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America’s empty roads seeing fewer deaths but are a blow to state budgets

By RYAN BEENE | Bloomberg | Published: April 19, 2020

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Motorists on a typical weekday log roughly 200,000 trips on North Carolina’s Triangle Expressway in the Raleigh-Durham region, many of them commuters headed to the state’s Research Triangle Park.

But on the first Monday in April, just 69,000 tolls were collected.

Similar scenes are playing out across the U.S. as Americans drive roughly half as much as they did before the coronavirus prompted broad stay-at-home directives to combat the spread. Plazas along the Pennsylvania Turnpike now sit mostly empty, while Google Maps shows freeways around Los Angeles, New York and Atlanta usually choked with traffic now largely free of cars.

The impact goes beyond idle toll booths. Fewer drivers are getting into accidents, resulting in a drop in deaths as well as premium refunds by auto insurers. Gasoline demand and sales have collapsed, prompting regulators to approve the extended use of wintertime blends. Greenhouse gas emissions from cars, power plants and other sources in the U.S. are forecast to decline by a whopping 7.5% this year.

And state budget officers are fretting over a sharp decline in revenue from gasoline taxes and other sources tied to driving.

“If this continues, it really could be devastating for North Carolina,” said Eric Boyette, secretary of the North Carolina Department of Transportation. “The issue that we have is trying to predict the end — when does the end come?”

Nationally, personal road travel in the week ending April 10 was down 48% from the final week in February, before social-distancing measures took hold broadly, according to traffic data provider Inrix. New York City, at the heart of the outbreak in the U.S., saw a 63% decline.

Long-haul trucking, essential to maintain the flow of critical supplies and to service the boom in home shopping, has proven more resilient with just a 10% dip nationally, though the pace of declines is accelerating, according to Inrix.

Just as highway deaths tend to decline during economic downturns and rise during recoveries, evidence has emerged that the current drop off in road traffic is leading to fewer fatalities and injuries.

Researchers at the University of California Davis estimate that Gov. Gavin Newsom’s shelter-in-place order has led to a 50% reduction in the state’s daily rate of roughly 1,000 traffic collisions and approximately 400 crashes involving injuries or fatalities.

Insurance companies have responded to the decline in driving by refunding billions of dollars’ worth of monthly premiums to their auto-insurance customers. For example, State Farm Mutual Automobile Insurance Co. last week said it would refund some $2 billion to policy holders via a 25% credit on premiums between March 20 and May 31.

“We insure more cars than anyone and we see from our claims activity people are driving less,” State Farm Chief Executive Officer Michael Tipsord said in an April 9 statement.

U.S. filling stations last week sold roughly half the gasoline as previous-year levels. Sinking demand prompted the Environmental Protection Agency to delay a required shift to more cleanly burning, summertime gasoline.

The drop in fuel sales means states are collecting far less revenue from fuel taxes. Funds from motor vehicle sales taxes and license and registration fees also have been cut by the closing of motor vehicle department offices and falling U.S. auto sales as dealerships have been shut.

“We’re really concerned about what that means for state DOTs in the near term and really over the next 18 months,” said Jim Tymon, executive director of the American Association of State Highway and Transportation Officials. “State DOTs are being squeezed on all sides.”

State transportation officials and analysts say the declines are more severe and rapid than those that occurred during the 2008-2009 financial crisis. Tymon’s association estimates that state transportation departments anticipate revenue from fuel taxes will decline at least 30%, on average, during the next 18 months. The organization last week asked congressional lawmakers for nearly $50 billion in emergency funds to offset the anticipated revenue shortfall, which, Tymon said, threatens layoffs, service cutbacks and project delays.

North Carolina’s Boyette likewise has warned state lawmakers that traffic is already down as much as 50% on some roads and the department expects revenue to fall by at least $200 million in the current fiscal year.

“This loss of revenue will require significant reductions in expenditures,” Boyette wrote in an April 7 letter to state legislators.

Traffic declines are estimated to peak in the second quarter at roughly 60% below prior-year levels before improving to a 30% decline in the third quarter, Fitch Ratings Inc. analyst Scott Monroe wrote in a March 24 note. For the full year, 2020 traffic levels will likely be down 28% before nearly returning to 2019 levels next year, he added.

Toll roads could be subjected to “stresses of unprecedented severity” in the near term, according to Monroe, who covers debt issued by roughly 60 toll road operators. Toll roads, express lanes, bridges and other fare-based arteries are seeing traffic declines that are roughly five times worse than those seen during the great recession, he said, citing data provided by the toll-road operators and other sources.

“The tolling agencies by and large are in a really good position to weather this crisis, as long as it’s time-limited, almost regardless of how severe it becomes,” he said.

Some states already have begun to make tough choices to cope with the shortfalls.

Missouri officials recently postponed additional action on nearly $150 million worth of transportation projects across the state until after the July 1 start of its fiscal year, according to Patrick McKenna, director of the Missouri Department of Transportation.

Capital projects are just half of the picture, he said. Line painting, sign repair, traffic management centers and pothole repairs all are suffering. Sustained funding shortfalls will put those operations in jeopardy, too, said McKenna, who is also the president of AASHTO, the association of state highway officials.

“This is why we’re urgently asking Congress through AASHTO to consider a backstop of the loss of state revenues here,” he said.

Boyette said his department had halted all advertising of new construction projects to contractors and has suspended purchases of materials. Compounding North Carolina’s challenge is a more than tripling of annual emergency spending by the state to rebuild after devastating hurricanes in recent years, which led to spending cuts before the coronavirus hit, he said.

“We honestly are putting everything on the table and trying to look at what best fits our needs and still trying to do as much maintaining of our existing highway infrastructure as we can,” Boyette said. “We’re looking forward to better days, but right now, we have a lot of uncertainty in front of us.”