Showing posts with label New Jersey. Show all posts
Showing posts with label New Jersey. Show all posts

Monday, 28 November 2011

News briefs: UK, Canada, Maryland, New Jersey

UK
Parliamentary Under Secretary of State for Transport, Mike Penning has announced that the UK government will not be proceeding with its proposed 33% increase in toll charges this year (or 25% next year) on the busy Dartford Crossing, according to the Essex Enquirer.  The increase proposal resulted in a flurry of submissions to the government opposing it, given the underlying economic conditions.  The government has delayed decisions on increases until 2012, and there is speculation that increases may follow the proposed conversion of the crossing to a fully electronic free flow system to relieve the chronic congestion at the toll booths.  The government is also considering options to build a fourth crossing (it currently consists of two tunnels northbound and one bridge southbound), which would be funded by the tolls.  I previously reported on the Dartford Crossing issue late last year.  Trucking lobby group the Freight Transport Association supports the decision and is calling for the introduction of free flow tolls as soon as possible and any future toll revenue to go into additional capacity.
Toronto

The Star (Toronto) reported some interesting comments from former head of Metrolinx (the Toronto transport authority) at a conference on road pricing:
-  Most citizens believe governments already have the funds they need for transportation. (true)
-  Don't ask people to do things that are against human nature. (true)
-  Transportation agencies need to approach their industry as if it were a consumer product and sell convenience and availability. Transportation should be a lifestyle product, something the customer wants to be associated with. (true)
- You can make a regional case for road pricing but you have to remember to sell it locally. A lot of things come down to the individual and neighbourhoods. (true)
- Make sure you are getting the best capacity out of existing infrastructure. The Ontario government invested more than $300 million in high occupancy vehicle lanes but doesn’t charge for them. (true)
- The only thing people detest more than sprawl is density. (quite!)
- When it comes to pricing structures, it's all about choice. You have to provide people with alternatives. (the question is whether this is mode, route and time of day or part of these)
- Generally the public supports funding for capital — new vehicles, new transit lines or new roads. It is less enthusiastic about paying to operate and maintain those things.(obviously)

I wrote before that Toronto, which already has a free flow toll road, is debating adding a toll lane to an existing road.  However, the debate needs to be had for it to go further.

New Jersey

Bloomberg Businessweek is reporting that New Jersey Turnpike Authority toll roads are forecasting a $45 million shortfall for the year to September, 6% below target.  Part of the decrease is due to snowstorms and Hurricane Irene, but most is attributed to the economy suppressing demand.  This is not expected to cause major problems for the roads, as revenue is adequate to cover opex, capital expenditure and service debts.  Meanwhile, plans to increase tolls on two major turnpikes in New Jersey are proceeding, with the main intention being to general significant net revenues for the state.

New Jersey Turnpike tolls due to rise 53% in January 2012 on the 148 mile highway.
Garden State Parkway tolls due to rise 50% in January 2012 on the 173 mile highway.

Maryland

Website of radio station WTOP reports that the new Inter County Connector (profiled here) toll road will have a 50% surcharge for users without an EZPass, as Maryland's first fully electronic free flow toll road.

Wednesday, 9 November 2011

News shorts: Norway, North Carolina, New Jersey, Pennsylvania

Norway

Norway is to change laws to allow local authorities to introduce congestion charging, primarily to help contribute towards reducing emissions.  Given Norway's recent history with tolling, with urban toll rings in Trondheim, Bergen and Oslo (and the latter is now effectively a congestion charge), this is unsurprising.  


North Carolina toll road to be “expensive”

The Triangle Business Journal reports that the Triangle Expressway, due to open in December, will be one of the more expensive toll roads in the US. It will be North Carolina’s first toll road and will be fully electronic free flow using DSRC and ANPR technologies. It will be 18.8 miles long between I-40 at Durham to NC55 Morrinsville. The cost is estimated at US$1 billion to be recovered over 50 years.

Those who drive it from NC 147 to Holly Springs will be charged as much as $4.15 when the 19-mile section is completed next year. For drivers who don’t buy remote payment devices called transponders, the rate of 22.2 cents a mile compares to 16 cents a mile on a toll road in Greenville, S.C., 13 cents a mile on a route in Austin, Texas, and 8 cents a mile on both the New Jersey Turnpike and a short toll highway in Atlanta. The local tollway also is relatively expensive for transponder-outfitted cars, but the 14.5 cents a mile they will pay represents a relatively generous 35 percent discount. The 14.5-cent rate is just above average compared to a selection of U.S. toll systems that use transponders, according to an economic analysis used to set rates here.

The key for me is whether the tolls match the infrastructure costs, if they aligned then it is difficult to argue that they are excessive.

New Jersey and Pennsylvania states pulling money from toll roads

The Inquirer reports how turnpike authorities in both New Jersey and Pennsylvania are being told to hike up tolls to help states meet general expenditure.

New Jersey Turnpike Authority last week agreed to contribute an additional $324 million a year to the state. Since 2007, the Pennsylvania Turnpike Commission has sent $3.1 billion - more than it collected in tolls - to Harrisburg for statewide use.

Tolls will go up again Jan. 1 on the New Jersey Turnpike (53 percent), Garden State Parkway (50 percent), and Pennsylvania Turnpike (10 percent for cash customers; none for E-ZPass users).

Given some of the debates about privately owned toll roads taking money from motorists, I wonder if it is practices like this that provoke the likes of Initiative 1125 in Washington!

Friday, 30 September 2011

News briefs: Russia, New Zealand, Texas, New York

Russia

The Moscow Times reports that a consortium led by investment company VTB Capital, has won the right to build the 120 rouble (US$4 billion) segment of the Western High Speed Diameter in St. Petersburg.  The 11.5 km northern segment will be tolled.   The consortium includes Russian firm Gazprombank, Italian firm Astaldi and Turkish firm Ictas Insaat.  The concession last for 30 years, with revenue estimated at an average 9.67 billion roubles (US$304 million) per annum, indicating a lucrative return if revenue meets forecasts, although the City of St.Petersburg will be required to compensate if traffic forecasts are not met.  Apparently one of the key reasons for the consortium winning was because its rival wanted a guaranteed 14 billion rouble p.a (US$440 million) from the city.

Tolls remain a growing source of revenue for major new Russian motorways, and PPPs are increasingly of interest as a way to progress such projects.

New Zealand

Following on from the Auckland Mayor, Len Brown, proposing congestion pricing to help fund an underground inner city rail loop, the New Zealand Herald now reports that he is praising the proposal of the contractor lobby ground Council for Infrastructure Development.  The suggestion is that every motorway onramp in the city have a NZ$3 (US$2.33) toll at peak times, NZ$2 (US$1.55)interpeak and NZ$1 (US$0.78) off peak, with a cap of NZ$6 (US$4.66) a day.

It is an interesting idea for a city with three major radial motorways (and a north-west and south-west peripheral ones), but also with short distances between interchanges which could mean quite some diversion onto local roads.  Yet it should still be investigated to determine how much impact it could have on congestion, and revenues.

Texas

Frum Forum reports on how Republican Presidential Contender, Rick Perry, achieved considerable success with his toll road policy as Governor of Texas.  It said:

The secret lies with locally chartered toll road authorities that exist in every major Texas metropolis and were largely created under Perry’s administration. As Perry envisioned with the TTC project, the private sector has played a role. Cintra, the company that would have built the TTC, has built one decent-sized Austin-area road without a dime of public money. It is one of only a handful of enitrely-privately-financed roads in the United States...Most prominently, by opening up new land for development, the new roads have played a role in keeping Texas housing affordable for just about everyone. Today, the typical home in Texas costs less than 3 times the median income; while multiples of 8 or 12 are common in California and New York.

There is enough commentary about Presidential contenders for this blog to stand to one side, but it looks like at the very least, Rick Perry brought a free market approach to toll roads.

New York

The Gothamist writes about whether the increases on tolls on the tolled crossings from New Jersey to New York could be a trojan horse to tolling the remaining crossings.   It floats an idea from ex traffic commissioner Sam Schwartz “His plan would raise all tolls into Manhattan below 60th Street to $13, charge drivers to cross 60th Street from uptown, and impose tolls for the first time on the Brooklyn, Manhattan, Williamsburg, and Ed Koch Queensboro bridges. The price at other crossings would stay flat or be lowered, to reward drivers who aren’t contributing to Manhattan congestion - reducing tolls at the RFK Triboro, Verrazano Narrows, Throgs Neck and Whitestone Bridges from $13 to $8.” Then the issue arises as to why some bridges remain free...

Indeed. How can it be politically acceptable for the Port Authority of New York and New Jersey to increase tolls (without there being any dedication of money to new transport projects), but not toll the other crossings?  It is time for a decent study on the economic and environmental benefits of New York congestion pricing, with multiple scenarios.

USA truck tolling?

The National Review has published an article by Reihan Salam supporting distance based truck tolling, with a voluntary option for cars.  The benefits of it would mostly be in revenue protection, but also far better pricing for freight.  Yet it neglects the benefits of reducing congestion, which only will really be effective if all cars are priced too.  However, to get that far will take a long time, and the merits of starting with trucks are considerable, especially if tolling is priced to reflect economic efficiency combined with usability and practicality.

Wednesday, 21 September 2011

Are toll roads bad for New Jersey?

This is the question raised and answered by Bob Ahler. Bob joined an ad-hoc commit-tee called Citizens Against Tolls, whose primary goal was the elimination of tolls on the Garden State Parkway.
Those of us working in the road pricing world have to face opponents to tolling regularly. Of course many of the concerns about tolling are quite legitimate issues about whether the money will be used for what is intended, or misunderstandings about how a system may work. People don’t generally like paying for something that is, to them, free otherwise. Given most roads most of the time don’t have any form of direct charging (although fuel taxes form a kind of indirect charge), putting any form of pricing on a road is going to be controversial.

Once you get beyond highly politicized debates about tolling it is worthwhile to understand what arguments are made against it, and so I though it would be worthwhile reviewing Bob Ahler’s series on tolling in New Jersey in the Cape May County Herald (not that it was easy to find all of the articles as they weren’t linked in a series and there are two "fourth articles" and a sixth as well as a final article).  The ones I found are numbers 1, 2, 3, 4, 5 and 6, oh and another 3rd!

All in all there is a lot of interesting history in his articles, but his anti-toll position doesn’t seem unassailable. I thought the best approach would be to go through his conclusion point by point.  He starts:

With the high cost to collect tolls, additional driving times, wasted gasoline, additional pollution, unsafe toll plazas driving conditions, loss in matching federal highway funds and the subsidy paid by drivers on toll roads, the only conclusion that can be reached is that tolls do not serve the best interest of New Jersey citizens. 

It is therefore recommended that tolls be eliminated from all roads, thus saving $522 million a year. Lost revenues can be made up from a 7.2 cent per gallon increase in the state gasoline tax, thus insuring that road upkeep funding is the same for all roads in New Jersey.

So he proposes eliminating tolls and increasing fuel tax. So everyone pays more, rather than letting people using some roads pay for those roads. Except of course, not everyone pays the same. Fuel efficient vehicles pay a lot less, except that they don’t actually consume less “road” than others. However, it is his financial claims of a saving that don’t bear close scrutiny, especially since around a quarter of these “savings” are “travel time” savings which can be gained by fully free flow tolls. Let’s go one by one: 

The following is a list of toll elimination benefits:

• Savings of over three hundred million dollars a year in toll collection costs.

Now it is true that collecting tolls costs more than collecting fuel tax. Indeed, collecting taxes on basic commodities is always cheaper than billing people for what they use. It would probably be cheaper to charge telecommunications, cable TV and broadband through a tax on electricity, but would it result in better services if such systems were provided by a government monopoly reliant on politically driven funding? I doubt it. Toll collection costs can be brought down. EZPass is one way to do it, but a more concerted effort to move to fully electronic free flow and learning lessons of competitive utilities can do a lot more. This is Bob’s strongest argument, and it is up to the toll sector to show it can collect tolls more efficiently. What he completely fails to even acknowledge is that fuel taxes are a poor proxy for road use, as they can’t reflect wildly differing geographical costs, variations in demand and supply, nor do they reflect well the marginal costs of road use by the heaviest vehicles. 

• The in-flow of $75 million a year in matching federal highway funds.

What this demonstrates is that, if true, the Federal government is not neutral on states that toll. He appears to consider that if tolled roads were untolled, they would gain federal funding support, but that also requires matching funding from the state. I advocate that tolled roads that fuel tax payers use should get funding from the fuel tax paid in using those roads, that would eliminate this distortion and reduce tolls.

• Without toll plazas, there would be less traffic congestion, resulting in less wear and tear on vehicles, a reduction in gasoline usage and a reduction in air pollution.

Don Shula Expressway, North Texas Tollway Authority, Maryland County Connector, Toronto 407, Melbourne Citylink etc etc. Toll plazas are unnecessary for tolling and eliminate all of these concerns. Next!

• Driving on the Turnpike, the Parkway and the Expressway would be safer and more of a pleasure since drivers would no longer have to contend with competing traffic in the selection of a toll lane.

See above. Next!!

• Lengthy and cumbersome entrance and exit lanes could be replaced with shorter and more efficient clover-leave ones.

See above. Next!!!

• The location of entrances and exists would be based on the needs of traffic instead of toll plaza revenue generation consideration (sic)

Electronic free flow tolling can enable this too.

• Drivers would no longer be encouraged to change their driving habits by clogging up adjacent roads in order to avoid toll roads. All roads would therefore be funded in the same fair and efficient manner, thus spreading the cost equally among all drivers.

A road that is clogged is badly priced, so should be subject to pricing that matches demand with supply. Fuel tax may be financially efficient, but it is not economically efficient or fair, nor does it spread costs equally. Indeed, why is spreading costs equally fair? Why should users of an expensive major facility be subsidised by other motorists? The diversion issue is reasonable, but it is an argument also for network wide road pricing, which I believe would give Rob apoplexy.

• The elimination of subsidies paid by tolls.

The thesis here is that toll roads are priced far higher than untolled roads and some of the money is used to subsidise the other roads. A fair point, as tolls should be set at efficient rates related to the infrastructure costs concerned, and demand and supply. On some roads this means a healthy surplus, or a profit. Yet fuel tax offers exactly the same thing. Some heavily used roads generate lots of fuel tax revenue, and others generate little. So why are tolls particularly singled out for this argument?

• The lowering of the operating cost for trucks, thus eliminating the need to pass toll costs on to customers.

Well, only for the trucks using toll roads. He wants to increase fuel tax on everyone everywhere in the state, which puts up their costs. Wouldn’t they pass that onto customers?

• The elimination of the temptation by elected officials to sell or lease toll roads to meet current budget requirements.

He means, to retire some debt or fund some other infrastructure. The argument presented as to why this is “bad” is that the new owners would increase tolls. That can be limited by specifying conditions in a concession of course, which is more effective a limit than it could be under state ownership (as politicians can’t constrain themselves as easily as they can constrain the private sector). Why is state ownership of all roads a good thing in and of itself, unless this is an ideological argument?

• Although the need to eliminate tolls appears to be obvious, there could be pressure against doing so by those having a vested interest in the continuation of tolls. It will therefore take a politically courageous person to eliminate road tolls in New Jersey, one who seeks to run an efficient and fair highway system, so that we can say that we do not have tolls on roads in New Jersey.

Politically courageous? Well it would be popular, except for the need to increase fuel taxes and find the money from somewhere else. The vested interest in the elimination of tolls comes from those who pay tolls, and nobody else. Others would have to subsidise them. The vested interest in keeping them comes from everyone else would avoids having to pay for the roads tolled, and the staff. The former is a big enough group to listen to!

All in all, the argument against tolls rests on an antiquated view of tolling technology, combined with high operating costs and poor pricing. There are cases where tolls don’t make sense, but these often are new roads where the case for the road itself was very poor indeed. Unviable toll roads are often unviable roads. Other cases are those where the benefits to non-users are substantial and come from the diversion of traffic onto the new route. Bypasses being a clear example, where having all through traffic bypassing a built up area, reduces congestion, pollution and accidents, but tolling such a route may dramatically cut those benefits, which when monetized, more than make up the value of toll revenue.

I don’t believe toll roads are bad for New Jersey. They may be run more efficiently with new technology, business processes and commercial imperatives. However, they generate net revenue for the roads concerned that would otherwise have to come from fuel tax. Consider the elimination of tolls on the crossings into Manhatten to think about the effects of that on congestion, and the pitiful fuel tax revenue one would get from the increase proposed. Quite why rural motorists should pay more to make up revenue from those driving into Manhatten is unclear. As fuel tax revenues become ever more difficult to obtain, the likelihood is that tolls will be considered more frequently, but the real benefit comes from better pricing to manage congestion, and send signals to road users and governments spending money on roads, as to how to respond.

Almost all of the economy functions according to price signals, and is the better for it. Roads can be too, as long as the transaction costs involved in tolls are more than offset by the better investment and usage decisions that such signals can help inform. An overly simplistic view of tolls is that they are just another way for the government to make money, but I consider them to be a way to efficiently price infrastructure and everything that comes from that – and this is where debate on tolls should reside. In economics, not politics.

Tuesday, 26 April 2011

Call for electronic free flow for New Jersey Turnpike Authority

Map of the two New Jersey toll roads
The advantages of electronic free flow tolling over manual tolls are obvious.  On heavily used toll roads such manual booths are obvious bottlenecks which can create long tailbacks and delays to motorists.  However, a growing issue is cost.  According to the Gloucester County Times, New Jersey (USA), 90% of toll booth staff of the (state owned) New Jersey Turnpike Authority (responsible for the New Jersey Turnpike and Garden State Parkway) are earning US$65,000 per annum (which compares well to the US GDP per capita average of around US$47,000).

That means that moving to electronic free flow tolling not only would remove the cost of delays through time and wasted fuel, but also administrative costs.   Apparently 70% of trips now use the electronic EZ-Pass system that avoids this, no doubt mostly being locals who prefer to get past the queues where the toll plazas widen.   However, there is every good reason to go further and fully automate toll collection.

The paper reports how the Turnpike Authority is to vote on Wednesday 27 April whether to privatise the collection and operation of the toll roads, which would allow any company responsible to adopt whatever techniques it wishes to deliver such efficiencies.  The Gloucester County Times supports it, as so it should.  Electronic free flow tolling is not cutting edge, it is proven technology.  As long as New Jersey has access to the enablers to make it work, it should proceed so that New Jersey toll roads are no longer working with 19th century technology.