How Kansas Turnpike Authority spends money from tolls compared to KDOT

On Oct. 24, 1956, the Kansas Turnpike opened to the public and, for the first and only time in its history, allowed people to drive its roads without paying tolls.

The mood was celebratory at the ribbon cutting, with Hollywood star and country singer Gene Autry providing entertainment to the more than 5,000 cars that used the turnpike on the first day.

Kansas followed a trend of public-private partnerships to construct freeways at a time when federal funding for such projects was scarce.

The drivers on the first day assumed the roads would one day be free after the bonds that funded its construction were paid off. But over the years, new bonds were issued, and the Kansas Turnpike Authority has remained a separate entity from the state. It still tolls the 120,000 drivers that use its thoroughfare.

Months before Kansas opened the road to the public, then-President Dwight D. Eisenhower authorized $25 billion — which is more than $200 billion in today’s dollars — to construct an interconnected interstate highway system across the United States.

The Kansas Turnpike was grandfathered into this system. It now includes 236 miles of I-70 from Kansas City to Topeka, I-335 from Topeka to Emporia and the I-35 from Emporia to the Oklahoma border. During the first couple of years, drivers could expect to pay 1.7 cents per mile traveled on the roadway.

Federal funds decreased the number of roads being constructed under tolls, until the 2000s when a lack of federal funding and the proliferation of electronic tolling made the option more attractive.

On July 1, Kansas Turnpike joined these more modern toll roads when it implemented cashless tolling.

The move to cashless tolling

The cashless system using K-Tags and mailed bills is a massive departure from the cash system used since the turnpike’s founding. The Turnpike’s CEO Steve Hewitt estimates the implementation of cashless tolling will cost the KTA about $100 million when all the projects are wrapped up.

“We expected that from when we started the project five years ago, actually dove into the numbers. So it’s going to be close to ($100 million), maybe slightly under, but all in all, it’s going to be pretty close to that once we finish all the demolition, and reconfigure those locations,” Hewitt said.

The ongoing costs are less clear, with the KTA still having upfront costs that will roll over into future budgets as the KTA continues tweaking its websites, ensuring efficiency in its camera systems and fulfilling its contractual obligations to those who built the cashless tolling system.

But Hewitt said the costs will be worth it in the long run.

“We know we’re going to have a savings,” he said. “There’s an efficiency to cashless tolling. The efficiency happens year after year.”

Last year, the KTA spent about $4.8 million on toll collection, a figure that has decreased over the past couple of years. In 2015, toll collection cost the KTA nearly $10 million, but costs since then have steadily declined. Hewitt said about time about 70% of that spending will be reduced as the turnpike employs fewer people in toll collection.

Most of the toll booth employees did retire, but others are moving to different jobs in customer service, maintenance and upkeep of the K-Tag system. The transition began more than five years ago when the turnpike committed to cashless tolling.

“One of the reasons that we decided to invest in a cashless system is because not only was 69% of our toll collection workforce coming up on retirement age, but we had to make an investment in technology,” said Rachel Bell, director of business services and customer relations at KTA. “Because our cash collection equipment was at the end of its life, we were either going to have to replace the technology in the booth, or go with the cashless system.”

Tolls make up the lion share of the turnpike’s revenue, with about $140 million collected last year out of $154 million in total revenues. It also makes money renting out retail spaces along the turnpike and investments, according to the KTA’s annual report.

How does the KTA spend its money?

The KTA spent $95 million in 2023, with the biggest expense being $32 million of “preservation costs on modified infrastructure assets.”

That is the nonroutine maintenance that requires a contractor.

“Preservation is going to be like when we hire a contractor. We spend money on major bridge repair, re-decking, major overlays, drainage items, you know, those are the big asset items that maintain the preservation make sure system is up to the quality standards that needs to be,” Hewitt said.

The more routine maintenance is handled by KTA staff and costs the turnpike about $12 million per year, bringing total costs preserving the roadway to about $50 million.

Administration costs are the KTA’s second largest expense at $25 million a year.

Administration costs have ballooned over the past several years, costing just $11.6 million in 2016. Adjusted for inflation that would be about $15 million in today’s dollars according to the Bureau of Labor Statistics.

In 2018, the first fiscal year that the KTA started working on cashless tolling, the administration budget jumped from $13 million to $18 million and steadily grew to the $25 million it accounted for in 2023.

Hewitt said the increase can be attributed to the increased capacity of its call center, upfront costs implementing the cashless system, more requirements for the IT department and post-COVID inflation.

“There’s a multitude of factors why costs grow, which is to maintain it from a staffing standpoint, all the things it takes to cover the in maintain the Turnpike, those costs have kind of across the board gone up,” Hewitt said.

Executive pay is also factored into the administration budget, but salaries of the top earners at the KTA hasn’t risen drastically over the past decade with director-level employees earning salaries between $150,000 to $200,000 a year.

Hewitt, the chief executive and highest-paid KTA employee, first exceeded $200,000 in fiscal year 2022, and got a $30,000 pay bump the next year. He is still making less than the former CEO Michael Johnston did in 2013 when he made almost $500,000 after 18 years in the role.

KTA and KDOT expenses compared

The Kansas Department of Transportation has a broader mandate and more roads to construct and preserve, and its budget reflects that with about $2.3 billion allocated for the current fiscal year. It is responsible for the maintenance of 10,000 miles of the state’s highway system, but also has money going to such different forms of travel as rail, aviation and public transportation.

With no tolls to generate their revenue, the KDOT’s budget is funded through the State Highway Fund. That fund gets about 16% of all sales tax, 24 cents per gallon of gas pumped in the state, proceeds from vehicle registration, titling and permit fees, and reimbursements from federal and local partners.

Its highest expense is construction, which is estimated at $1.4 billion for financial year 2025. That includes all the right-of-way purchases, design, construction supervision and material testing involved with constructing and preserving roadways. The maintenance budget at $179.8 million is nearly an order of magnitude lower than what the department spends on construction.

“The Maintenance Program contains all regular highway and bridge maintenance functions performed by the state. Regular maintenance activities are designed to preserve, repair, and restore the highway system to its designed or accepted standards,” said Brendan Yorkey, finance and budget chief of the Kansas Department of Transportation.

KDOT and KTA calculate their costs to preserve the roadway differently, with the KTA factoring in all costs associated with their business into their figures. When dividing the total budget into the number of lane-miles, KTA spends about $95,000-per-lane-mile annually.

KDOT, however, just factors in maintenance in its cost, which came out to just $4,700-per-lane-mile in fiscal year 2023. When dividing the KTA’s $12 million maintenance budget to the approximately 1,000 lane-miles in KTA’s system, it comes to about $12,000.

When calculating KDOT’s per-lane costs in the same way KTA does, by dividing the total budget by lane-miles in the system, KDOT spends more than $91,000 per lane-mile.

“It’s really apples and oranges,” Hewitt said. “KDOT does a great job at what they do, but they have a tremendous amount more lane miles than we do. But we have a certain reputation and expectation a customer service standpoint because we’re trying to get customers to us.

“And so, we have a higher standard when it comes to what we want to make sure we’re investing in the roadway.”

Will the tolls on the Kansas turnpike ever end?

When the turnpike was constructed, most people had the impression that the tolls were a temporary means to construct the highway and that the 266-mile-turnpike would be transferred to the state. Before the ubiquity of an interstate highway system, people who saw less benefit from a highway were less eager to use tax dollars to fund road projects that primarily benefited urban economic centers.

“The turnpike will automatically belong to the state of Kansas after it is paid for by its users’ tolls. Meanwhile the state is out no taxes, no levies for any phase of construction or operation. The good name of an asset like that will be worth preserving,” The Topeka State Journal reported on Oct. 26, 1956.

The statutes governing the roadway back then still apply, and once all KTA bonds are paid off the turnpike would revert ownership to KDOT. However, the turnpike currently has $94 million in outstanding bonds and with interest the turnpike is expected to pay $130 million until the bond schedule ends in 2039.

But Hewitt expects there will be more bonds in the future that will keep the turnpike as its own separate entity from the state.

“It’s going to be a challenge to never have debt,” he said. “That debt helps us spread that out to keep our tolls low and not just wipe out reserves and reserves are so important.”

Hewitt said there is a $50 million expense incoming with the K-10 interchange and another $300 million to continue widening lanes on I-70.

“We’re still an asset to KDOT, from a standpoint that KDOT isn’t forced to use taxpayer dollars to maintain our tour in 36 miles,” he said. “And so we put that money right back in the system, we put that money right back into the economy. We had an economic assessment done a few years back, you know, we’re putting nearly $250 million back in the Kansas economy — 12% of the Kansas economy runs through our system.”

He said about half of the traffic on the turnpike is from out of state, and a lot of the toll revenue comes from freight trucking rather than typical commuters. The Kansas turnpike does have cheap fares when compared to other turnpikes, with a standard vehicle charged 4.8 cents per mile with a K-Tag, or 8.6 cents per mile without a K-Tag.

Kansas leaders have considered absorbing turnpike authority in years past

Officials have toyed with absorbing the KTA for decades.

In 1993, Kansas State Sen. Alicia Salisbury, R-Topeka, said the ongoing tolls weren’t what the state envisioned when it created the KTA. Her father Herbert Lang was considered the “father of the turnpike,” according to a Capital-Journal article.

“I don’t remember if he said it was going to be a freeway in 10 years or 50 years or when. But that was his explanation to his daughter,” she told The Capital-Journal in 1993.

At that time, the KTA’s initial bond cycle that funded construction of the road was coming to an end of its first bond cycle, but the KTA refinanced to repair roadways, put new decks on most of the turnpike’s bridges and erect a concrete safety barrier in the highway’s median.

The new bonds issued since then will run until 2040.