Moody’s predicts rise in US toll roads

With a sizeable infrastructure funding gap and little will in Washington to bring in additional revenue, toll roads and PPPs will play a growing role, the agency said in a report.

The US is likely to see a growing number of toll roads in the coming years, a new report from ratings agency Moody’s said, driven by growing infrastructure needs and a dearth of available funding.

Moody’s pointed to a March report card issued by the American Society of Civil Engineers, which cited a backlog of $836 billion in capital needs on bridges and roads. And despite $1 trillion infrastructure plans pitched by both the Trump administration and Senate Democrats, help from Washington does not appear imminent.

“We expect no significant increase in federal funding given the lack of political will in recent years and the depleted state of the Federal Highway Trust Fund,” the report stated. “With states taking on an increasing share of infrastructure funding compared with the federal government, we expect toll roads to be increasingly used as an alternate funding source to help close the infrastructure funding gap and alleviate traffic congestion.”

Moody’s also sees a growing role for PPPs, noting that 37 states have already approved some kind of PPP legislation. But even in states with established PPP laws, private investment plays a role in only a minority of projects. “As public policy towards the use of PPPs evolves, we anticipate that more states will pursue legislation to authorise or clarify their use,” the report concluded.

Over the past 12 years, toll usage has increased mainly in regions with high population and income growth, Moody’s said. Southern and western states have comprised over 80 percent of new toll roads during this period.

Moody’s has rated 52 toll roads totalling around $120 billion of debt, the agency said.