Oklahoma helped pioneer public toll road systems

“Transportation funding decisions are becoming increasingly critical as system needs continue to overwhelm available resources,” the report reads. “How each state meets these challenges is necessarily shaped by its distinctive approach to governing and paying for its transportation system.”

Critics of the Oklahoma turnpike system complain the owners of Oklahoma Turnpike Authority bonds are profiting off the state's public infrastructure system. That's true to some extent. For their investment, bondholders will collect about 3 to 4 percent interest in 2012, or more than $47 million.

But this type of program is not unusual, said the state's bond adviser James Joseph, head of the oversight group that reviews and approves all agency financing requests.

Authority bondholders, like the bondholders of a municipal power authority or student loan authority, include individuals and institutions worldwide that, through the investment, provide upfront project funding with the intention of profiting.

The Turnpike Authority's bonding system is a highly rated one, he said, and its bondholders are typically large financial firms, some of which sell to individuals worldwide and some of which flip the bonds on the open market almost daily.

Finding a balance

The Fitch Group, one of three nationally recognized credit rating organizations, has awarded the authority's 2011 bond series an AA- rating, second-highest on its grading scale. The New York banking organization Depository Trust Company acts as securities depository for the series.

“Whether it's the best way to finance it is somewhat a matter of opinion,” Joseph said. “Some projects are just too big to pay as you go, and turnpikes are certainly one of them.”

Taylor said a successful toll program balances the benefits of user-based funding and the ability to influence road use and traffic patterns with the time and cost required to implement the system, including collection costs, traffic delays and diversions.

A toll road is usually most economical in high-traffic areas and in states with “lumpy” transportation budgets, he said.

“If the transportation budget is pretty much flat year-to-year, it's much cheaper to pay as you go because you avoid interest charges. But if it's lumpy, like the budget is very large in '03 and '08 but much smaller in other years, then there is a public finance argument for bonding and borrowing,” he said.