adequately maintained, any additional toll revenue may be used for other roads and other uses allowed under federal highway law (e.g., maintenance and improvement of other highways, congestion mitigation and air quality improvements, highway safety initiatives, and certain public transit improvements).
Special Transportation Fund
The STF is a dedicated fund used to finance the state's transportation infrastructure program and operate DOT and DMV (CGS § 13b-68). The law requires specified tax revenue (e.g., fuel taxes and a portion of sales and use tax revenue) and various transportation-related fees, fines, and charges to be credited to the STF. By law, STF revenue is pledged to STO bonds issued for transportation projects through DOT's capital program (CGS §§ 13b-74 to 13b-77), and its resources must be used first to pay off STO bond debt service.
Connecticut statutes contain a “lockbox” provision, which makes the STF a perpetual fund, requires its current revenue sources to continue to be placed in the fund as long as the state collects them, and restricts the use of its resources to transportation purposes (CGS § 13b-68(b)). In 2017, the legislature approved a constitutional amendment to provide these “lockbox” protections in the constitution. The amendment will be placed on the November 2018 general election ballot.
Several bills favorably reported by the Transportation Committee contain provisions related to tolling:
1. HB 5046, also favorably reported by the Finance, Revenue and Bonding Committee, allows DOT to implement tolling on state highways and contains similar tolling implementation language;
2. SB 389 creates the quasi-public Connecticut Transportation Authority and authorizes it to implement tolls on I-84, I-91, I-95 and the Merritt and Wilbur Cross Parkways; and
3. sHB 5393 creates a framework for a quasi-public Connecticut Transportation Finance Authority, which would be established if the General Assembly authorizes tolls.
Joint Favorable Substitute