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Funny math: Seattle drivers will pay $1 billion in tolls to cover a $200 million debt

Construction continues on the SR-99 tunnel on Thursday, November 2, 2017, in Seattle.
KUOW Photo/Megan Farmer
Construction continues on the SR-99 tunnel on Thursday, November 2, 2017, in Seattle.

You know the phrase: "You have to spend money to make money." That's the case for tolling the state Route 99 tunnel in Seattle.

Washington state says it will spend about $500 million to run a tolling system on the tunnel in order to fulfill its obligations.

The Washington State Transportation Commission estimates the SR 99 toll system will generate almost $1 billion in tolls over the next 25 years. That tolling revenue will be used to cover multiple costs, such as the price to operate the toll program.

Here's a breakdown of the estimated costs:

  • $329 million (about 33 percent) pays off construction debt, principal, and interest
  • $496 million (about 49 percent) for tolling equipment and maintenance, credit card fees, customer service and other collection costs
  • $170 million (about 17 percent) for tunnel operations and maintenance

That's nearly $1 billion in driver tolls, all to pay off $329 million for debt and $170 million in tunnel maintenance.
After this story published 4/20/2018, the Washington State Department of Transportation got in touch to say the percentages above may not be accurate when compared to the true toll revenue. For example, if tolls generate more than $1 billion, the percentages for equipment and operations could be lower. WSDOT provided an updated estimate that the tolls could generate $1.1 billion over 25 years.

Since the numbers are estimates, the transportation commission notes that the operational costs could ultimately be lower. A $200 million debt payment (plus $129 million principal/interest), however, is required by a 2017 Washington state law.

That still will only cover part of the SR 99 tunnel construction cost, estimated at $3.2 billion total. The rest of the construction cost is being repaid from gas taxes and government funding.

If the toll system seems inefficient, it's no surprise to national transportation experts. Highway toll systems elsewhere in the country, including San Diego and north of Baltimore, have actually failed because their overhead was higher than the toll revenue. Collecting highway tolls costs an average 8 percent to 11 percent of the amount collected, according to the congressional report.

A 2016 U.S. Congress report notes: "A toll road must have sufficient traffic willing to pay a high enough toll to cover construction, maintenance, and toll collection costs if it is to be financially successful. Most roads on the federal-aid system are not likely to pass that test."

As a general rule, the more traffic there is on a tollway, the more efficient the system will be. That, among other reasons, is why WSDOT is aiming to have as many drivers as possible use the SR 99 tunnel when it opens. The tunnel construction debt could be paid off faster if tolls generate more than expected.

Washington state transportation officials will open the new tunnel this fall, and start tolling drivers by early 2019. Early estimates show the price could be $1.00-$2.50 per trip.