[Senate Hearing 112-762]
[From the U.S. Government Publishing Office]
S. Hrg. 112-762
PROTECTING COMMUTERS: ENSURING ACCOUNTABILITY AND OVERSIGHT IN TOLLING
=======================================================================
HEARING
before the
SUBCOMMITTEE ON SURFACE TRANSPORTATION
AND MERCHANT MARINE INFRASTRUCTURE,
SAFETY, AND SECURITY
of the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
APRIL 18, 2012
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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80-594 WASHINGTON : 2013
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
JOHN D. ROCKEFELLER IV, West Virginia, Chairman
DANIEL K. INOUYE, Hawaii KAY BAILEY HUTCHISON, Texas,
JOHN F. KERRY, Massachusetts Ranking
BARBARA BOXER, California OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida JIM DeMINT, South Carolina
MARIA CANTWELL, Washington JOHN THUNE, South Dakota
FRANK R. LAUTENBERG, New Jersey ROGER F. WICKER, Mississippi
MARK PRYOR, Arkansas JOHNNY ISAKSON, Georgia
CLAIRE McCASKILL, Missouri ROY BLUNT, Missouri
AMY KLOBUCHAR, Minnesota JOHN BOOZMAN, Arkansas
TOM UDALL, New Mexico PATRICK J. TOOMEY, Pennsylvania
MARK WARNER, Virginia MARCO RUBIO, Florida
MARK BEGICH, Alaska KELLY AYOTTE, New Hampshire
DEAN HELLER, Nevada
Ellen L. Doneski, Staff Director
James Reid, Deputy Staff Director
John Williams, General Counsel
Richard M. Russell, Republican Staff Director
David Quinalty, Republican Deputy Staff Director
Rebecca Seidel, Republican General Counsel and Chief Investigator
------
SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT MARINE
INFRASTRUCTURE, SAFETY, AND SECURITY
FRANK R. LAUTENBERG, New Jersey, JOHN THUNE, South Dakota, Ranking
Chairman Member
DANIEL K. INOUYE, Hawaii JOHN ENSIGN, Nevada
JOHN F. KERRY, Massachusetts JIM DeMINT, South Carolina
BARBARA BOXER, California ROGER F. WICKER, Mississippi
MARIA CANTWELL, Washington JOHNNY ISAKSON, Georgia
MARK PRYOR, Arkansas ROY BLUNT, Missouri
CLAIRE McCASKILL, Missouri JOHN BOOZMAN, Arkansas
AMY KLOBUCHAR, Minnesota PATRICK J. TOOMEY, Pennsylvania
TOM UDALL, New Mexico MARCO RUBIO, Florida
MARK WARNER, Virginia KELLY AYOTTE, New Hampshire
MARK BEGICH, Alaska
C O N T E N T S
----------
Page
Hearing held on April 18, 2012................................... 1
Statement of Senator Lautenberg.................................. 1
Prepared statement........................................... 3
Statement of Senator Wicker...................................... 4
Witnesses
Bill Baroni, Deputy Executive Director, Port Authority of New
York and New Jersey............................................ 5
Prepared statement........................................... 6
Steve Grabell, Chief Financial Officer, NFI, on behalf of the
American Trucking Associations (ATA)........................... 8
Prepared statement........................................... 9
Chris Plaushin, Director, Federal Relations, American Automobile
Association (AAA).............................................. 15
Prepared statement........................................... 17
Hon. Eugene A. Conti, Jr., Secretary, North Carolina Department
of Transportation, on behalf of the American Association of
State Highway and Transportation Officials (AASHTO)............ 19
Prepared statement........................................... 20
Appendix
Response to written questions submitted by Hon. Frank R.
Lautenberg to:
Bill Baroni.................................................. 37
Steve Grabell................................................ 43
Chris Plaushin............................................... 46
Response to written questions submitted by Hon. John D.
Rockefeller IV to:
The Port Authority of New York And New Jersey................ 41
Steve Grabell................................................ 42
Chris Plaushin............................................... 45
Hon. Eugene A. Conti, Jr..................................... 47
Response to written questions submitted by Hon. Kay Bailey
Hutchison to Hon. Eugene A. Conti, Jr.......................... 48
Letter dated July 24, 2012 to Patrick Foye, Executive Director,
Port Authority of New York and New Jersey and David Samson,
Chairman, Port Authority of New York and New Jersey from Hon.
John D. Rockefeller IV and Hon. Frank R. Lautenberg............ 48
Letter dated August 14, 2012 to Hon. John D. Rockefeller IV and
Hon. Frank R. Lautenberg from Patrick J. Foye, Executive
Director, The Port Authority of New York and New Jersey........ 49
Letter dated September 24, 2012 to David Samson, Chairman, Port
Authority of New York and New Jersey and Bill Baroni, Deputy
Executive Director, Port Authority of New York and New Jersey
from Hon. John D. Rockefeller IV and Hon. Frank R. Lautenberg.. 62
PROTECTING COMMUTERS:
ENSURING ACCOUNTABILITY AND OVERSIGHT IN TOLLING
----------
WEDNESDAY, APRIL 18, 2012
U.S. Senate,
Subcommittee on Surface Transportation and
Merchant Marine Infrastructure, Safety, and Security,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:06 a.m. in
room SR-253, Russell Senate Office Building, Hon. Frank R.
Lautenberg, Chairman of the Subcommittee, presiding.
OPENING STATEMENT OF HON. FRANK R. LAUTENBERG,
U.S. SENATOR FROM NEW JERSEY
Senator Lautenberg. Good morning and welcome all of you,
and I appreciate the fact that our witnesses have joined us
this morning. We've got a lot to think about in terms of how
toll revenues are derived. What's the effect on them on the
present infrastructure? Does it enable us to maintain a
currency in the functioning of these facilities? So, I'm
pleased that you're here, and our Subcommittee on Surface
Transportation is the subcommittee that's holding this hearing,
and the purpose is examining toll policies throughout the
country.
With budgets tight and transportation infrastructure
crumbling, states are desperately seeking revenues to fund
transportation programs. For as long as highways have existed,
tolling has been a source of funding for projects and states
are increasingly looking to tolling to support new
infrastructure projects. Tolling, if done in an open and fair
manner, can have economic benefits for a region; however, as we
have seen recently, when authorities are not serving the public
interest, drivers and the public pay dearly.
We've seen tolling authorities in Maine, Florida, and
Pennsylvania involved in various scandals and cases of
corruption, and in my home state, in our home state of New
Jersey, we have reached crisis levels.
Now, I'm not against tolling, nor am I against tolling
authorities. I am proud to be a former commissioner of the Port
Authority of New York and New Jersey. The Port Authority has
built some of the greatest transportation projects in our
country. These projects changed the Northeast, and New Jersey
would not be the vibrant state it is today if we failed to make
these investments. But when I was a commissioner, the toll to
cross our bridges and tunnels was $2. In today's money, it
would be slightly more than $5. But today, the Port Authority
tolls are out of control. It now costs $12 to cross between New
Jersey and New York, and it's short of a mile long, the George
Washington Bridge.
When it costs $12 to drive your car across a bridge in
America, something is wrong. Now, the toll increase that we've
just seen from the Port Authority took the toll from $8 to $12.
Now, if one goes to work every day, crossing that bridge, it's
an $80 a month, roughly, increase in costs, besides the fact
that people, when they get there have the cost of parking, et
cetera. It's an enormous cost on those who are working and
commuting to their jobs.
Worse yet, there are allegations of patronage and
dysfunction at the Port Authority that leaves drivers wondering
what they're paying for. And the process that led to these toll
hikes took place largely behind closed doors. The public was
given conflicting information about the reason for the toll
increase, and at the very least, people deserve to know exactly
what their money's going for, and that it will be spent well.
Questions were also raised about who was involved in the
decision to raise tolls and when they approved the toll
increase. Voters can't hold elected leaders accountable for
their unpopular decisions when those leaders are hiding behind
closed doors.
There has also been an allegation of out-of-control
political patronage at the Port Authority where substantial
positions, with six-figure salaries, were given to former
political bloggers, local mayors, and others with questionable
credentials. No wonder an independent auditor called the Port
Authority of New York and New Jersey, and I quote him, ``a
challenged and dysfunctional organization.''
Unfortunately, this isn't the end of the bad news for New
Jersey commuters. A recent New Jersey comptroller investigation
revealed major abuses at the Delaware River Port Authority in
South Jersey. According to the State comptroller, DRPA wasted
millions of toll revenues by allowing the Authority to be used
like a personal ATM for those with connections to the
commissioners. Half a million dollars of toll money went to an
insurance brokerage firm that did no work for the Authority.
Half a million dollars, for no work. And millions more were
directed to economic development projects that provided no
transportation or economic benefits. As interest in tolling
expands across the country, we've got to examine the practices
of these authorities and ensure proper oversight.
Now, whether it's the ability of commuters to get to work
or the ability of freight to move on our highways, these tolls
have an enormous impact on our lives, and should face rigorous
scrutiny. It's our job to ensure that the tolls are just and
reasonable, and that future tolls are imposed with proper
protections in place for commuters. And that's why I called for
a GAO study to examine the practices of intrastate tolling
authorities and introduced the Commuter Protection Act to
restore Federal oversight of tolling practices.
I look forward to hearing from our witnesses on current
tolling practices, and what we can do to take steps to improve
oversight and accountability. And I'm pleased to be joined here
today with our colleague, Senator Wicker.
[The prepared statement of Senator Lautenberg follows:]
Prepared Statement of Hon. Frank R. Lautenberg,
U.S. Senator from New Jersey
Good morning. I'd like to thank you all for joining us this morning
for a hearing of the Senate Subcommittee on Surface Transportation to
examine tolling practices in the United States.
With budgets tight and transportation infrastructure crumbling,
states are desperately seeking revenues to fund transportation
projects.
For as long as highways have existed, tolling has been a source of
funding for projects, and states are increasingly looking to tolling to
support new infrastructure projects.
Tolling, if done in an open and fair manner, can have economic
benefits for a region. However, as we have seen recently, when
authorities are not serving the public interest, drivers and the public
pay dearly.
We have seen tolling authorities in Maine, Florida, and
Pennsylvania involved in various scandals and cases of corruption. And
in my home state of New Jersey, we have reached crisis levels.
Don't get me wrong: I am not against tolling, nor am I against
tolling authorities. I am proud to be a former Commissioner of the Port
Authority of New York and New Jersey.
The Port Authority has built some of the greatest transportation
projects in our country.
These projects changed the Northeast, and New Jersey would not be
the vibrant state it is today if we had failed to make those
investments.
But when I was commissioner, the toll to cross our bridges and
tunnels was two dollars. In today's money, that would be slightly more
than five dollars.
But today, Port Authority tolls are out of control. It now costs
twelve dollars to cross between New Jersey and New York.
When it costs twelve dollars to drive your car across a bridge in
America, something is wrong.
Worse yet, there are allegations of patronage and dysfunction at
the Port Authority that leave drivers wondering what they are paying
for.
And the process that led to these toll hikes took place largely
behind closed doors, and the public was given conflicting information
about the reason for the toll increase.
At the very least, people deserve to know exactly what their money
is paying for, and that it will be spent well.
Questions were also raised about who was involved in the decision
to raise tolls, and when they approved the toll increase.
Voters can't hold elected leaders accountable for their unpopular
decisions when those leaders are hiding behind bureaucrats.
There have also been allegations of out-of-control political
patronage at the Port Authority, where substantial positions with six-
figure salaries were given to former political bloggers, local mayors,
and others with questionable credentials.
No wonder an independent audit called the Port Authority of New
York and New Jersey a ``challenged and dysfunctional organization.''
Unfortunately, this isn't the end of the bad news for New Jersey
commuters--a recent New Jersey Comptroller investigation revealed major
abuses at the Delaware River Port Authority in Southern New Jersey.
According to the State Comptroller, DRPA wasted millions of toll
revenue by allowing the Authority to be used like a personal ATM for
those with connections to the commissioners.
Half a million dollars of toll money went to an insurance brokerage
firm that did no work for the Authority, and millions more were
directed to economic development projects that provided no
transportation or economic benefits.
As the interest in tolling expands across the country, we must
examine the practices of these authorities and ensure proper oversight.
Whether it's the ability of commuters to get to work or the ability
of freight to move on our highways, these tolls have an immense impact
on our lives and should face rigorous scrutiny.
It is our job to ensure that existing tolls are just and
reasonable, and that future tolls are imposed with proper protections
in place to protect commuters.
This is why I have initiated a GAO study to examine the practices
of interstate tolling authorities, and introduced the Commuter
Protection Act to restore Federal oversight of tolling practices.
I look forward to hearing from our witnesses on current tolling
practices and how we can take steps to improve oversight and
accountability.
Senator Wicker, your opening statement, please.
STATEMENT OF HON. ROGER F. WICKER,
U.S. SENATOR FROM MISSISSIPPI
Senator Wicker. Thank you very much, Mr. Chairman. And
thank you to our distinguished panelists today. Tolling is an
issue that deserves the attention of this subcommittee,
particularly as we continue to push for a long-term
transportation reauthorization. Tolling should be part of this
discussion, as it is an important part of how we fund and
maintain some of the nation's most critical transportation
projects.
This committee has historic jurisdiction with regard to the
tolling of bridges and tunnels, and that will be the focus of
today's hearing. But, clearly tolling and user fees have a much
wider application in funding transportation infrastructure.
With an economy that is still struggling to regain its footing,
it is of the utmost importance that the nation's drivers not be
subject to unfair or overly burdensome toll rate increases.
Likewise, our nation's trucking industry has an interest in
ensuring that toll rates are set at an appropriate level,
especially as the trucking sector seeks to remain competitive,
with gas prices continuing to climb upwards.
I think it's also important that we maintain the states'
prerogative to set proper toll rates. So, I'm interested in
hearing perspectives from all the witnesses on this morning's
panel about the various proposals for tolling regulation.
I supported the Senate's bipartisan transportation
reauthorization bill, and I look forward to going to conference
with the House, we hope, on this critical legislation. Not only
do major transportation projects generate economic activity for
decades to come, but they also put people to work immediately
in the construction industry, an industry that is suffering the
effects of our slow economic recovery.
Looking ahead, we must start thinking about a longer term
bill that will take transportation funding beyond 2013.
Historically, transportation bills have been 6 years in length,
and I'm hopeful we will move back to that longer model in the
next Congress, so that states can once again have the certainty
for planning that comes with a longer term reauthorization.
This approach will present challenges and difficult choices for
lawmakers, particularly, as revenues flowing to the highway
trust fund flatten and even decline.
I expect we will continue to have hearings in this
subcommittee that will inform the many decisions that must be
made to pass a longer term bill, and today's hearing on tolling
is a good start.
Thank you, Mr. Chairman.
Senator Lautenberg. So, we have today's witnesses. We are
pleased that you're here, and look forward to hearing from you.
Mr. Bill Baroni has a significant position in the
management of the Port Authority of New York and New Jersey.
It's a great agency. And we're expecting that we'll have a
chance to discuss the Port Authority's tolling practices. Chris
Plaushin, Vice President of Public Affairs for AAA, and he'll
be discussing the impact of tolling on the traveling public.
Steve Grabell, Chief Financial Officer, National Freight. We
look to you, sir, for the trucking industry's perspective. And
Mr. Conti, Eugene Conti, is North Carolina's Secretary of
Transportation. And we look forward to your testimony on behalf
of the American Association of State Highway and Transportation
officials.
And with that, Mr. Baroni, please.
STATEMENT OF BILL BARONI, DEPUTY EXECUTIVE DIRECTOR, PORT
AUTHORITY OF NEW YORK AND NEW JERSEY
Mr. Baroni. Thank you, Chairman, and thank you, Senator
Wicker. Senator Wicker, I have to apologize. It is very rare to
come to the U.S. Senate and be able to address the Chairman
with a title even greater than Senator, and that is, of course,
Commissioner Lautenberg. It is good to see you. Commissioner
Lautenberg spent 4 years at our great Port Authority. And
Senator, thank you for giving me the opportunity to be here,
and I look forward to our discussion on a number of topics that
you raised.
But, as you said, back in the summer of 2011, the Port
Authority did, indeed, face a crisis. We faced a crisis,
because over the years preceding that, decisions were made and
the economy reached a point where the revenues at the Port
Authority were down $2.6 billion. Our activity levels at our
crossings were down. We had decades of wasteful spending that
preceded us. Our cost of borrowing was up.
We'd invested in the decades leading up to my arrival at
the Port Authority. We'd invested in real estate investments
that, quite frankly, were either losing money or certainly a
drain on the agency, and we had a series of Federal mandates,
largely unfunded, that caused the Port Authority to get to the
point where we were facing a crisis. And we did everything we
could to push that decision back.
We had three straight flat operating budgets. In fact,
since Governor Christie came into office, the actual operating
expenses year to year, since I got the Port Authority, is down
$33 million. We've the lowest number of full-time employees at
the Port Authority since the 1940s. Since I came into office
with Governor Christie and Chairman Sampson, we have 243 less
people working at the Port Authority. We've cut $10 million out
of the salary line in the--but even with all those decisions,
we still face looming transportation questions.
We had a Bayonne Bridge. We have a Bayonne Bridge. And
Senator, you and Senator Menendez, Senator Schumer, and Senator
Gillibrand jointly signed a letter urging the Federal
Government to help us raise that Bayonne Bridge. The Goethals
Bridge, linking Elizabeth and Staten Island, anybody's who's
ever driven it knew we needed to work to spend well more than
$1 billion.
The Lincoln Tunnel Helix that takes people into the Lincoln
Tunnel each and every day needed to be rehabbed. It hadn't
happened in 70 years. The George Washington Bridge, the most
iconic bridge, perhaps, certainly, in the world, the suspender
ropes, and the project needed $1.8 billion of capital spending.
The Harrison PATH station built in 1930s, anyone who's
traveled--in fact Mayor McDunn and I were there in Harrison.
You look at that train station. We need to build a new one.
We are a state of good repair projects. Christopher Street
PATH Station needed a new substation. We had to do all that.
And at the same time, we had thousands of men and women,
construction workers, iron workers, bricklayers, operators,
laborers who needed jobs. And the projects that we were
prepared to do, that we didn't have the money to do, would
employ 16,000 people. So, we were forced to propose a toll
increase.
But, we didn't just do a blanket toll increase as agencies,
and, quite frankly, the Port Authority had done in the past. We
tried to create a progressive tolling structure that valued the
things that we look for in New York and New Jersey. We wanted
to increase E-ZPass driving. We wanted to encourage carpooling.
We wanted to encourage people to drive green cars. We wanted to
encourage our truckers to travel off-peak or overnight. So, we
created a tolling structure that gave discounts.
Right now, under our tolling structure, if your car, and
you drive during peak E-ZPass, you get a 21 percent discount.
If you drive off-peak, it's a 37 percent discount. If you've
got a green car, 67 percent discount. If you're in a carpool,
71 percent discount. For people who use the Staten Island
bridges multiple times, 50 percent. And for our trucks, as we
know, trucking drives much of our economy in New York and New
Jersey, if you're a truck today, and you've got an E-ZPass, and
you drive off-peak, it's a 31 percent discount.
If you drive during peak, 23 percent discount, with an E-
ZPass. If you drive overnight with an E-ZPass, it's a 42
percent discount. And if you do more than 100 trips of big
business, like my friend here, you're going to get an extra 10
percent. We did that. We did that, because we know how
difficult this is, and we built a process for that toll, and I
know, Senator, you mentioned it, the most number of public
hearings ever for a Port Authority toll increase, we had 10
public hearings, an online public hearing, more than 1,500
people turned out, more than 500 people spoke. And what
resulted? A toll plan that's going to put 16,000 people to
work, a toll plan that's going to fix that infrastructure, a
toll plan that values environmental justice, values E-ZPass,
values green pass, values carpool, and we did it in the most
open and transparent ever in the history of the Port Authority.
That is a process that worked.
It's hard to raise tolls. It's difficult to raise tolls. It
is harder to have the George Washington Bridge suspender ropes
needing to be replaced. It's harder not to have the Lincoln
Tunnel Rehab for the Helix. It's harder to have a Harrison
train station that's not disabled accessible. That's what we
did, and we did it in an open and transparent manner.
I look forward to the questions.
[The prepared statement of Mr. Baroni follows:]
Statement of the Port Authority of New York and New Jersey
The Port Authority of New York and New Jersey is a bi-state agency
under the leadership of New York Governor Andrew Cuomo and New Jersey
Governor Chris Christie. The agency was created in 1921 to build,
operate and maintain many of the busiest and most important
transportation facilities in the region, including some of the
country's largest airports, the East Coast's largest seaport, six major
bridges and tunnels and the PATH rapid transit system linking the two
states. The agency also owns the 16-acre World Trade Center site.
As an agency that does not receive tax dollars from either state,
our primary source of revenue to operate and maintain this interstate
transportation network is through the tolls we collect on our bridges
and tunnels, which is the subject of today's hearing along with the
transparency and accountability issues that come with being a toll-
collecting agency.
In September 2011, at the request of both governors, the Port
Authority's Board took unprecedented action by forming a Special
Committee to conduct a full review of the authority's past and current
governance, management and financial practices. This comprehensive
review looked at how this 91-year-old agency could do the public's
business better, smarter and more cost efficiently. Its overall goal
was to identify ways for the agency to continue to carry out the
agency's mission of job creation and economic growth and to meet its
responsibilities to maintain and operate its critical transportation
facilities.
The results of the first phase of this review were made public in
February 2012--during a very open and transparent process--and resulted
in significant reforms in how this agency conducts its business.
These reforms, led by our bi-state and bi-partisan Board of
Commissioners, have included historic changes in compensation and
benefits, which will save the agency and its toll payers $41 million
dollars over the next 18 months; a new Freedom of Information code,
which streamlines the process of the public receiving information; the
creation of the Port Authority Transparency Project, which has already
posted more than 20,000 pages of documents online; a pilot program that
waives fees for the public to receive public records, something perhaps
no other government or public agency in the Nation is doing; a complete
review and restructuring of the Port Authority Security structure to
ensure our commuters and customers continue to be safe; and the posting
of all compensation of employees and retirees.
These and dozens of other reforms are the hallmark of a new Port
Authority that values its toll payers' hard earned dollars, while also
ensuring we meet our unique and critical role of building the region's
infrastructure and providing economic growth and job creation.
The PA is embarking on an extraordinary period of mission critical
projects including: a new Goethals Bridge; raising the roadway on the
Bayonne Bridge; a rehabilitated Lincoln Tunnel Helix; the replacement
of the George Washington Bridge suspender ropes; a new PATH station in
Harrison, NJ; a new George Washington Bridge Bus Station in upper
Manhattan; hundreds of millions of dollars in road and bridge projects
on both sides of the Hudson; and the completion of the World Trade
Center.
Our goal is to accomplish these objectives with full transparency
to enable our toll payers to measure and judge the progress we are
making to create a better travel experience for them. We also will
strive to fulfill our mission as an engine for job creation and
economic growth, which will benefit the millions of people who live and
work in this bi-state region.
This is a new day at the Port Authority, and we will continue our
ongoing efforts to keep our customers informed every step of the way as
we do the public's business.
Senator Lautenberg. You're finished with your testimony?
Mr. Baroni. Senator, the good folks who talked to me said
when that five minutes hits, I should stop.
[Laughter.)
Mr. Baroni. And I'm going to listen to the directions I'm
told. When Ian tells me five minutes and shut up, I'm going to
shut up.
Senator Lautenberg. We have not said that yet. Anyway, if
you've completed the testimony that you wanted to bring to it.
Mr. Baroni. Well, Senator, I'm happy to continue. I wanted
to condense it.
Senator Lautenberg. No. I mean, but we----
Mr. Baroni. They instructed me that you have more questions
for me.
Senator Lautenberg. We just used your extra time, so----
Mr. Baroni. OK. Thank you, Senator.
[Laughter.]
Senator Lautenberg. We'll go on now to our next witness.
Mr. Grabell, we'd like to hear from you, and get your view
on the trucking industry's perspective.
STATEMENT OF STEVE GRABELL, CHIEF FINANCIAL OFFICER,
NFI, ON BEHALF OF THE AMERICAN TRUCKING ASSOCIATIONS (ATA)
Mr. Grabell. Thank you. And I'll try to subscribe to my
five-minute limit as well, Bill.
Chairman Lautenberg, Senator Wicker, thank you for inviting
me to testify on behalf of the American Trucking Associations.
As the CFO of a diversified trucking company, with extensive
operations in the Northeast and the Mid-Atlantic, I'm deeply
concerned about the significant increases in toll costs that
have been imposed on NFI and other trucking companies over the
past few years.
Last year alone, my company paid $14 million in tolls.
These added costs have forced us to reroute our trucks to less
efficient secondary roads, which raises our costs and increases
congestion and safety concerns.
In addition to the impact increased tolls have on logistics
providers, the added costs associated with toll increases
filter down to the consumer and affect business decisions
regarding hiring, and facility locations, and equipment, and
expansion.
The trucking industry recognizes that the resources
available for highway maintenance and improvement are well
short of what is needed, and we are willing to contribute more,
provided the money is invested wisely. However, we do not
believe that tolls are necessarily an efficient way to fund
highway projects, particularly when they're imposed on
previously toll-free highways.
We are especially concerned when tolling authorities use
toll revenue for projects and programs that contribute little
or no value to the motorists who are paying the fees.
Unfortunately, some of these authorities have demonstrated a
disregard for their customers in terms of rate-setting
practices, governance, and expenditure of toll revenue. At
least where toll facilities serve interstate traffic, we
believe that Federal oversight and possible intervention in
determining toll rates is necessary and appropriate.
While there are many examples of irresponsible actions by
tolling authorities that merit Federal attention, I would like
to cite two examples which have been brought to light by recent
state audits: The Port Authority of New York and New Jersey,
and the Delaware River Port Authority.
Last year, the Port Authority of New York and New Jersey
announced massive increase in toll rates on its six bridges and
tunnels connecting New Jersey and New York City. By 2015, the
cash truck toll rate will increase by 163 percent, to $105.
This is nearly three times greater than the country's next
highest bridge toll rate.
Throughout the process of instituting the rate increases,
the Port Authority's public involvement and disclosure
practices were visible. During its so-called public outreach
process, the Port Authority did not disclose how the additional
revenue will be spent, and to this date has refused to make
that information public. It appears, however, that the vast
majority of the revenue will be directed to projects that have
no benefit for toll payers. Instead, most of the money will be
used to benefit seaports and airports, and to complete the
reconstruction of the World Trade Center office buildings.
Mr. Chairman, a recent audit described the Port Authority
as dysfunctional, and questioned management's ability to
effectively and prudently operate the organization. It's clear
that Federal oversight of the Authority, which is created
through interstate compact by Congress, is necessary and
appropriate.
If possible, the Delaware River Port Authority, also a
federally-authorized body, may be even more dysfunctional, and
similarly in need of Federal oversight, of course, until Bill
got involved. According to a recent audit, for a period of at
least 10 years, the Authority violated many of its own policies
and procedures, particularly those related to its spending
practices. The audit also suggested that State officials, who
were supposed to be providing oversight, were instead
benefiting from these violations, and had little incentive to
prevent these practices from occurring.
We are most concerned about the expenditure of $440 million
in economic development funds at the expense of critical bridge
maintenance and improvement projects. These expenditures are in
direct violation of the Authority's compact, which prohibits
expenditure of funds on economic development projects if
sufficient money is not available for bridge projects. In fact,
the Authority actually had to take on additional debt to pay
for the economic development projects, even as it was cutting
back on funding for bridge projects.
Mr. Chairman, we greatly appreciate your introduction of
the Commuter Protection Act, which was cosponsored by Senator
Menendez. ATA believes it is a significant step towards
ensuring better oversight of tolling authorities that serve
interstate traffic. Congress has an obligation under the
Constitution's commerce clause to ensure that interstate
travelers, who may not be represented when rate setting and
spending decisions are made, to have a voice in these
processes.
And as such, since the early part of the 20th century,
Federal law has required that toll rates for certain bridges
should be just and reasonable. Unfortunately, and
unintentionally, the authority to enforce this requirement has
eroded. The Commuter Protection Act will correct its oversight.
We look forward to working with the Subcommittee to pass
Federal legislation that curtails tolling authority abuses and
ensures that the public is treated fairly, with a transparent
process that takes the interest of interstate travelers into
account.
Thank you.
[The prepared statement of Mr. Grabell follows:]
Prepared Statement of Steve Grabell, Chief Financial Officer, NFI, on
Behalf of the American Trucking Associations (ATA)
Introduction
Chairman Lautenberg, Ranking Member Wicker, and members of the
Subcommittee, thank you for giving me the opportunity to testify on
behalf of the American Trucking Associations (ATA). The American
Trucking Associations is the largest national trade association for the
trucking industry. Through a federation of other trucking groups, the
industry-related conferences and its 50 affiliated state trucking
associations, ATA represents more than 35,000 members covering every
type of motor carrier in the United States.
My name is Steve Grabell and I am the Chief Financial Officer for
National Freight, Incorporated, more commonly known as NFI. NFI offers
a complete range of transportation and distribution services throughout
the United States and Canada, including dedicated trucking, non-asset
based transportation services, public and dedicated warehousing, and
other supply chain and logistics services. NFI is based in New Jersey
and has total annual revenues of approximately $1 billion. More than 50
percent of NFI's trucking revenue is generated in the Mid-Atlantic and
Northeast regions of the U.S., where tolls are most prominent. NFI
operates approximately 2,000 tractors and 7,000 trailers and about 20
million square feet of warehouse space.
Mr. Chairman, we are very concerned about the irresponsible
behavior of some tolling authorities which, along with complicit state
officials, seemingly view toll revenue as a slush fund for investment
in all manner of projects, programs and activities which have nothing
to do with maintaining their highways, bridges and tunnels. We believe
that these toll facilities must be subject to Federal oversight, and
the statutory ``just and reasonable'' toll rate standard that has been
in effect for nearly a century must be applied to toll facilities that
serve interstate traffic. Furthermore, Federal enforcement authority,
whether through judicial review, Executive Branch oversight, or a
combination of the two, must be restored. Absent such action, consumers
and businesses will be compromised by unfair costs and a highway system
that is less efficient and less safe.
The Impacts of Tolls on NFI
Due to our considerable operations in the Northeast and Mid-
Atlantic, NFI bears a significant toll burden. In 2011 alone, we paid
approximately $14 million in tolls. Tolls represent the fourth largest
expense category for our trucking fleet, behind the cost of our
drivers, trucks and fuel. In the event of increases in tolls, we are
able to pass on to our customers in any given year, 50 percent to 80
percent of these increases, depending on contractual commitments,
market conditions and the particular freight lanes. Regardless, there
will always be a portion of our toll cost increases that we cannot
collect from our customers. For example, when the marketplace may not
accept, or may delay the acceptance of, the additional pricing for
necessary empty miles run by our trucks without customer freight. The
additional costs, administrative burdens, as well as customer frictions
created by the toll increases, compromise margin and customer
satisfaction in an already low margin, highly competitive business.
Our customers, ultimately, bear much of the costs of tolls, and of
course, they attempt to pass the costs on to their customers, which
eventually filter through to the consumer of the product. This impacts
the customers' cost of doing business and creates additional
uncertainty regarding these companies' ability to continue to operate
in the Northeastern part of the U.S. and other areas of the country
that impose tolls on major freight routes. It should be no surprise
that companies have relocated to more business-friendly locations. Toll
costs certainly contribute to these decisions. It is also important to
recognize that individual toll facilities do not exist in a vacuum.
Because of other recent increases in the Northeast, by 2015 a trip from
Baltimore to New York City will cost a 5-axle truck more than $209 in
tolls. To put this into perspective, the tolls could represent more
than 20 percent of the charge to a customer for this move and would
make tolls as a cost component more expensive than the cost of a
driver, truck or fuel for this trip. This will be a serious
consideration for businesses who are considering their future plans,
including in states served by the I-95 corridor which do not impose
tolls.
Due to these recent major toll rate increases in our service area,
we are in the process of reviewing all of our major lanes in the
Northeast to evaluate rerouting to avoid tolls. We have some success
avoiding, for example, the New Jersey Turnpike. We have to measure the
cost savings of the tolls relative to costs associated with the out-of-
route miles. Unfortunately, to avoid tolls, we are creating additional
mileage and congestion on non-toll roads which in some cases may be
less safe. Obviously we prefer to use Interstates as much as possible,
but we operate in a competitive industry with low average profit
margins, and when toll authorities raise their rates to a certain
threshold, we have no choice other than to find a less expensive
alternative. Tolls distort the marketplace by penalizing those vehicles
that stay on the toll roads and rewarding those that divert to local
roads. As a result, efforts to raise money for toll facility
maintenance and improvement have the unintended, yet predictable,
effect of adding to the maintenance costs of diversionary routes. In
some cases these routes are outside of the state where the toll
facility is located.
Some Toll Authorities Have Abused the Public Trust
Mr. Chairman, while there is significant evidence of toll authority
abuse in many locations, we would like to highlight two recent
examples: the Port Authority of New York and New Jersey (PANYNJ) and
the Delaware River Port Authority (DRPA).
Port Authority of New York and New Jersey
A January 31, 2012 audit report \1\ of the PANYNJ found ``a
challenged and dysfunctional organization suffering from a lack of
consistent leadership, a siloed underlying bureaucracy, poorly
coordinated capital planning processes, insufficient cost controls, and
a lack of transparent and effective oversight of the World Trade Center
(the ``WTC'') program that has obscured full awareness of billions of
dollars in exposure to the Port Authority.'' The report found that the
PANYNJ had accumulated debt of $19.5 billion by the end of 2011, which
is projected to rise to $20.8 billion by the end of 2012.
---------------------------------------------------------------------------
\1\ Navigant, ``Phase 1 Interim Report to the Special Committee of
the Port Authority of New York and New Jersey,'' Jan. 31, 2012.
---------------------------------------------------------------------------
In order to fund a 10-year, $25.1 billion capital plan, in 2011 the
PANYNJ announced a massive toll rate increase on the six interstate
bridges and tunnels between New York and New Jersey under its
jurisdiction. By 2015 the cash toll rate will increase by 88 percent
for cars and a whopping 163 percent for 5-axle trucks. This is on top
of a 75 percent increase in truck tolls passed just three years
earlier. At $105 per crossing on PANYNJ facilities, the truck toll rate
will be nearly three times higher than the rate for any other bridge or
tunnel in the country. In a laughable attempt to mitigate the
exorbitant increases, the authority recently developed a ``Truck Repeat
Volume Program,'' which offers a mere 10 percent discount on trucks'
monthly tolls, provided they take 100 trips or more through Port
Authority crossings during off-peak hours within 30 days. However, the
vast majority of truckers entering New York City will not be eligible
for the program. The fact that a truck has to cross during off-peak
hours presents a huge problem. The trucking industry does not choose
when to cross a bridge--that is dictated by our customers. Until
shippers and receivers allow truck deliveries during overnight hours,
trucks MUST travel into New York City during high congestion times.
Furthermore, most trucking companies are small operators and simply do
not have the necessary volumes to qualify. In addition, in order to
qualify for the discount, the truck must have either a New York or New
Jersey E-ZPass transponder. Transponders from other states do not
qualify.
Since the PANYNJ has refused to specify how the additional toll
revenue will be spent, it is unclear how the money generated by the
toll increases will be invested. Public information made available by
the Authority lists the projects to be funded, but does not detail the
amount to be spent on each.\2\ A PANYNJ press release put out prior to
final approval of the capital budget suggested that only about $3
billion of the revenue from toll increases will be used for projects
that directly benefit toll payers.\3\ The remainder will be used to
raise the Bayonne Bridge to accommodate larger ships, improve security
at PANYNJ facilities, and fund airport and seaport improvements.
However, the most egregious use of toll revenue is the approximately
$11 billion dedicated to the completion of the World Trade Center
office buildings. It is apparent from the audit report that these costs
are likely to escalate. It is unclear why trucking companies and
commuters are being forced to foot the bill for a real estate project.
Certainly when Congress granted an interstate compact to the PANYNJ, it
did not envision that the Authority's responsibilities would extend to
such activities.
---------------------------------------------------------------------------
\2\ http://www.panynj.gov/press-room/press-
item.cfm?headLine_id=1445.
\3\ http://www.panynj.gov/press-room/press-
item.cfm?headLine_id=1401.
---------------------------------------------------------------------------
The manner in which the Authority conducted the public hearings
associated with the toll increase did not allow commuters and carriers
with legitimate concerns, and who would likely suffer significant
hardship as a result of the increases, with sufficient opportunity to
provide input. The proposal was announced on August 5, 2011, and only
one day of hearings was scheduled, for August 16, 2011. This allowed
less than two weeks for the public to analyze the proposal and prepare
remarks. The hearings were held at locations that were difficult for
the public to reach, and at inconvenient times of the day. Following
the hearings, the Port Authority Board met on August 19, 2011 and
approved a revised toll increase schedule which was apparently
negotiated with both Governor Cuomo (NY) and Governor Christie (NJ). As
a result, the public was not even provided an opportunity to comment on
the final proposal. The approved toll increase was set to go into
effect on September 18, 2011, providing less than a month for motorists
to prepare for the exorbitant increases associated with the first phase
of the 5-year planned increases. This is especially problematic for
trucking companies, which cannot easily renegotiate contracts with
customers or, in many cases, cannot effectuate the rate increases with
customers within such a short period. The result for NFI and other
truckers is that we will absorb a disproportionate amount of the toll
increase for a period of time.
The hearings associated with the proposed increases were frankly
just window dressing. The way in which the whole process was conducted
sent a very clear message that the decision to increase tolls had
already been made, without regard to public input. The increases were
forced on motorists during a slow recovery from one of the worst
economic recessions in history, with little to no time for commuters or
businesses to determine how they would budget for the increased costs.
The process and the outcome points to an Authority with unchecked power
that shows little regard for the impacts of its decisions on the
community which it purports to serve.
Delaware River Port Authority
Among other responsibilities, DRPA owns and operates four
interstate bridges serving traffic between Pennsylvania and New Jersey.
Until the PANYNJ's recent rate increases, DRPA's truck toll rates were
the highest in the country for a bridge crossing. A March 29, 2012,
investigative report by the New Jersey Office of the State Comptroller
found ``wasteful spending and mismanagement of tollpayer funds due to
misguided priorities as well as weak or ignored DRPA policies,
procedures and internal controls.'' \4\ The report reveals an
organization whose flagrant disregard for its customers, misuse of
public funds and disregard for following even basic tenets of public
accountability, is a textbook demonstration of the need for greater
Federal oversight.
---------------------------------------------------------------------------
\4\ http://www.state.nj.us/comptroller/news/docs/
report_drpa_032912.pdf.
---------------------------------------------------------------------------
Here are just a few of the report's findings regarding DRPA's
operations over the past 10 years:
$1.5 million in payments were made to two insurance firms
that provided no service or coverage to DRPA.
$440 million in ``economic development'' project grants were
made, even though the DRPA Compact prohibits such grants if
sufficient money is unavailable for bridge projects. Over the
same period, DRPA had to cut back on bridge project funding and
take on additional debt to fund economic development projects.
The economic development project selection essentially
relied on the recommendations of elected officials from New
Jersey or Pennsylvania, and from DRPA commissioners. Projects
were accepted without any evaluation of the benefits to DRPA.
No project oversight was instituted.
Contributions from the DRPA's charitable contributions fund
were almost all made to organizations in some way affiliated
with the commissioners.
DRPA commissioners, employees and their friends and family
members got free passage E-ZPasses, which cost $1.2 million
over 10 years.
DRPA totally ignored all procedures with regard to expense
reimbursement, caps on expenses using DRPA credit cards, etc.
The report found evident abuse, citing ``meetings'' at
expensive restaurants and questionable trips and outings, some
for elected officials responsible for Authority oversight.
It is clear from the report's findings that the obvious abuses at
DRPA over a long period of time were allowed to continue with the
knowledge of the state officials who were supposed to provide
oversight, most likely because these officials were benefitting from
DRPA's largesse.
These are just two recent examples of toll agencies' irresponsible
practices. There are many more. Here is just a sampling:
The Ohio Turnpike Commission raised toll rates by 82 percent
in the mid-1990s, and was subsequently forced to partially roll
back the increases when it became apparent that massive
diversion of traffic to secondary roads was occurring, a
scenario that the Commission was told would likely unfold even
before they made the decision to raise rates. The Commission
ignored entreaties from the state legislature, local school
boards, the trucking industry, local city governments and
others, who warned that the rate increase would cause massive
evasion with dire consequences. The Commission went ahead with
their plans anyway. It is instructive that while the
Commission's own rules require public hearings prior to a rate
increase, and did indeed schedule hearings, none of the
Commissioners actually showed up, having obviously
predetermined the outcome.
In 2003, the Delaware River Joint Toll Bridge Commission
voted to increase tolls by 300 percent, partially for economic
development, even though Federal law did not allow them to use
toll revenue for this purpose. When Commissioners realized they
could not spend the money as intended, rather than roll back
the increases, they put the money into a slush fund. When ATA
challenged the rate increases under the Federal ``Just and
Reasonable'' standard, the Court found that although the
Commission likely violated the standard, Federal law does not
provide a private right of action to enforce the law, and
therefore the suit was thrown out.
The New York Thruway recently approved toll rate hikes of up
to 100 percent, in part to finance a continuing subsidy of the
state's canal system.
In 2004, the City of Chicago signed a 99-year lease
agreement handing control of the Chicago Skyway--and the toll
revenue it generates--to a private consortium in return for a
one-time payment to the City of $1.8 billion. Nearly all of
this money was used to retire city debt. Skyway users--about 80
percent of whom live in Indiana--were forced to endure a
doubling of toll rates. Indiana residents will have the
satisfaction of knowing that for the next century they will be
paying off the debt for a city which they do not even reside
in.
ATA Opposes Tolls on Existing Lanes
Mr. Chairman, a safe, efficient system of highways connecting
America's cities, towns and rural areas, financed in a fair and
equitable way, is essential to our country's economic well-being,
national security, and overall quality of life. Trucks move 67 percent
of our Nation's freight tonnage and draw 81 percent of freight
revenue.\5\ Unfortunately, the highway system no longer meets our
transportation needs. According to the U.S. Department of
Transportation, highway investment would have to approximately double
in order to fix the system's deficient pavements and bridges, and
address serious and growing congestion on highways throughout the
Nation.\6\
---------------------------------------------------------------------------
\5\ Global Insight, U.S. Freight Transportation Forecast to . . .
2023, 2012.
\6\ U.S. Department of Transportation, 2008 Status of the Nation's
Highways, Bridges and Transit: Conditions and Performance, 2009.
---------------------------------------------------------------------------
Disruptions to the movement of freight on our Nation's highway
system due to congestion jeopardize the tremendous gains the trucking
industry has made to improve supply chain efficiencies. Congestion
slows delivery times, creates unpredictability in supply chains, and
ultimately makes U.S. businesses less competitive and consumer products
more expensive. If we fail to address congestion, these costs will
continue to rise, and will translate into higher consumer prices and
slower job growth, and weaken the United States' ability to compete in
the global economy. However, the real costs of congestion are largely
hidden. The supply chain is wound so tightly that any disruption or
slow-down can cause significant ripple effects.
Recognizing these serious threats to our Nation's economic
security, ATA's members have indicated their willingness to support an
increase in highway user fees, provided the revenue is dedicated to
projects and programs that will benefit goods movement on the Nation's
highways. We use the following criteria to determine how this revenue
should be raised.
Will produce the level of revenues needed to meet current
and future highway infrastructure needs;
is easy and inexpensive to pay and collect;
has a low evasion rate;
is tied to highway use; and
does not create impediments to interstate commerce.
Traditional user fees, such as fuel taxes and registration fees,
meet the above tests, and ATA has been a vocal proponent for an
increase in the Federal fuel tax. Tolls, on the other hand, fall well
short of meeting these criteria, and therefore ATA is strongly opposed
to tolls on existing Interstate highways. While Federal law generally
prohibits this practice, Congress has, over the years, created a number
of exceptions. Imposing tolls on existing lanes of the Interstate
System would have a devastating effect on the trucking industry. The
industry is highly competitive and tolls cannot easily be passed along
to shippers. Furthermore, tolls cause diversion of traffic to
alternative routes, which are usually less safe and were not built to
handle the additional traffic.
ATA also opposes the imposition of mileage-based user fees, which
are a form of tolling. While we recognize that in the future a
replacement for the fuel tax as the primary source of revenue for
highway funding will be necessary due to changes in vehicle technology,
that scenario is likely at least two decades away. It is also important
to understand that passenger vehicle fleet conversion will precede
commercial vehicles' transition from internal combustion engines by
many years. Therefore, it would be illogical to require trucks to
transition to a mileage-based fee before passenger vehicles. In
addition, currently available options for implementing vehicle miles
traveled fees are limited, and these options have extremely high
collection costs and will experience a very high level of evasion.
Federal Oversight is Needed
Mr. Chairman, we would like to thank you and Senator Menendez for
introducing the S. 2006 ``Commuter Protection Act.'' This legislation
will provide greatly needed oversight for irresponsible tolling
authorities and protect the public from being gouged in order to fund
projects and programs that do not benefit them by ensuring that rates
comply with the long-established ``just and reasonable standard.''
Those tolling agencies which set ``just and reasonable'' toll rates
will not be affected by the legislation and have no reason to be
concerned with or oppose the bill.
Title 33, Section 508 of the United States Code requires that
``Tolls for passage or transit over any bridge . . .'' constructed over
navigable waterways ``. . . shall be just and reasonable.'' This
requirement, which was first established in 1906, was amended several
times over the years. In 1966, Congress gave the U.S. Department of
Transportation (USDOT) the explicit authority to determine whether
tolls met the just and reasonable standard, although it was equally
clear that the law gave the public the right to challenge the agency's
decisions through the judicial process.
In a wide-ranging effort to streamline the Federal administrative
process, in 1985 Congress removed the USDOT's authority to rule on the
just and reasonable standard. While it is clear from the legislative
history that Congress' intent was to retain a just and reasonable
standard that was challengeable through the court system, the new
language did not explicitly create a private right of action which
would allow the public to challenge the toll rates in Court. In a 2006
decision by the United States Court of Appeals for the Third Circuit,
the Court established that this lack of a specific provision for a
private right of action prevents the public from challenging toll rates
through the judicial process. As a result, since Congress removed the
Federal government from the review process altogether, the Court
decision essentially rendered Section 508 moot, despite the fact that
Congress clearly intended to retain the just and reasonable standard.
The result of this decision is that toll authorities subject to
Section 508 can, and have, set toll rates which generate revenues that
are far in excess of what is necessary to maintain and improve the
tolled bridges. In some cases, the tolls have become a slush fund for
all manner of activities completely unrelated to the bridges
themselves, and with little or no benefit to the motorists paying the
tolls. These toll rates clearly violate the just and reasonable
standard established by Congress. Yet neither the public nor the
Federal government has the ability to challenge these rates and enforce
Federal law. The Commuter Protection Act, a bicameral, bipartisan bill,
would restore enforcement of the just and reasonable standard and we
urge its passage.
Congress has a Constitutional obligation to protect interstate
commerce. Most of the states that have considered, or are currently
considering, Interstate tolls, have suggested that they will charge
tolls at their borders or at other locations designed to place much of
the financial burden on out-of-state traffic, an act that likely
violates the Commerce Clause. Multi-state agencies, such as the PANYNJ
and the DRPA, operate with the consent of the Federal government and
are subject to Federal requirements.
Mr. Chairman, as described above, we have witnessed a disturbing
trend among some tolling authorities. Operating independently, or with
the support of, or benign neglect from, state officials, these
authorities seem to view their control over the distribution of toll
revenue as an opportunity for personal enrichment or accumulation of
power. Without Federal oversight, such abuses may never be uncovered
and will not be curtailed.
Toll facilities that serve significant volumes of interstate
traffic are particularly in need of Federal oversight. This is
especially true of bridges and tunnels, which normally do not have
toll-free alternatives. In these cases, facility users are captured,
and the normal free market rules which might otherwise hold toll rates
down do not apply. Under these circumstances, one can characterize
tolls more as taxes than as user fees, since customers have no choice
but to pay the toll. Yet out-of-state travelers have no voice with
regard to whether their toll taxes should be raised since they enjoy no
political representation. A Federal presence is required to fill that
void and to be the voice of representation for interstate travelers.
This is certainly consistent with the Commerce Clause.
Mr. Chairman, once again, I would like to thank you for holding
this hearing. We look forward to working with the Subcommittee to
ensure that the rate-setting practices of tolling authorities are fair,
transparent, and consistent with the public's interest. We also
encourage Congress to refrain from granting additional state authority
to toll existing Interstates, and to consider eliminating existing
authority.
Senator Lautenberg. Thank you very much.
Mr. Plaushin, we'd like to hear from you. I understand
you're the Vice President for Public Affairs, AAA, and we'd
like your view on what's happening with tolls.
STATEMENT OF CHRIS PLAUSHIN, DIRECTOR, FEDERAL RELATIONS,
AMERICAN AUTOMOBILE ASSOCIATION (AAA)
Mr. Plaushin. Thank you very much, Chairman Lautenberg and
Senator Wicker for the opportunity to testify here today.
To put our tolling policies and positions in context, AAA
believes the success of any tolling plan is first that
motorists must be assured that the tolls they pay are fair and
equitable, the process for setting these toll rates is
transparent and open, and that the revenues derived are
utilized to improve the corridor or facility from which they
are collected.
As a general principle, AAA opposes tolling the existing
interstate, but we also recognize that tolling to provide new
capacity is among the future solutions that will help us
increase capacity and manage congestion.
AAA has done periodic polling on the topic of
transportation funding and, specifically, on tolling, in
particular. And naturally, it would come to no one's surprise
that no one really wants to pay more, but what we found is that
the public is generally more supportive of the concept of a
user-paid system, and then that support can translate to
tolling on the principle that toll revenues collected will be
solely dedicated toward the transportation improvements for
that particular facility. But once that direct link is severed,
the public acceptance will plummet.
The Office of the New Jersey State Comptroller said as
much, recently detailing the actions of the Delaware Port
Authority, stating that toll payers have borne a financial
burden attributable to years of mismanagement and neglect. Over
15,000 AAA members registered their complaints to the DRPA
board for raising tolls and spending revenues on items
unrelated to transportation improvements.
If tolling is to fulfill its role as part of the solution
to financing our infrastructure needs, tolling proposals must
provide the public with recognizable improvements for their
traveling experience. Instead, the public is being asked to pay
more and more, and in return, given less and less. The daily
commuter, the AAA member, the small businessman, the traveler
is being squeezed and developing a sense of futility, because
they feel that they have no voice in the process, and in many
cases, they don't.
Going forward, what can we do better, and what kinds of
safeguards should be in place to ensure the public good is
being served. Toll rates need to have a sound economic basis to
reflect the actual costs of improvements to the system, and
capital plans should be included as part of the overall scope.
A sufficient amount of time needs to be established between the
development of the tolling proposal, the public hearings, and
final approval so that all portions of the plan can be fully
vetted.
Public hearings on tolling need to be held at a variety of
locations and times, especially to ensure that there's broader
public acceptance. And tolling authorities should make annual
disclosures of their financial status and the progress of the
debt retirement for the tolled facilities within their
jurisdictions.
Before concluding, Mr. Chairman, I want to take the
opportunity to state AAA's support for your legislation, the
Commuter Protection Act, and to thank you for your leadership
on the issue of toll fairness and revenue protection. Your bill
will reinforce the definition of ``just and reasonable'' as the
standard for tolls, and reassert the need for accountability
and oversight of the process.
Further, today I'd like to submit a letter sent yesterday
from AAA's CEO, Bob Darbelnet, to the Executive Director of the
E-ZPass Interagency Work Group. Various AAA clubs have heard
from their members with complaints about unfair and unequal
treatment for those with E-ZPass transponders, and it appears
that E-ZPass holders are being charged different amounts, based
on which authority issued their transponder, or which state
they were issued at.
[The letter follows:]
American Automobile Association
Heathrow, FL, April 17, 2012
Mr. PJ Wilkins,
Executive Director,
E-ZPass Interagency Group,
Wilmington, DE.
Dear Mr. Wilkins:
I am writing to express AAA's concerns about disparate E-ZPass
tolling policies being exercised by member agencies of the E-ZPass
Interagency Group (IAG). AAA represents over 53 million members in
North America, with 19 million of them residing in the states that make
up the E-ZPass network.
AAA clubs have heard from members who utilize E-ZPass technology
about what they characterize as unequal and unfair treatment of those
with transponders. Their complaints are based on various toll
authorities charging different amounts to E-ZPass holders depending on
which authority issued the transponder.
We believe this practice is not only unfair and could serve as an
impediment to interstate travel and commerce, but also flies in the
face of the underlying promise of E-ZPass, which you state is ``to
provide the public with a seamless, accurate, interoperable electronic
method of paying tolls and fees.''
There is no reason for one authority to charge some E-ZPass holders
a higher toll, except, unfortunately in our estimation, to take
advantage of drivers who may be ``from out-of-state.'' The fact is, the
cost of providing the transportation service and collecting the toll
are identical for a vehicle with an E-ZPass tag issued by the home
authority and a vehicle with a tag from an away authority.
I urge you to work within the IAG to put an end to this practice.
Sincerely,
Robert L. Darbelnet,
President and CEO.
Mr. Plaushin. AAA believes charging out-of-state drivers a
higher toll rate violates the underlying promise of E-ZPass,
which is to provide the public with a seamless, accurate, and
interoperable electronic method of paying tolls and fees.
And with that, I will conclude my remarks in four minutes.
And thank you again for the time today.
[The prepared statement of Mr. Plaushin follows:]
Prepared Statement of Chris Plaushin, Director, Federal Relations,
American Automobile Association (AAA)
AAA History
Thank you for the opportunity to testify at today's hearing. My
name is Chris Plaushin. As the Director of Federal Relations for AAA, I
oversee AAA's Federal public policy and advocacy agenda on the topic of
transportation funding.
By way of background, AAA was founded in 1902 to advocate for
better roads and motorist safety. AAA is a not-for-profit, fully
taxpaying federation of motor clubs in the U.S. and Canada serving over
53 million members. Nearly 24 percent of all North American passenger
vehicles belong to AAA members. Our members are prime users and
beneficiaries of the Nation's surface transportation system. They are
commuters, leisure travelers, business owners, and users of public
transportation.
Current Needs, Immediate Crisis
As members of this committee know all too well, our Nation's
transportation system is woefully underfunded. Opinions differ on how
to make up this funding shortfall and precisely whose responsibility it
is to bridge the funding divide. But we should not lose sight of the
fact that everyone involved in this complex discussion cares about the
future of our system and wants to create a more functional, efficient,
sustainable transportation network.
The U.S. Department of Transportation (USDOT) recently released its
latest Conditions and Performance report which estimates that $101
billion, plus increases for inflation, would be needed annually over
the next 20 years from all levels of government--local, state and
federal--to maintain the highway system in its current state.
Investments needed to improve the current state of highways and bridges
could total up to $170 billion a year, according to the report.
The most recent American Society of Civil Engineers report card
gave our Nation's roads a ``D-'' grade and our bridges a ``C''.
Further, the Congressional Budget Office last month issued its March
2012 baseline for the Highway Trust Fund that shows it is expected to
stay solvent through the end of Fiscal Year 2012 but run into a
negative balance sometime in Fiscal Year 2013.
All of this data demonstrates that we are on the wrong trajectory
when it comes to the maintenance of our current system and providing
adequate funding to expand our system to meet the demands of the 21st
century.
AAA has been sounding the alarm on this topic for years. While our
engagement has brought some successes along the way, unfortunately
there is still much work to be done and not much time to do it. Which
brings us to our topic for today's hearing--the role that tolling can
play as a future funding solution to our Nation's transportation
funding crisis.
AAA Tolling Policy/Position
To put our tolling policy and positions in context, AAA believes
the success of any transportation funding plan or program is that fees
or taxes collected are fair and equitable, transparent, and used for
the purposes for which they are collected.
AAA supports the user-fee concept as the most appropriate and fair
way to continue to fund our transportation system for the future.
Tolling, properly implemented, is a part of the solution.
At the same time, tolling is estimated--even in the most ideal of
circumstances--to only bring in a small portion of the revenue needed
to build and maintain our Nation's infrastructure. Despite this, there
are some who envision a system where tolling is the silver bullet
solution to all that ails our transportation network.
As a general principle, AAA opposes tolling existing capacity, but
tolling new capacity is among the future solutions necessary to
increase capacity and manage congestion. However, tolls are not the
panacea proponents often try to paint them to be. As I mentioned
before, we won't fix the Nation's transportation funding shortfall by
assuming that tolled projects alone will fill the gap.
Tolling for some in the transportation community is simply a way to
engage in the real policy pursuit of congestion pricing. AAA generally
opposes pricing when it is implemented as a punitive measure to get
people out of their cars while providing no alternatives. A fairer
approach is to provide a priced road as an alternative to existing
congested roads. Many people don't have flexibility with their
employers to alter their work schedules to non-peak travel times. By
providing priced lanes as a superior service alternative, motorists can
choose to use them when time and predictability are most important.
Key to our support for tolls is that the revenue not be diverted to
other uses. In a perfect world, toll revenue would only be reinvested
in the facilities where users are charged, though we are now seeing an
increasing trend of toll money being used for other transportation
projects off the tolled-traffic corridor, as well as projects that have
nothing to do with transportation. These are troubling trends which
only serve to move us further away from the user-pays/user-benefits
model.
AAA Public Polling Data
In terms of public perceptions on tolling, AAA national as well as
some individual AAA clubs, periodically poll the public on the topic of
transportation funding, and tolling more specifically. What we have
found is that the public generally supports the idea of a user-pays
system and supports tolling on the principle that toll revenue
collected would be solely dedicated towards transportation improvements
for that particular facility.
In 2009, we found that 41 percent favor building new toll roads and
bridges which polled fairly high against other funding alternatives.
Similarly, in a telephone survey conducted among 800 New Jersey
motorists in May, 2011, the AAA New Jersey Automobile Club found that
67 percent of survey respondents support maintaining existing toll
rates and planned toll rate increases.
The public has clear expectations that the tolls they pay will be
utilized for the purpose of upkeep and proper maintenance for the
facility on which they were collected. Once that direct link is
severed, the toll is no longer a direct user fee, it just becomes
another tax.
AAA Recommendations for Tolling Authorities
Going forward, what can we do better and what kind of safeguards
should be in place to ensure the public good is being served?
Toll rates need to have a sound economic basis to reflect
the actual cost of improvements to the system. A capital plan
should be included as part of the overall project scope.
A sufficient amount of time needs to be established between
the development of the tolling proposal, the public hearings,
and final approval, to ensure that all portions of the plan are
fully vetted.
Public hearings on tolling proposals need to be held at a
variety of locations and times, especially to ensure broader
public attendance. Further, tolling commissioners should be
required to attend such hearings.
Tolling authorities should make annual public disclosures of
their financial status and the progress of the debt retirement
for each tolled facility within its jurisdiction.
Commuter Protection Act
With that in mind, Mr. Chairman, I want to take this opportunity to
state AAA's support for your legislation, the Commuter Protection Act,
and thank you for your leadership on the issue of toll fairness and
revenue protection. AAA endorses the Commuter Protection Act and is
pleased that you were able to get included within MAP-21 a GAO study of
tolling authority practices. Hopefully this will improve public
oversight and accountability of tolling agencies while we continue to
work towards enacting this important legislation.
As you know, the Commuter Protection Act would protect commuters
and interstate travelers from unfair and egregious toll hikes.
Specifically, your bill would restore USDOT authority to determine
whether toll increases are `fair and reasonable.' Groups like AAA and
other affected parties would have an opportunity to protest toll
revenue diversion, and other unjustified actions, on Federal roads and
bridges before USDOT.
E-ZPass Letter
Before closing, I'd like to take a moment to discuss an issue that
AAA thinks is critical to the future of tolling in the United States--
and that is the interoperability and seamless nature of interstate
tolling transponder technology. Tolling agencies that utilize E-ZPass
technology and are members of the E-ZPass Interagency Group (IAG) have
recently engaged in a harmful, discriminatory practice of charging
drivers who purchase their transponders out-of-state a higher rate than
those who purchase their technology in-state.
This troubling industry trend is the subject of a letter, sent
yesterday by AAA's President and CEO Robert Darbelnet to the E-ZPass
IAG which I would like to submit for the record.
The letter calls on the IAG, which represents toll facilities that
account for almost 40 percent of all U.S. toll transactions and nearly
70 percent of all U.S. toll revenue, to immediately end this misguided
charging practice.
Technology that was once hailed as being innovative, open, fair and
transparent, is at risk of becoming perceived as untrustworthy,
parochial, inconvenient and heavy-handed because of this discriminatory
business practice. AAA has an interest in protecting the integrity of
future cashless tolling systems which we believe are important to
motorists because of their convenience, and accommodation of free-
flowing toll payments. I hope the IAG is able to remedy this troubling
issue for the benefit of America's motoring public.
Conclusion
AAA is committed to doing its part to engage our members and raise
awareness about the transportation funding challenges our Nation faces.
We're doing so through our ``Making America Stronger'' campaign and
website, social and traditional media channels as well as club efforts
at the state and local level. Our research shows Americans understand
that a free-flowing, safe, efficient transportation system is needed to
keep us competitive in the global economy. We need to focus our
collective efforts on building broader public support for all solutions
that can raise revenue, in a fair and responsible way, for our Nation's
transportation infrastructure.
Thank you for the opportunity to testify here today. I look forward
to any questions you might have.
Senator Lautenberg. We didn't stop you to pay any tolls.
[Laughter.]
Mr. Plaushin. It was a fast trip.
Senator Lautenberg. You just kept going. Anyway, thanks
very much.
Mr. Conti, we look forward to hearing from you now.
STATEMENT OF HON. EUGENE A. CONTI, JR., SECRETARY, NORTH
CAROLINA DEPARTMENT OF TRANSPORTATION, ON BEHALF OF THE
AMERICAN ASSOCIATION OF STATE
HIGHWAY AND TRANSPORTATION OFFICIALS (AASHTO)
Mr. Conti. Thank you, Mr. Chairman and Senator Wicker for
giving me the opportunity to share the state policy
perspectives on the use of tolling as part of a menu of revenue
options for surface transportation. And I have submitted a
longer statement for the record. I'm testifying on behalf of
the American Association of Highway and Transportation (AASHTO)
officials, which represents all the states transportation
departments.
Two Federal commissions and a number of recent studies have
demonstrated and documented that we have a significant
investment deficit. I think both of you referenced that in your
opening comments. There is a significant investment deficit in
surface transportation infrastructure at all levels of
government.
We have a sizable portfolio of financing mechanisms that
could be utilized to supplement more traditional grant funding,
which supports investments in transportation infrastructure,
and one of the most useful has proven to be tolling options.
AASHTO developed the board of directors, which is all the
states' CEOs. It recommends adopting a diversified portfolio of
revenue options, including tolling, to meet program funding
needs, and to this end, we believe the Congress should support
flexible national policies that use both conventional and
innovative financing tools. For example, Federal limitations
should be removed on the ability of state and local governments
to raise toll revenues, and to apply those revenues to
transportation projects and activities within the same corridor
or region as the toll facility. At the same time, we recognize
that states must continue to deliver on the need for
accountability and transparency.
Under the interstate reconstruction and rehabilitation
pilot program, which was authorized under T-21, the last three
existing interstate facilities to be tolled, this tool holds
tremendous promise, given the backlog of reconstruction and
rehabilitation needs in the interstate system, and three
states, including my home state of North Carolina, along with
Missouri and Virginia, have been approved by the Federal
Highway Administration to proceed with those pilots.
We have addressed very directly the issues of transparency,
accountability, and equity in our pilot program, and I know
Virginia is in particular doing the same thing to make sure
that we are studying all the issues around tolling Interstate
95 through North Carolina. We have spent 30 months, two and a
half years, to reach out to affected communities and users of
the I-95 corridor through social media, through a dedicated
website, through editorial board meetings, through structured
workshops, with stakeholder groups, and the public. Seven
public hearings. Seven informational workshops. We've gone
beyond the traditional project development process by adding an
additional step to assess the economic impact along the
corridor of the potential tolling of I-95. And let me say very
directly that our Governor has not decided whether to move
forward with this imitative, but we are doing the detailed work
that needs to be done in a transparent way to make that
decision openly and with all the facts on the table.
Let me conclude by just commenting on the Commuter
Protection Act. Our concerns, from a state perspective, are an
insertion of new Federal oversight and uncertainty into what
has traditionally been a state and local process for setting
toll rates. We would resist the idea of direct Federal
decisionmaking for tolling. We have no problem with the Federal
involvement as it is, where we work with the Federal Highway
Administration on new tolling proposals, and to make sure that
we follow those rules of transparency and accountability that I
talked about. But to lose the ability of states and localities
to make these decisions and to have another step in the process
of Federal approval and decisionmaking we think would
discourage the role of tolls and innovative finance, and
particularly create an impediment for private investment in
infrastructure projects.
So, we think the most appropriate role for the Secretary is
to stay within that broader Federal policy framework, and to
continue to provide the guidance and counsel that we've had in
the past.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Conti follows:]
Prepared Statement of Hon. Eugene A. Conti, Jr., Secretary, North
Carolina Department of Transportation, on Behalf of the American
Association of State Highway and Transportation Officials (AASHTO)
Introduction
Chairman Lautenberg and Members of the Subcommittee, thank you for
the opportunity to share AASHTO's policy perspectives on the use of
tolling as part of a menu of revenue options for surface
transportation. My name is Dr. Eugene Conti, and I serve as Secretary
of the North Carolina Department of Transportation. Today I am
testifying on behalf of the American Association of Highway and
Transportation Officials (AASHTO), which represents the state
departments of transportation (DOTs) of all 50 states, Washington, D.C.
and Puerto Rico.
The federal surface transportation program is at a crossroads.
While the Highway Trust Fund (HTF) had generally provided stable,
reliable, and substantial highway and transit funding since its
inception in 1956, this is no longer the case. According to the
Congressional Budget Office, HTF spending is estimated to exceed
receipts by about $13 billion per year on average for the next ten
years (FY 2013-2022). At the same time, the National Surface
Transportation Policy and Revenue Study Commission has projected future
Federal investment needs at $225 billion per year for the foreseeable
future. When compared to about $90 billion currently spent, there is a
significant investment deficit in surface transportation
infrastructure.
This trend toward flattening or declining revenues at a time of
increasing investment needs is not something that is limited to just
the current Federal funding sources. In fact, this funding issue is
creating deep concern at all levels of government about the outlook for
adequate resources for maintenance and capacity improvements in highway
and transit assets in the United States. While addressing the
transportation investment crisis will require sustained commitment from
a broad range of stakeholders, a key component in this effort is the
funding and financing mechanisms that could be utilized to support
investment in transportation infrastructure. One of the useful proven
tools is tolling.
Definition and Historical Context
Generally, roadway tolling can be applied at the state and local
level in a wide range of fashions, including turnpikes, which are
individual (generally long-distance) facilities that charge a fee for
use; ``single links,'' which are facilities such as bridges, tunnels,
or connector roads; and ``managed lanes,'' or highway lanes that are
devoted to carpoolers, public transit vehicles, and toll-paying users,
including but not limited to High Occupancy Toll (HOT) lanes and HOT
networks, or systems of high-occupancy vehicle lanes.
The United States has made extensive use of, and has broad
expertise with facility-based tolling, but the history of toll use has
also been evolving. Prior to the Interstate era and the Federal Aid
Highway Act of 1956, many of the major highways and bridges/tunnels in
the country were funded through toll financing. Examples include the
turnpikes in Pennsylvania, New Jersey, and Delaware and many of the
bridges and tunnels in the New York metropolitan area. After 1956,
however, the number of new facilities built as toll roads declined
dramatically due to the focus on completing the Interstate system, the
availability of Federal funding to support investment, and the Federal
tolling prohibitions that went along with the use of this money.
In recent years, with the growing gap between highway investment
needs and available revenues as well as the development of easy-to-use
automated toll collection technology, toll roads and toll lanes have
once again become an important means for financing investment in new
highway capacity--in the last decade about one-third of all new
limited-access lane miles built in the United States were tolled; in
states such as Texas and Florida, the share is even higher.
Modern tolling in the United States has occurred primarily in two
forms: for new construction and for rehabilitation or conversion of
existing facilities. Tolling for new construction covers most tolling
projects currently in development in the country and relates to the use
of tolling to fund new capacity in the form of either new highways or
additional lanes for existing facilities. Examples of recent new toll
alignments (so-called greenfield projects) include the Pocahontas
Parkway in Virginia and the Inter County Connector in Maryland. The
State Route 91 Managed Lanes Project in Orange County in California,
which included the addition of two toll lanes in each direction
parallel to existing non-tolled lanes, exemplifies the use of tolls to
add new capacity to existing routes. In North Carolina, we are opening
this year the state's first modern toll road, around Raleigh, and two
more toll expressways near Charlotte are close to construction.
Tolling for rehabilitation or traffic management involves either
imposing a toll on an existing bridge or roadway to help pay for its
rehabilitation or replacement or converting High Occupancy Vehicle
(HOV) lanes to High Occupancy Toll Lanes (HOT) lanes to make better use
of existing capacity. Examples of these so-called brownfield projects
include addition of tolls on the Tacoma Narrows Bridge in Washington
and the Coleman Bridge in Virginia to pay for reconstruction or
expansion and various HOT lane conversions in California, Colorado,
Minnesota, and Utah. Again in North Carolina, we are planning
conversion of HOV lanes to HOT lanes to pay for widening of congested
Interstate 77 near Charlotte.
Currently, there are more than 270 state and local toll roads,
bridges, and tunnels in 32 states, totaling 5,541 miles of roadway.
Several more toll facilities are either in development or under
consideration. In 2008, toll revenues of $11 billion represented 9
percent of total federal, state, and local highway user fee revenues
(i.e., from motor fuel taxes, vehicles fees, and tolls).
Toll roads have been widely used to finance important system links
between large cities by crossing through rural areas in states such as
Kansas, Oklahoma, Pennsylvania, and New York. While the majority of
U.S. toll roads (by number of facilities) is in urban areas, 52 percent
of the country's toll road miles are in rural areas, mostly on the
parts of the Interstate system as part of statewide tolling programs
(grandfathered from tolling prohibition in case of Interstates), not as
part of targeted tolling efforts. In addition, several toll road
projects have been initiated or developed in recent years in ex-urban
areas.
AASHTO Recommendation On Federal Tolling Policy
The AASHTO's Board of Directors recommends adopting a diversified
portfolio of revenue options, including tolling, to meet program
funding needs. Furthermore, given the magnitude and diversity of needs
throughout the country, Congress should develop national policies that
support flexible use of both conventional and innovative funding and
financing tools. Under this framework, state DOTs agreed that Federal
limitations should be removed on the ability of state and local
governments to raise toll revenues and to apply such revenue to
multimodal transportation projects and activities within the same
corridor or region as the tolled facility.
We recognize that seeking greater Federal flexibility for tolling
activities entail states and local partners ensuring that such programs
are implemented with appropriate accountability, transparency, and
equity. There is no question that states have and will continue to
deliver on the need for accountability and transparency. States have
been able to demonstrate many positive benefits of tolling over the
past decades. Some examples include:
Raising substantial revenues as non-federal shares and
paying for state-only investments, in areas where traffic
volumes make it cost-effective to implement;
Establishing a revenue stream that tends to be stable and
well suited to be dedicated to transportation;
Adjusting toll rates as necessary to account for inflation,
including through automatic toll rate adjustment mechanisms;
Utilizing excess revenues (beyond debt service and
operations costs) for transportation purposes at their
discretion;
Encouraging innovation through implementation of electronic
toll collection and other tolling technologies to improve
compliance enforcement and offering user benefits such as
improved travel speeds and toll discounts that, over time, can
help offset the associated costs of the technology to the
consumer;
Setting toll rates to manage congestion, which can help
maximize the efficiency of the existing network;
Providing income equity in many instances through provision
of non-toll alternatives such as transit;
Generally establishing a high level of user-beneficiary
equity by ensuring that toll rates reflect the benefits derived
by the user, and;
Constructing tolled turnpikes in regional or national goods
movement corridors to provide robust highway capacity through
rural regions that otherwise could not afford it.
Furthermore, expanding Federal flexibility and support for tolling
would continue to build upon a progression of policy changes in the
last two decades achieved through ISTEA, the NHS Act, TEA-21, and
SAFETEA-LU that established the following programs:
Express Lanes Demonstration Program
High Occupancy Vehicle (HOV) Facilities
Interstate System Reconstruction & Rehabilitation Pilot
Program
Interstate System Construction Toll Pilot Program
Title 23 U.S.C. Section 129 Toll Agreements
Value Pricing Pilot Program
High Occupancy Toll (HOT) Facilities
Reflecting the need for program financing beyond the traditional
pay-as-you-go framework, some of these pilot programs have seen heavy
demand from states. In particular, the Interstate System Reconstruction
& Rehabilitation Pilot Program allows up to three existing Interstate
facilities (highway, bridge, or tunnel) to be tolled to fund needed
reconstruction or rehabilitation on Interstate highway corridors that
could not otherwise be adequately maintained or functionally improved
without the collection of tolls, This tool holds tremendous promise
given the backlog of reconstruction and rehabilitation needs in the
Interstate system after 56 years in service.
Three states, including my state of North Carolina, along with
Missouri and Virginia, have been approved for pilot demonstrations.
This is how we have addressed the issues of transparency,
accountability and equity in our pilot program studying the feasibility
of tolling Interstate 95 through North Carolina. Over a period of 30
months, we have reached out to affected communities along the 182-mile
I-95 corridor through social media, a dedicated website, editorial
board meetings, seven citizen informational workshops, seven public
hearings and numerous public presentations and meetings with
stakeholder groups. We are also going beyond the traditional project
development process by conducting an extensive economic analysis on the
economic impact of the project on local communities.
Commuter Protection Act
I would also like to take this opportunity to share AASHTO's
perspective on S. 2006, the Commuter Protection Act, introduced by
Senator Lautenberg in December 2011. We understand that this
legislation would provide the U.S. Secretary of Transportation the
authority to review and regulate tolls for passage over or through any
bridge or tunnel on any Federal-aid highway.
Contrary to additional flexibility that tolling affords the states
in meeting funding needs, this bill would introduce new Federal
oversight and uncertainty into what has traditionally been a state-and
locally-managed process of setting toll rates. At a time when new
infrastructure investment opportunities should be encouraged, this bill
would introduce direct Federal decision making for tolling, which could
discourage states and regions from utilizing tolling to expand capacity
and improve operations of their facilities and the overall
transportation network.
Furthermore, the loss of tolling agencies' ability to set their own
rates would have a deeply unfavorable effect on their credit ratings,
increasing the cost of capital and making it harder for such agencies
to borrow money through issuances of bonds for much needed capital
improvements, maintenance and other essential services. In addition,
the bill would discourage use of toll-financed public-private
partnership (PPP) opportunities. Instead of granting maximum access and
flexibility to a mix of funding and financing tools most appropriate
for each state including toll-based PPPs, Congress would create new
impediments to private investment through this legislation.
We believe that the U.S. Secretary of Transportation's most
appropriate role with respect to tolling lies in addressing the broader
Federal policy framework, including how the historically strong Federal
investments in surface transportation can best be sustained over the
long term.
Conclusion
On behalf of AASHTO, I very much appreciate the opportunity given
to us to offer our views on appropriate tolling policies to support
transportation funding and financing. Given the tremendous challenges
we face at all levels of government, the state DOTs are in full support
of assisting you in your efforts to address our national infrastructure
investment needs. Thank you and I look forward to answering any
questions you may have.
Senator Lautenberg. Thanks very much, Mr. Conti.
I want to take a look at what's happened, Mr. Baroni, with
recent toll increases, drivers paying $12 in cash and nearly
$10 with E-ZPass to cross the Port Authority bridges and
tunnels. Trucks have to pay as much as $65 to cross. The
question is: did the size of the increase strike those of you
who make the decision at the Port Authority as being fair? I
mean that's a substantial 50 percent increase to cross the
bridge. That's a lot of money.
Mr. Baroni. Senator, thank you for the question, and I know
that the conversation we heard some of my colleagues talking
about how much it is, but as I described before, Senator, that
if you are a cash-paying, non-E-ZPass using, rush-hour driving
truck, you are causing the most challenges physically to our
crossings. For every fully loaded tractor-trailer that goes
across our bridges, it's 10,000 times the damage to our bridges
as one car.
But one of the reasons we built all of the discounts in,
Senator, is to be able to--those folks who are commuting, who
have an E-ZPass, or are driving off-peak. And Senator,
respectfully, I understand the concerns that people have about
paying tolls across the Hudson. It is something that commuters,
as you mentioned, Senator, pay each and every day. But
respectfully, Senator, you only started paying tolls recently.
For years, Senator, as a former commissioner of my agency, you
received free E-ZPass. In fact, I have a copy of your free E-
ZPass. I've got letters from 2001.
Senator Lautenberg. How often was it used, do you know?
Mr. Baroni. Yes, actually. 2001, 2002, 2003----
Senator Lautenberg. But how many times?
Mr. Baroni. Well, I can tell you. Without----
Senator Lautenberg. I'm not going to permit you to continue
with this silliness.
Mr. Baroni. Well, Senator, you took 284 trips for free in
the last 2 years you had a pass.
Senator Lautenberg. I want you to answer this question.
Mr. Baroni. Sure.
Senator Lautenberg. Is this fair? Is this toll increase
fair to the public at large?
Mr. Baroni. I think, Senator, for the----
Senator Lautenberg. Talk about the individual cars, and
then we can talk about truckers.
Mr. Baroni.--cars. Certainly.
Senator Lautenberg. I want to keep you on track, so let's
go.
Mr. Baroni. Certainly, Senator. It is impossible to argue
fairness in tolls if you don't pay them. So, the people who are
driving vehicles across the Hudson River each and every day, we
give discounts for E-ZPass peak, discounts for E-ZPass off-
peak. We give discounts for carpools. We give discounts for
green pass.
Senator Lautenberg. Have the discounts worked?
Mr. Baroni. It worked.
Senator Lautenberg. Has it leveled off the usage on the
facilities?
Mr. Baroni. It has. We're now up to 81 percent of our
facilities use E-ZPass. Vehicles that cross the bridges and
tunnels are 81 percent. We're up 4 percent E-ZPass use since
August of last year.
Senator Lautenberg. You've talked about trucks. You've
talked about----
Mr. Baroni. Well, you asked me to talk about vehicles.
Senator Lautenberg. Yes. Vehicles, trucks, I'm talking
about the whole assemblage of people who use those bridges and
tunnels and pay tolls.
Mr. Baroni. Eighty-one percent of the people who will go
through the tolls at the Port Authority crossings will use an
E-ZPass that they pay for.
Senator Lautenberg. How do you get an E-ZPass?
Mr. Baroni. There are a variety of ways to get an E-ZPass.
You can go online and get an E-ZPass.
Senator Lautenberg. What do you pay for an E-ZPass?
Mr. Baroni. I think the number is, it's $20-some. I can get
back to you on the exact number, Senator.
Senator Lautenberg. Yes. The fact of the matter is that if
you've got the extra money, you get a little bit of privilege.
Mr. Baroni. I'm not sure what you mean by----
Senator Lautenberg. I guess it's all right.
Mr. Baroni. E-ZPass is not a privilege.
Senator Lautenberg. I'm going to conduct this hearing. And
I'll give you adequate time to respond.
Mr. Baroni. Great.
Senator Lautenberg. I'll promise you that.
You flooded us with all the things that were wrong in the
past, and to pull out that little thing that I got after
serving in the Port Authority for 4 years, I don't even think
about using it, Mr. Baroni.
Mr. Baroni. Of course not, because we took it away,
Senator.
Senator Lautenberg. Well, what happened, it was there.
That's what they did, and that's what I took. And I'm not going
to defend it. That's a silly thing to bring into this. I want
to discuss your direction of this grand agency, and where the
money has gone.
Mr. Baroni. Sure.
Senator Lautenberg. And why the increases were so large. Is
that fair play, in your view? Why did the administration that
we have in office now cancel $6 billion worth of money that we
raised through this place to build a tunnel and get 22,000 cars
a day off the road? You want to talk about those things? We
have to stay on the subject, and I, now Chairman of this
Subcommittee, will lay the ground rules.
Mr. Baroni. Senator, I'm prepared to talk about anything
you'd like.
Senator Lautenberg. Yes. And you were prepared to talk
about a lot of things that aren't relevant to this subject. You
can't hear me? I'll make it louder, I promise you.
So, is $12 for crossing fair?
Mr. Baroni. Is $12 for a crossing, if you don't have an E-
ZPass, therefore, you're backing our traffic up? Yes.
Senator Lautenberg. Yes. If you don't have the money to buy
an E-ZPass, right.
Mr. Baroni. If you're traveling on E-ZPass and you're going
through on peak rush hour, and you don't have an E-ZPass, given
the fact that 81 percent of the people who do our crossings
have an E-ZPass, and given the fact--you know, for every 10
percent that we can move people----
Senator Lautenberg. How do you go to work?
Mr. Baroni. Say it again.
Senator Lautenberg. How do you go to work? You live in New
Jersey.
Mr. Baroni. I do live in Hamilton, New Jersey. I take the
train. Sometimes I drive.
Senator Lautenberg. Oh. You take the train.
Mr. Baroni. Sometimes I drive.
Senator Lautenberg. Because, otherwise, you could wait a
half an hour or an hour to cross the bridge, or the tunnels, or
things of that nature.
Mr. Baroni. That's true, because not enough people are
using E-ZPass.
Senator Lautenberg. Instead of taking advantage of the
opportunity to build more rail transportation there, what you
did you laid it all over the commuters, the truckers who need
to have that kind of access.
So, I want you to answer the question. Do you think it's
fair?
Mr. Baroni. Is it fair for someone who doesn't have an E-
ZPass? Is it fair for a truck that's causing 10,000 crossing--
--
Senator Lautenberg. No. I didn't ask you that. I asked you
if it's fair for a passenger going to work in a car, is it
fair----
Mr. Baroni. A passenger going to work in a car, commuting
by car, the statistics of E-ZPass users are even higher.
They're not paying that. They're doing E-ZPass discounts. So,
Senator, look, for someone who doesn't get an E-ZPass and is
backing our traffic up at the Lincoln Tunnel this morning, yes,
it's fair.
Senator Lautenberg. The person who doesn't have the money
to buy an E-ZPass----
Mr. Baroni. Some people don't get them given to them,
Senator.
Senator Lautenberg.--is screwing up the works as you cross
the bridge.
Mr. Baroni. I didn't understand, sir.
Senator Lautenberg. Your response to the question is----
Mr. Baroni. In fact, Senator, I've just been handed some
information, so I want to correct something I said. You don't
have to pay for an E-ZPass. All you need is a pre-paid balance
on E-ZPass for the Port Authority of New York and New Jersey.
Senator Lautenberg. Are you kidding? What do you mean a
balance? Where does the balance come from? Does it come out of
your pocket? Does it come out of your----
Mr. Baroni. Yes. And when you're done using the E-ZPass,
you get it back.
Senator Lautenberg. You get what back? You get the cost of
the card back?
Mr. Baroni. The E-ZPass?
Senator Lautenberg. Yes.
Mr. Baroni. You put a balance----
Senator Lautenberg. E-ZPass gives you a $9.50 ride, right?
Mr. Baroni. Depending on the time of day, but OK.
Senator Lautenberg. A $12--a $9.50 ride with E-ZPass.
Mr. Baroni. OK. You're talking a peak-hour E-ZPass.
Yes?
Senator Lautenberg. Yes. Yes. $9.50. Is it fair to the
person who doesn't have an E-ZPass to pay 12 bucks? Is it fair
to someone who puts up their money in advance to pay $9.50? Is
it a fair rate, in your judgment?
Mr. Baroni. Yes.
Senator Lautenberg. It is?
Mr. Baroni. Yes.
Senator Lautenberg. OK.
Mr. Baroni. Given the world that we inherited. Yes.
Senator Lautenberg. So you're saying to those who need the
bridges and tunnels to commute, pay up. Did the Governor
approve the minutes that raised the toll?
Mr. Baroni. Yes. Of course.
Senator Lautenberg. He approved it?
Mr. Baroni. You know that, Senator.
Senator Lautenberg. So, he knew about--you didn't surprise
him with something and say----
Mr. Baroni. When he got the minutes? No.
Senator Lautenberg.--``Here's what we got. Tomorrow we'd
like to raise''----
Mr. Baroni. When the Governor got the minutes of the
meeting, no. Both Governor Cuomo----
Senator Lautenberg. He got advance----
Mr. Baroni. Governor Cuomo and Governor Christie got the
minutes of the meeting and they did not veto them. That's
exactly right. Well, you know that, Senator, because when you
were on the commission.
Senator Lautenberg. Don't tell me what I did. I want to
know what you did.
Mr. Baroni. Senator, you can't ignore the past.
Senator Lautenberg. I'm going to keep you on path, whether
you like it or not. You don't have an E-ZPass. You are there in
the chair----
Mr. Baroni. I do have an E-ZPass.
Senator Lautenberg.--at our request, and we expect you not
to give us a song and dance, but to answer the questions
specifically. OK?
So, I'm asking you: when did the Governor get word of the
fact that you were going to boost the----
Mr. Baroni. Well, Senator, I'm not going to get into
conversations that I have with the administration.
Senator Lautenberg. No. You have----
Mr. Baroni. Senator, I'm not going to start having a
conversation about who I talked to.
Senator Lautenberg. So, you're refusing to answer the
question.
Mr. Baroni. Senator, I'm not going to have a conversation--
--
Senator Lautenberg. You're refusing to answer the question.
Mr. Baroni. Senator, I'm not going to talk about
conversations that I have with different administration
officials.
Senator Lautenberg. This isn't a conversation. Are you
running a protection agency there?
Mr. Baroni. Excuse me?
Senator Lautenberg. Talk straight about what went on. And I
asked you a simple question, and you say you're not going to
discuss it. You have to discuss it. You're an important
executive at that agency. You work for the people, whether you
think so or not. And the fact of the matter is, I want to know
when the Governor knew when the rates were going to go up.
Mr. Baroni. Well, as you said before, Senator, and I'll
clarify it.
Senator Lautenberg. If that was your private conversation,
you can't use the private, it's a public effort.
Mr. Baroni. You asked me the direct question before. The
Governor and Governor Cuomo received the minutes of the meeting
and they approved the toll increases by not vetoing them. Yes,
sir.
Senator Lautenberg. Yes. OK. So, they knew what was coming.
That was not what I would call an E-ZPass. The decision to
raise the toll, of course, was the Governor's decision to raise
that toll.
An external audit released after the toll hike went into
effect called the Authority a dysfunctional organization. Tolls
are scheduled to rise even higher in the coming years, reaching
$15 a car to enter Manhattan in 2015. Will you agree to delay
the additional toll increases until a subsequent external audit
finds the Port Authority has fully resolved the issues raised
in the initial audit?
Mr. Baroni. I can't sit here, Senator, and commit to
something that the board does or does not do. I can tell you
that what you're referring to is the Navigant report that was
called for by Governor Christie and Governor Cuomo at the time
of the tolls. And in that report, they said the Port Authority
had become dysfunctional. And it is impossible to argue with
that conclusion.
For decades, the Port Authority had moved away in many ways
from its core mission, investing in projects that don't have to
do, and this is something the Navigant report points out,
investing in projects that don't have to do with its core
mission, had done, over the decades, wasteful reckless
spending, and had developed a system of compensation and
benefits that was completely out of whack with the rest of the
public sector and certainly the private sector.
And as a result of that, at our last board meeting,
Chairman Sampson and Vice Chairman Rechler led the board in
getting rid of all of those compensation and benefit--all of
them, and over the next 18 months saving $41 million for the
agency.
In addition, to a series of reforms that this agency has
put into place, including the first new outside auditor,
including the leadership that we've had on making people
contribute to healthcare. These are the kind of reforms--and
getting out of these bad real estate deals, and starting to get
out of deals that we should never have been in the first place,
and selling and getting rid of these wasteful spending.
Senator, you know, I came into office in March 2010. We're
about to celebrate our 90th anniversary of the agency. Over
those decades, decisions were made at the Port Authority, for
example, to, as I said before, invest in the teleport, and
create industrial parks.
Senator Lautenberg. Let's not talk about all those things
that were--tell me what you're doing?
Mr. Baroni. You can't say we're dysfunctional and not let
me explain why we became dysfunctional.
Senator Lautenberg. Well, you've blamed it on everybody
else. The Bergen Record linked Governor Christie in January to
offering more than 50 positions to people at the Port
Authority. Now, according to the article, many of these
employees have six-figure salaries and close ties to the
Governor, including a former political blogger, a campaign
worker, and local mayors, prompting questions about the extent
of political patronage at the Port Authority.
Mr. Baroni. Yes.
Senator Lautenberg. I want you to supply this committee the
names and the positions of these recommendations and their
qualifications. We'll give you two weeks to do that.
Mr. Baroni. Well, Senator, I'm not sure how the last time a
Senator asked for a list of names, but I'm happy to provide a--
--
Senator Lautenberg. What do I care about--your opinions are
really----
Mr. Baroni. You asked me to come here. You asked for my
opinion.
Senator Lautenberg. Yes. But you're not going to do--I'm
asking you to do something.
Mr. Baroni. Well, Senator----
Senator Lautenberg. You have----
Mr. Baroni. Absolutely. I'm happy----
Senator Lautenberg. You have a direct responsibility to be
looking at these things in terms of their need.
Mr. Baroni. Sure.
Senator Lautenberg. There's a lot of money that the Port
Authority was originally going to put into the tunnel, which
was pulled back. $3 billion was the offer that was made to
match the Federal contribution to the rail tunnel. Nothing
happened.
Mr. Baroni. Well, Senator, can I at least address your
question about patronage, because I think it's a fair one, and
I appreciate you asking it.
So, The Bergen Record ran a story back in January, I
believe, that talked about 50 political hires that were
directed--the story goes, were directed by the Governor's
office. If I could make a couple of points.
First of all, the list that The Bergen Record mentioned--
the number that the Record mentioned, included a list of
interns. Eleven of them. One of whom is a young man by the name
of Robert Menendez, Jr., who I understand his dad works around
here. And he was a graduate of the University of North
Carolina, for my friend, the secretary, and he worked very
hard, and clearly, I don't think anyone could say that he's a
political appointee. But he was on the list.
But I think philosophically that, as Governor Christie has
said, governors have the ability--you know, when I showed up at
the Port Authority, I was the first Christie person there. And,
you know, governors should be able to put people at these
agencies who share their values and interest. You may disagree
with it, but Senator, respectfully, over the 8 years before I
got there, there were 68 political appointees by Governors
Codey, McGreevey, and Corzine. Sixty-eight. There was never a
hearing about that. And one of the reasons I find interesting,
and one of the criticisms----
Senator Lautenberg. They weren't called dysfunctional at
that time.
Mr. Baroni. Senator, you just criticized me for hiring,
your words, a campaign staffer. Well, Senator, one of your
campaign staffers from the 2002 campaign was then hired at the
Port Authority. On her resume, when she applied to the Port
Authority, said she ran your U.S. Senate candidate visibility
throughout the county, and was hired at the Port Authority as
an energy specialist. What I find interesting is when Chris
Christie and this Port Authority brings somebody on, it's
political. When it happens before, it's good government.
Senator Lautenberg. You're going to pick out these things.
Robert Menendez, Jr., very smart guy, and you're lucky to
have----
Mr. Baroni. Absolutely.
Senator Lautenberg.--him on the job.
Mr. Baroni. That's why I brought him on board.
Senator Lautenberg. Why is 1 out of 50, why does it matter?
These little tidbits of things that you're trying to score
points with don't register with me.
Mr. Baroni. I know they don't register with you.
Senator Lautenberg. Yes. But you have a responsibility. And
so, we want straight talk from you. If you want to play little
games, Robert Menendez, Jr., he's a very qualified young man.
Mr. Baroni. And that's why I hired him.
Senator Lautenberg. Oh. So, that justifies the other 49 is
what you're saying.
Mr. Baroni. Senator, I'm happy to go through the list. You
want a list.
Senator Lautenberg. Well, I've asked you for a list----
Mr. Baroni. You just did.
Senator Lautenberg.--of all 50 of those people.
Mr. Baroni. Sure.
Senator Lautenberg. And their responsibility.
Mr. Baroni. Would you like to go through it now?
Senator Lautenberg. And their backgrounds.
Mr. Baroni. Sure. Should we go through them now? I'm happy
to.
Senator Lautenberg. The impertinence is barely tolerable,
but no. I'll give you 3 days to provide it here.
Mr. Baroni. No problem. Look forward to it.
Senator Lautenberg. I'm sorry?
Mr. Baroni. I have no problem----
Senator Lautenberg. OK. Fine. Fine.
Mr. Baroni.--answering for the people that we hired.
Senator Lautenberg. Yes. OK. Well, that only took us 15
minutes to get to.
In January 2011, both Governors Christie and Cuomo were
informed of the need to raise cash tolls to $12. January 2011.
Suddenly, in July, the internal proposal drastically jumped to
$15. Whose decision was it to raise the toll to $15, when that
matures?
Mr. Baroni. I'm not sure what proposal you're talking
about, Senator.
Senator Lautenberg. The one that it's going to take the
tolls up to $15 in the year----
Mr. Baroni. The toll proposal you're talking about?
Senator Lautenberg. Yes.
Mr. Baroni. Well, Senator, the Port Authority did. We put
it out as a public notice in full page ads in the newspaper.
Then people came and had public hearings about it, that you
talked about. And so, I'm not--the Port Authority did.
Senator Lautenberg. The Port Authority did. With the
approval of the Governors.
Mr. Baroni. No. As you asked me before, Senator, the
Governors approved the minutes after the toll increase.
Senator Lautenberg. Yes. Oh. So, this was something that
the Port Authority decided without waiting for any approval.
Mr. Baroni. As I said before, Senator, I'm not going to go
back and forth in the conversations that agencies have with
each other, but it's certainly fair to say, by me sitting here
today, it's the person you want to ask questions about the
tolls, so I'm prepared to spend all day talking about them.
Senator Lautenberg. So what's the significance of what you
just said? What's the significance of that?
Mr. Baroni. The significance--it's a great question.
Senator Lautenberg. You're trying to play----
Mr. Baroni. It's a great question.
Senator Lautenberg.--a funny game of table tennis here. I
don't like it, obviously. I asked you a question. Who raised
it? You said the Port Authority.
Mr. Baroni. Port Authority. Sure.
Senator Lautenberg. I thought you said that the Governors
hadn't yet seen it. Is that what you're suggesting?
Mr. Baroni. Well, again, I'm not going to comment about who
saw what and when, but----
Senator Lautenberg. Well, you are going to comment.
Mr. Baroni. Well, Senator.
Senator Lautenberg. You have a responsibility to comment,
my friend, whether you like it or not. You're at a table here,
and you are compelled to tell the truth to the Congress.
Mr. Baroni. Of course, I'm telling the truth, Senator. I've
told the truth the whole time.
Senator Lautenberg. Yes.
Mr. Baroni. And an implication, Senator, that somehow I had
not told the truth is offensive to me. I take this body and
this Senate sacrosanct----
Senator Lautenberg. No. The game you're playing, with
picking out these things, a past----
Mr. Baroni. Senator, you can't----
Senator Lautenberg.--former Port Authority Commissioner.
Mr. Baroni.--say that we're dysfunctional, like somehow the
Port Authority became dysfunctional in the 2 months Chris
Christie was Governor. Senator, we're cleaning up.
Senator Lautenberg. Oh. Are you sensitive to that? That
suddenly it was declared dysfunctional in the last 2 months.
Mr. Baroni. It was because of Chris Christie and Andrew
Cuomo called for a Navigant review of the agency that finally
somebody did call it dysfunctional. And it's dysfunctional----
Senator Lautenberg. By throwing 50 political appointments
in there, did that help straighten out the dysfunctionality at
the agency?
Mr. Baroni. We brought people to this agency, passionately
believed in reforming it. And we brought people in who took the
places, in some cases, of the very political appointees under
Governor McGreevey, Governor Codey, and Governor Corzine, that
apparently were, in the world here, good government. But it's
political when Chris Christie does it, but apparently it's good
government when John Corzine does it.
And the dysfunction that we are cleaning up, that we are
passionate about cleaning up, that we're making people pay for
their healthcare, that we are getting rid of all these
benefits.
Senator Lautenberg. Just get me the list.
Mr. Baroni. No problem, Senator.
Senator Lautenberg. Get me the list.
Mr. Grabell or Mr. Plaushin, to ensure public involvement,
the Port Authority is required to hold public hearings on toll
increases. Did drivers in New Jersey and New York have
sufficient opportunities to air their concerns to the Port
Authority, Mr. Plaushin and Mr. Grabell?
Mr. Plaushin. My understanding of the public hearings, from
talking to our AAA club in New York, was that they were all
held at the same time during rush hour, and that none of the
Commissioners actually attended any of the public hearings.
Senator Lautenberg. And Mr. Grabell?
Mr. Grabell. With regard to truckers, the best we were able
to do is to attend via webinar a particular hearing, and our
attendees found that to be a pretty unproductive exercise, in
light of not being able to hear information proffered by other
people on the webinar. So we've generally just looked to rely
upon the agencies that support us to try to give us the best
support they can, because, again, we're not just looking at
this location, but we're looking at dealing with tolling
authorities elsewhere as well.
Senator Lautenberg. The New Jersey comptroller issued a
scathing report on the practices at the Delaware River Port
Authority. Again, for Mr. Grabell and Mr. Plaushin. According
to the report, the Authority was treated like an ATM for those
who had connections to the board. Do you have any concerns
about the diversion of nearly half a million dollars in toll
revenue that was given to an insurance service company, even
though the company did no direct work for the Authority?
Mr. Plaushin. In reading some of that report, I know there
were many things listed in terms of diversion of funds to non-
transportation-related items. I think the most important item
that comes out of that report is that the Port Authority
basically ignored its primary responsibility, which was to
address the backlog in transportation and infrastructure
improvements.
Any sort of diversion of funds from toll payers is
unacceptable and needs to be addressed, and I think that's
why--you know, AAA is not anti-tolling, but we do believe that
some accountability in the process is needed.
Senator Lautenberg. Mr. Grabell?
Mr. Grabell. We would share those thoughts. I mean,
obviously, the challenge today is the escalating costs of
tolls. And, obviously, if money is being used for inappropriate
purposes, it gives us great concern, because this cost
escalation dramatically impacts both us and our shipping
customers, and ultimately, the consumers. So, we are very
concerned. We recognize that there needs to be revenue to
support the highways, and the bridges, and the tunnels, but
certainly diverting money to other inappropriate places does
not help the cause at all.
Senator Lautenberg. The Delaware River Port Authority
borrowed money and delayed needed infrastructure repairs to
fund non-transportation economic development projects. Do you
think that that is appropriate to use those toll revenues for
non-transportation projects?
Mr. Grabell. Chairman, from our perspective, we find that
to be very inappropriate. I mean the challenge that we have is
that we see that there is obviously a need for funds to be
raised to support the infrastructure, but for people that are
paying those tolls, to then have money used for purposes that
have nothing to do with helping to make their highways,
bridges, tunnels, and other facilities both safer and more
efficient really is, you know, essentially burdening them with
expenses that probably should be borne by a different universe
of people.
Senator Lautenberg. Mr. Plaushin?
Mr. Plaushin. Yes. I mean I would agree. I mean AAA would
argue that tolls, you know--we know that localities are
strapped. We know that, as Secretary Conti pointed out, that,
you know, the need for revenue is great, and tolls can be a
part of that solution. They're not a panacea. They're not a
silver bullet. But they need to be implemented in a way that's
fair and reasonable, and the tolling authorities need to be
accountable and transparent to those that are paying the rates.
Senator Lautenberg. Mr. Baroni, the Port Authority cited
declining revenues as one of the major reasons for the drastic
toll hike.
Mr. Baroni. Yes, sir.
Senator Lautenberg. Shortly before the toll hike, the Port
Authority redirected $1.8 billion that was slated for the ARC
Tunnel, as you know, to fund the non-Port Authority road
projects. How much revenue will be generated by these road
projects?
Mr. Baroni. Essentially the same amount that ARC would have
generated for the Port Authority.
Senator Lautenberg. The same way?
Mr. Baroni. For the Port Authority's revenue? You know,
when you look at the projects that, we call it the Lincoln
Tunnel Access project, because, you know, there are four of
them that are part of the program, but the one that most folks
talk about, of course, is the Pulaski Skyway. And Senator, you
and I have both many times driven across the Pulaski Skyway,
and it was built to be the missing link between the Holland
Tunnel and the Port. In fact, it wasn't even built by the Port
Authority. It was given to the Port Authority after we were
founded. It was the first vehicular crossing across the Hudson.
The problem is that Pulaski, nearly as soon as it was
built--in fact, there's a great book, and Senator, I'll get you
the name of the book. Well, actually, one of my former law
students read it.
Senator Lautenberg. Well, you'll probably finish it here,
but please go ahead.
Mr. Baroni. Well, you're talking about Pulaski. I was just
saying I would recommend the book to you about Pulaski Skyway,
that as nearly as soon as it was built, it became obvious that
it couldn't take trucks. So we have Truck 1/9, that winds its
way through. But you look at Pulaski built in the same manner
that the I-35 bridge in Minneapolis, and Governor after
Governor, Senator Lautenberg, you've certainly spoken about
this repeatedly, the need to replace Pulaski.
The reason why Pulaski will assist the Port Authority is it
will do a couple things. It will make a smoother trip to
Lincoln, it will help at Holland, and certainly will help at
the Helix. So, it is a direct link to our facilities, which has
been the law in New Jersey forever and New York forever and a
day. So, it's an important project for our interstate network.
Senator Lautenberg. But, I detect that through all of this
discussion that we've just heard is that the non-Port Authority
road projects, how will they generate the revenue that you said
would be the same as that, which would be----
Mr. Baroni. Well, the ARC was a $3 billion contribution
from the Port Authority to the project. The Port Authority's
contribution was $3 billion, but the Port Authority was not
really going to get revenue out of that project, as you know,
but the Pulaski project, Whit Penn, Pulaski 1/9, we believe
will have a benefit to the current crossings, certainly, at
Lincoln, and at Holland. So, we believe, you know, it will be a
marginal improvement there. But, no one has made an argument
that--Senator, you're not arguing we should toll the Pulaski.
Senator Lautenberg. That wasn't the only non-Port Authority
project.
Mr. Baroni. It's four projects in the same--they're all
linked. It's Whit Penn. It's Pulaski. It's 1/9. And I'll get
the fourth one. I think it's 139. They're all connected to the
Lincoln Tunnel. They're all linked to the Lincoln Tunnel.
Senator Lautenberg. What's does the transportation trust
fund look like in New Jersey right now?
Mr. Baroni. Senator, it's been 2 years since I've been in
the State Senate, so I'm not necessarily the person you should
ask that question to.
Senator Lautenberg. Well, if the Port Authority was
prepared to give $3 billion to the ARC Tunnel, and the state
committed to do the program, I discussed this directly with the
Governor, Governor Christie, and he was much behind it as a
candidate and then as Governor. And then suddenly, the climate
changed, and he killed the tunnel project. And some of that, I
think, might have been given to the transportation trust fund.
Are you aware of that at all?
Mr. Baroni. Senator, all I can speak to is the Port
Authority dollars that are going to these four projects. Beyond
that it's----
Senator Lautenberg. But is that the only place that the--
you're talking about the $3 billion?
Mr. Baroni. Right. The four projects that the Port
Authority is participating in are designated for specific
projects.
Senator Lautenberg. How much money?
Mr. Baroni. $1.8 billion.
Senator Lautenberg. $1.8 billion.
Mr. Baroni. Right.
Senator Lautenberg. So, how did the four projects get
designated?
Mr. Baroni. We spent a lot of time with engineers. We spent
a lot of time looking----
Senator Lautenberg. But, these were approved in the minutes
of the Port Authority by Governor Christie and Governor Cuomo.
Mr. Baroni. My recollection at the time that this was
probably done under Governor Patterson, but I'd have to go back
and check.
Senator Lautenberg. The ARC Tunnel would have taken an
estimated 22,000 cars off the road, double the number of
households in New Jersey that are within 50 minutes of
Manhattan. Will the $1.8 billion that was redirected from the
ARC Tunnel to fund the road projects provide the same levels of
benefits for commuters?
Mr. Baroni. Well, again, Chairman, I'm not an expert about
it. I can tell you this, that clearly, fixing Pulaski, Whit
Penn, 139 will make the flow, and traffic, and delay in and out
of Lincoln, and less so, in and out of Holland, better. But, in
addition to that, and I think you raise you a very, very good
point about cross-Hudson Rail, and there was a lot of
discussion about when it comes to ARC and Gateway, but the
first four tunnels that take trains under the Hudson were built
by us, well, built by the Hudson and Manhattan, that we bought
in the late 1960s and made it the PATH. And because of the
commitment that previous Governors, and Governor Christie, and
Governor Cuomo, we've had an extraordinary investment in PATH,
that I think often gets--and I know we're talking about tolls,
but I think since we brought up crossings, we've seen the last
couple of weeks on a project that--and the folks who know me at
the Port Authority has been one of the projects I spend a lot
of time pushing, and pushing, and pushing, and that's a new
train station in Harrison.
Mayor McDonough, working across party lines, Mayor
McDonough, in Harrison, points out that the Harrison train
station needed work, but not only did it need a new station----
Senator Lautenberg. Thank you very much.
Mr. Baroni. OK, Senator.
Senator Lautenberg. Thank you.
Mr. Baroni. I thought this was important.
Senator Lautenberg. Yes. The terminal at Harrison was
important. Thank you.
Mr. Baroni. But if I could just finish up, because it's
very exciting.
Senator Lautenberg. Well, I thought you were finished.
Mr. Baroni. I just wanted to talk about the 10-car
platforms, because we talk about increasing capacity across the
Hudson. One of the challenges at Harrison is not just the
station, it's the physical head houses, but the platforms
themselves can only today accommodate eight cars. Under the
plan, we're going to be able to go to 10 cars, and that's going
to help us bring more rail----
Senator Lautenberg. Thank you very much. This hearing is
over. I expect from you, Mr. Baroni, the list of the 50 that
were appointed to the jobs, including their salaries, and
including their backgrounds and experience.
Mr. Baroni. Certainly, sir.
Senator Lautenberg. Thank you all for your being here. We
know one thing, that we have to be careful about how we use
these toll revenues. And again, I think it's agreed that, look,
at some places they're desperately needed, but we want them to
be just and reasonable, and I express a point of view that
perhaps hasn't come across yet.
I thought that a 50 percent increase at one moment was an
outrage, and we're going to continue to talk to and with the
Port Authority, and we'll ask for particular documents, and I'm
sure that you'll be quick to furnish them. The mail's good,
rather than verbal. I think we'll just condense it that way.
Thank you all very much for being here.
[Whereupon, at 11:15 a.m., the hearing was adjourned.]
A P P E N D I X
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to
Bill Baroni
Question 1. It has come to the Committee's attention that from
January to early July 2011 the Port Authority worked to finalize a toll
increase that was approximately $12 for cash payers and $10 for E-ZPass
users. The Committee understands that, in July 2011, you and David
Wildstein, Director of Interstate Capital Projects, directed that the
proposal be changed to $15 for cash payers and $12 for E-ZPass users.
The Port Authority announced the redesigned proposal publicly on August
5, 2011. Who specifically made the decision to change course shortly
before the announcement and propose this higher toll increase?
Answer. In the summer of 2011, the Port Authority of New York and
New Jersey was faced with the difficult decision to raise tolls and
fares. The decision was made as a result of numerous factors, which
included the effects of the 2008 economic crisis, which dramatically
affected Port Authority revenue; the resulting effect of that crisis on
our ability to access capital markets and the need to keep our aging
facilities--many built in the 1920s--in a state of good repair through
major capital projects. In addition, the Port Authority's mission of
transportation and economic growth required the investment of billions
in new and rebuilt infrastructure.
These projects include the raising of the Bayonne Bridge to
accommodate the world's largest cargo ships; a new Goethals Bridge; a
rehabilitated Helix leading into the Lincoln Tunnel; the replacement of
the suspender ropes on the George Washington Bridge; a new PATH train
station at Harrison; a refurbished George Washington Bridge Bus
Station; and hundreds of other infrastructure projects that would have
been further delayed in the absence of a revenue enhancement.
The Port Authority did much to forestall this increase. The Port
Authority is in its third straight year of flat operating budgets; the
Port Authority is at its lowest employee headcount in decades; the Port
Authority has implemented reforms to compensation and benefits saving
millions and the Port Authority has actually reduced the number of
employees by hundreds since 2010. Raising tolls and fares was a last
resort.
The process of the consideration and proposal of a toll and fare
increase is an internally collaborative one. All internal work product
and communications within the Port Authority on this--or any--matter is
therefore inappropriate for release as part of this Question For the
Record. Similarly, any communications between the Port Authority and
the offices of the Governors of New York or New Jersey on this--or
any--matter would similarly be inappropriate for release.
Question 2. After months of planning for a smaller toll increase,
what was the reason for drastically increasing the proposed tolls just
weeks before the announcement?
Answer. Please see one (1), above.
Question 3. When was Governor Christie's office first aware that
the proposal was being changed as described in Question 1? Who in the
Governor's office was made aware that the proposal would be changed?
Answer. Please see one (1), above.
Question 4. Please provide the Committee with all communications--
including, but not limited to, memoranda, briefing materials,
electronic mail, and letters--between the Port Authority and the
Governor Christie's office regarding the toll increase from January 1,
2011 to August 19, 2011.
Answer. Please see one (1), above.
Question 5. Please provide the Committee with a description of each
toll proposal that was considered, proposed, or adopted by the Port
Authority, including the dates these plans were created, internally
approved, discussed with Board Members, and discussed with Governors
Christie's and Cuomo's offices from January 1, 2011 to August 19, 2011.
Answer. Please see one (1), above.
Question 6. Please provide any analysis the Port Authority
conducted to determine the economic impacts of the initial internal
toll proposal, the August 5 proposal, and the approved August 19 toll
increase on the region, including impacts to businesses and commuters.
Answer. Please see one (1), above.
Question 7. In January, the The Record newspaper linked Governor
Christie to dozens of high-paying positions at the Port Authority. For
each individual with a salary in excess of $90,000 on the list you
provided to my office, please provide the Committee their job
description and job duties, their resume and/or application, and their
letter of recommendation from the Governor and/or his office. If there
have been additional hires at the Governor's recommendation since this
article, please include their information as well. Also, please provide
details on whether their positions were publicly posted and how many
additional individuals were considered for the positions.
Answer. Please find attached the resumes of employees hired by the
Port Authority since January 2010 whose salaries are $90,000 or greater
[resumes retained in Subcommittee files]. The following employees were
directly hired without resumes: Patrick J. Foye, Executive Director;
William Baroni, Deputy Executive Director; William DeGraaff, Program
Manager, Regional Airport Programs, Aviation; Paula Dow, First Deputy
General Counsel, Law; Anthony Greco, Senior Writer/Editor, Media
Relations; Erik Horvat, Assistant Director, Development, World Trade
Center Redevelopment; Diana Lopez, Senior Advisor, Port Commerce; John
Ma, Chief of Staff; David Wildstein, Director, Interstate Capital
Projects; Eddie Malave, Senior Safety Engineer, Operations Services;
and Mark Pucci, General Manager, Retail, World Trade Center
Redevelopment.
Question 8. Damon DiMarco is the coauthor of your book Fat Kid Got
Fit: And So Can You. When did the Port Authority hire Mr. DiMarco?
a. Is Mr. DiMarco a full-time or part-time employee? How many hours
per week does he work and what is his work schedule?
b. What was your role in Mr. DiMarco's hiring?
c. Did you and Mr. DiMarco have a written or oral agreement relative
to Mr. DiMarco's compensation for this book project? When was
that agreement signed or otherwise agreed to? Please describe
the agreement in detail or provide a copy to the Committee.
d. On what date did you sign the contract with the publisher of this
project?
e. Did the Port Authority legal department review the ethics of
hiring your business partner? If so, did that include a review
of all agreements between you and Mr. DiMarco?
Answer. Damon DiMarco was hired in the office of Public and
Government Affairs in June of 2010. He was hired to work part-time. The
book project was undertaken in 2008. Prior to the entrance into a
publishing contract, Mr. DiMarco and Mr. Baroni received an opinion
from an attorney in Governance and Ethics Unit of the Port Authority
Law Department that the entrance into the book contract would be
consistent with the Port Authority's Code of Ethics and Financial
Disclosure.
Question 9. When did the Port Authority hire Gretchen DiMarco? What
was your role in Ms. DiMarco's hiring?
Answer. Gretchen DiMarco was hired as a special assistant in the
Office of the Deputy Executive Director in April 2010.
Question 10. What are David Wildstein's specific job duties? Please
provide a copy of his official job description and duties.
a. When was Mr. Wildstein first approached about employment at the
Port Authority?
b. It has come to the Committee's attention that Mr. Wildstein
played a lead role in coordinating and setting the rates of the
proposed toll increases. Please describe why Mr. Wildstein, as
Director of Interstate Capital Projects, played this role.
c. Who tasked Mr. Wildstein with his role in the toll increases?
Answer. David Wildstein is the Director of Interstate Capital
Projects. He joined the Port Authority in May 2010. A description of
his professional background is attached [see below].
David Wildstein served as Vice President and Shareholder of
Apache Mills, Inc., a family-owned textile manufacturing
company, from 1988 to 2007. With more than 600 employees, the
company has offices in six states, a 750,000 square foot
manufacturing facility, and had an international customer base.
From 2007 to 2010, he was the Executive Director of the
Observer Media Group.
He served on the Livingston Township Council from 1985 to 1989
and was the Mayor of Livingston from 1987 to 1988. He served as
Chairman of the Livingston Redevelopment Authority, as Chairman
of the Board of Health, and as Member of the Livingston Free
Public Library Board of Trustees. He was the Chairman of the
Essex County Conference of Mayors' Solid Waste Subcommittee.
He was a member of the Essex County Vocational and Technical
Board of Education from 1987 to 1990. He was Vice President
from 1988 to 1990, and served as Chairman of the Personnel and
Labor Relations Committee and as Vice Chairman of the Finance
Committee. He was a member of the Essex County Board of School
Estimate.
He was the Deputy Clerk of the New Jersey General Assembly from
1987 to 1990. He served as Chief of Staff to Assembly Minority
Leader Chuck Hardwick, as a legislative aide to State Senator
Louis Bassano, and as a staff assistant to Congressman
Christopher Smith.
He served on the Board of Directors of the Livingston Community
Hospital, the Essex County Association for Retarded Citizens,
the Livingston Babe Ruth League, and the Livingston Youth
Service Bureau.
Question 11. The Port Authority was criticized for giving
misleading reasons for needing the toll hike--including funding non-
transportation, economic development projects. Please provide the
Committee with all of the specific projects and activities that will be
funded by the toll increase, the projected cost of each project, and
the scheduled completion date of each project.
Answer. As stated in one (1), above, the Port Authority was forced
to raise revenue as a result of difficult economic situations caused by
the 2008 recession. The Port Authority operates facilities supported by
toll revenues and the Port Authority Trans-Hudson (PATH) fares as an
integrated, interdependent transportation network system (Interstate
Transportation Network). All of the revenues from the toll increase are
needed to fund the needs of the Interstate Transportation Network.
Please find attached the filings of the Port Authority on the
litigation filed by the AAA on this matter [go to http://
www.panynj.gov/press-room/pdf/AAA-v-PA-USDC-Memorandum-Opinion-and-
Order-020612.pdf ]. The response by the Port Authority provides a
detailed explanation of that issue.
Question 12. The Port Authority cited declining revenues as one of
the major reasons for the toll hike. Yet, shortly before the increase,
the Port Authority redirected $1.8 billion that was slated for the ARC
Tunnel project to roads that were previously maintained by the state of
New Jersey. Under what legal authority did the Port Authority direct
funds to these projects?
a. The Committee has been made aware that the General Counsel's
Office does an extensive review of projects that expand the
Port Authority's role. Did the General Counsel's office review
these projects? If so, please provide the Committee with the
General Counsel's analysis and determination.
b. Were these projects part of the capital plan or annual budget? If
so, when were these projects added?
Answer. On December 7, 2010, the Board of Commissioners adopted a
budget for 2011. Attached is a copy of that budget, which includes a
2011 Capital Plan Project List [go to http://www.panynj.gov/corporate-
information/pdf/budget-2011.pdf. For minutes attached to the budget, go
to http://panynj.info/corporate-information/pdf/
board_minutes_dec_7_2010.pdf ]. On March 29, 2011, the Board of
Commissioners approved Access Infrastructure Improvement Projects.
Attached is a copy of the Board item [go to http://www.panynj.gov/
corporate-information/pdf/special_ops_minutes_mar_29_2012.pdf ].
Question 13. The Port Authority is charged with providing
transportation services for the traveling public, yet has faced severe
criticism for being unaccountable to the public. Does the Port
Authority Inspector General review the agency's transparency efforts;
if not, will you commit to having the Inspector General issue an annual
report analyzing the Port Authority's transparency efforts?
Answer. The Port Authority has recently updated its Transparency
Policy, allowing for greater transparency of the Agency's activities.
The Board of Commissioners on March 29, 2012 passed the attached item
[go to http://www.panynj.gov/corporate-information/pdf/
special_ops_minutes_mar_29_2012.pdf ]. That policy is regularly
reviewed by the Board of Commissioners. The Inspector General provides
reports directly to the Audit Committee of the Board of Commissioners,
chaired by Commissioner David Steiner.
Question 14. Please provide the Committee with the number of
vehicles that travel on average in each of the toll categories as well
as the revenue generated by each of these categories. What are the
expected revenue and driver diversion rates versus actual based on the
September 2011 toll increase for each of these categories? What are the
expected revenues and driver diversion rates for each category for the
scheduled December 2012 toll increase?
Answer. Please see attached memorandum from Cedrick Fulton,
Director of Tunnels, Bridges and Terminals [see ``Memorandum''
following this set of responses].
Question 15. The Port Authority Bus Terminal capacity expansion
project would have been one of the only current projects to provide
real congestion relief for New Jersey commuters, yet it has been
removed from the capital plan. With New Jersey paying a
disproportionate portion of the tolls, why has this commuter project
not been prioritized? Please provide the Committee with the Port
Authority's plan for this project.
Answer. The Port Authority is committed to providing greater cross-
Hudson capacity for commuters. Investments in PATH, including a new
station in Harrison, an entirely new fleet of PATH cars, and enhanced
signaling will assist in handling the growing use of PATH. The
rehabilitation of the Lincoln Tunnel helix will reduce unnecessary and
unplanned repairs, a new Goethals Bridge will alleviate congestion over
the 1-278 corridor, and the investments in a refurbished George
Washington Bridge Bus Station and the 42nd Street bus terminal are
ongoing. In addition, the Port Authority is undergoing a detailed and
thorough review of bus transportation at the 42nd Street terminal to
increase capacity and parking for buses on the West Side of Manhattan.
Memorandum
The Port Authority of NY & NJ
Tunnels, Bridges & Terminals Department--Director's Office
To: Patrick J. Foye, Executive Director
Bill Baroni, Deputy Executive Director
From: Cedrick T. Fulton
Date: June 7, 2012
Subject: 2011 and 2012 Toll Increase
In the seven months since the September 2011 toll increase, the
average monthly traffic has been 9,586,425 vehicles, which represented
an average monthly toll revenue of $100,732,886. The breakdown by
vehicle type for these averages is as follows:
------------------------------------------------------------------------
Avg. Monthly Traffic Avg. Monthly Revenue
------------------------------------------------------------------------
Auto 8,727,188 $76,680,791
Bus 244,221 $2,564,608
Small Trk 288,725 $6,385,111
Large Trk 326,291 $15,102,376
------------------------------------------------------------------------
Total 9,586,425 $100,732,886
------------------------------------------------------------------------
In comparison, the average monthly traffic and revenue in 2010
(i.e., the full year prior to the toll increase) was:
------------------------------------------------------------------------
Avg. Monthly Traffic Avg. Monthly Revenue
------------------------------------------------------------------------
Auto 9,206,809 $ 62,462,671
Bus 260,158 $ 1,112,880
Sm Trk 292,388 $ 4,766,364
Lg Trk 341,123 $ 11,784,755
------------------------------------------------------------------------
Total 10,100,479 $ 80,126,669
------------------------------------------------------------------------
We expected the September 2011 toll increase to reduce total
vehicular traffic by 1,417,159 vehicles (--1.2%) from original 2011
Plan of 122,408,652 vehicles prior to the toll increase. What we
actually experienced in 2011 since 9/18/2011 was a decline of 1,841,708
vehicles (-1.5%) below the original 2011 plan. The breakdown for these
variances by vehicle type is as follows:
----------------------------------------------------------------------------------------------------------------
Sept 2011 Toll Increase September 2011 Increase
Expected Change vs. Pctg. Actual Change vs. Original Pctg.
Original 2011 Plan Change 2011 Plan Change
----------------------------------------------------------------------------------------------------------------
Auto (1,300,537) -1.2% (1,584,720) -1.4%
Bus 34,553 1.1% (149,542) -4.6%
Sm Trk 27,476 -0.8% (85,768) -2.4%
Lg Trk (123,699) -3.0% (21,677) -0.5%
----------------------------------------------------------------------------------------------------------------
Total (1,417,159) -1.2% (1,841,708) -1.5%
----------------------------------------------------------------------------------------------------------------
We expected the September 2011 toll change to increase total toll
revenue by $99,001,015 (9.2%) from the original 2011 Plan of
$982,789,667 prior to the to increase. What we actually experienced in
2011 since 9/18/2011 was an increase of $48,741,732 (4.5%) above
original 2011 plan. The breakdown for these variances by vehicle type
is as follows:
----------------------------------------------------------------------------------------------------------------
Expected Change vs. Orig. Pctg. Chg. Actual Change Orig. 2011 Pctg. Chg.
2011 Plan Plan
----------------------------------------------------------------------------------------------------------------
Auto $72,822,073 8.7% $41,708,839 5.0%
Bus $6,647,748 32.1% $2,024,420 9.8%
Sm Trk $ 5,186,638 8.1% $471,834 0.7%
Lg Trk $14,344,557 9.0% $4,536,639 2.9%
----------------------------------------------------------------------------------------------------------------
Total $99,001,015 9.2% $48,741,732 4.5%
----------------------------------------------------------------------------------------------------------------
When we developed the impact of the toll increases in August of
2011, we expected a traffic decrease of 563,891 vehicles (-0.5%) to
result from the full-year effect of the planned December 2012 toll
increase compared to 123,743,906 vehicles in the original traffic plan
for 2012. We expected an increase in toll revenue of $143,374,747
(10.6%) to result from the full-year effect of the planned December
2012 toll increase compared to $1,352,432,579 in the original revenue
plan for 2012. The breakdown for these variances by vehicle type is as
follows:
----------------------------------------------------------------------------------------------------------------
Full-Year Dec 2012 Toll Full-Year Dec 2012 Toll
Increase Expected Traffic Pctg. Chg Increase Expected Revenue Pctg. Chg.
Change vs. Orig. 2012 Plan Change vs. Orig. 2012 Plan
----------------------------------------------------------------------------------------------------------------
Auto -507,844 -0.5% $85,207,503 8.3%
Bus - 0.0% $2,607,625 6.7%
Sm Trk -26,879 -0.7% $15,840,176 19.0%
Lg Trk -29,169 -0.7% $39,719,443 19.6%
----------------------------------------------------------------------------------------------------------------
Total -563,891 -0.5% $143,374,747 10.6%
----------------------------------------------------------------------------------------------------------------
We are currently in the process of updated the Port Authority
traffic and toll revenue forecasts . This will include an update of the
impacts on the estimated traffic and revenue for 2012 The revised
forecasts will include new elasticities for cash payment and E-ZPass
adoptions, updated economic drivers, the revised PA Staten Island
Bridge discount plan, the new truck volume discounts, and anticipated
losses from the NY Container Terminal in Staten Island. The update will
be completed by the end of June 2012.
Cedrick T. Fulton,
Director.
______
Response to Written Questions Submitted by Hon. John D. Rockefeller IV
to The Port Authority of New York And New Jersey
The Port Authority of New York and New Jersey fundamentally agrees
that the public should have the greatest possible level of transparency
to see how their toll and fare dollars are being spent. The Port
Authority has made great strides to ensure that transparency and
oversight. At the direction of the Board of Commissioners, under the
leadership of Chairman David Samson, we have embarked on a wholesale
reform of the agency's transparency policies.
As a result of our initial review, the Board of Commissioners
adopted a new Freedom of Information (FOI) Code in March of this year
to provide greater accountability and transparency, and an ongoing,
proactive Transparency Project that will identify agency records for
public release.
The Port Authority Transparency Project is an ongoing, proactive
review of agency policy, documents, and financial information to
determine what steps can be taken to ensure that the Port Authority
remains at the forefront of open government initiatives. At the time of
its launch in March, the Transparency Project posted roughly 22,000
pages of documents including a one-year archive of FOI requests, a one
year archive of board and committee meeting presentations, and more
than 300 pages of toll and fare hearing transcripts.
Since March, a significant number of strides have been made to
further increase Port Authority transparency and accountability. A
dedicated search feature has been added to our FOI request web page,
making it easier for the public to find documents for which they are
looking. The agency has voluntarily posted nearly 2,400 pages of Port
Terminal leases and over 4,300 pages of new FOI requests--all free of
charge. The agency recently updated Port Authority and Port Authority
Trans-Hudson Rail Corporation (PATH) total payroll information setting
forth total compensation, including base salary and all additional
compensation for all employees to reflect the first quarter of 2012,
adding to the four year archive, and for the first time, a breakdown of
agency overtime hours by department and category. This information is
updated quarterly. The Transparency Project is and will remain a key
Port Authority initiative going forward.
In addition, the Board of Commissioners passed a new FOI Code that
includes clarification of what documents are and are not exempt from
release, allowing for a faster, more streamlined process. All documents
released through the FOI process are posted online in real time so that
all members of the public can review documents that have been deemed
public. On a one-year trial basis, fees related to the FOI process will
be waived.
Following the most recent toll and fare increases that were adopted
in 2011, Governors Chris Christie and Andrew Cuomo charged the Special
Committee of the Board to undertake a comprehensive review and audit of
the agency. The Phase I interim report was released in January of 2012,
and Phase II, focusing on the hundreds of projects in the agency's
capital plan, will be released later this year.
This is all in addition to a longstanding Port Authority commitment
to ensuring that public documents at a public agency are available to
the public. Examples include: Port Authority budgets going back to
2008, Board Minutes going back to 2006, financial statements going back
to 2003, and the annual reports that are provided each year to the
Governors and Legislatures of both states going back to 2001.
Under the leadership of Governors Christie and Cuomo and the Board
of Commissioners, the Port Authority is quickly becoming a model for
transparency and good governance for Authorities around the Nation. The
Port Authority is committed to making the agency more open,
accountable, and transparent so that it may better serve the public
interest. Please find attached a copy of the resolution of the Board of
Commissioners from March of this year.
______
Response to Written Questions Submitted by Hon. John D. Rockefeller IV
to Steve Grabell
Question 1. I'm troubled by reports of mismanagement, misuse of
funds, and a general lack of accountability at multiple tolling
entities around the country recently, several of which operate as
interstate compacts. Given the Federal government's role in
establishing interstate compacts, what should the Federal role be in
overseeing these organizations to ensure that they act with the
traveling public's best interests in mind?
Answer. It is apparent in certain cases that toll authorities,
particularly those which serve a significant percentage of interstate
traffic, may not be fully accountable to toll payers, and therefore
require additional oversight. While in some cases oversight can be
provided by the state, this is often insufficient, since the authority
may be working in concert with state officials to establish unfair or
discriminatory toll rates. This is particularly true when the state
relies on toll revenue to meet its own fiscal needs. In those cases
where the public has nowhere else to turn for relief, Federal
intervention may be necessary. ATA believes that the longstanding Title
33 Federal toll rate standard requiring tolls on certain bridges to be
``just and reasonable'' should be preserved and its enforcement
mechanism should be restored, through either a Federal administrative
process, or by giving the public a ``private right of action,'' which
would allow the public to challenge toll rates through the judicial
system. The standard should, at a minimum, be applied to those bridges
currently subject to the Title 33 standard, to federal-aid bridges and
tunnels on the Interstate Highway System, and to other bridges and
tunnels established under an interstate compact. These are clearly
facilities on which the Federal government has an interest under the
Constitution's Commerce Clause.
Question 2. Your organization has spoken against tolls on existing
roads, bridges, and tunnels. Beyond increasing the gas tax, what other
methods do you support to increase funding for transportation projects?
Does your organization support tolling as a means to finance new
transportation projects?
Answer. ATA has explored many different mechanisms for funding
transportation projects. We have found that the most successful are the
fuel tax and state registration fees. There are various other state-
level revenue sources that are viable, but inferior to fuel taxes and
registration fees. These include sales taxes, property taxes,
development fees, and local option taxes.
At the Federal level, increasing the three non-fuel taxes--Heavy
Vehicle Use Tax, excise tax on new equipment and tire tax--are viable
options, but they tend to create cash flow challenges for carriers and,
in the case of the excise tax, a disincentive for carriers who wish to
purchase new equipment, which is likely to be safer and cleaner. We
have looked at a variety of other proposals, such as container fees,
freight waybill taxes, and other methods to more directly charge the
ultimate beneficiaries of freight transportation for these services.
All of these options faced extremely difficult or insurmountable legal
or administrative challenges and were therefore dismissed.
ATA has looked extensively at the viability of vehicle miles
traveled fees. While we are not opposed to VMT fees on their face, we
believe that challenges associated with collection costs, the potential
for evasion, and a lack of institutional certainty with regard to how
rates will be set and collected, are unlikely to be overcome in the
foreseeable future. We also believe that public concerns with regard to
privacy will likely doom these proposals even if all other issues are
resolved.
In short, the fuel tax is, by far, the best source of revenue for
transportation projects, and is likely to remain so well into the
future.
We believe that toll financing of new capacity projects is inferior
to traditional financing through a combination of fuel taxes,
registration fees, etc. and municipal bonding, primarily because of the
additional costs associated with toll collection. However, we have not
opposed tolls provided they offer an additional option, i.e., a toll-
free alternative is available, and existing lanes (other than HOV) are
not tolled.
Question 3. The public has the right to see exactly how tolling
entities use their revenues in order to ensure that these organizations
are spending funds with the public interest in mind. In your opinion,
how can tolling authorities best achieve this?
Answer. Tolling authorities should issue annual reports showing a
detailed accounting of how much revenue was collected from tolls and
other sources, and exactly how the revenue was spent. The authority
should also provide an estimate of future needs.
The report should include salary information and board/commission
members' compensation, including any in-kind contributions. If any
contracts are awarded, or contributions made, to a company with a
relationship to a senior employee or board/commission member, or to a
member of their family, that information should be disclosed.
Furthermore, if a relative of a board/commission member is hired, that
information should be disclosed as well.
Any proposed increase in toll rates should include a public
outreach process, with hearings to be held at convenient times and
locations. Board/commission members should be required to attend at
least some of these hearings. In addition, any votes taken to increase
toll rates should be public. The public should be given the opportunity
to review rate increase proposals, including projected revenue and how
the money is intended to be spent, well in advance of the public
hearings. In addition, at least 1/3 of voting members should be from
organizations which represent the interests of facility users.
Finally, ATA believes that privatization of toll facilities would
largely eliminate public accountability and transparency, and we
therefore oppose these types of schemes. A long-term lease to a private
company is often seen as a way for elected officials to avoid public
scrutiny when toll rate increases are considered. Under a long-term
contract, any actions by the leaseholder cannot be undone, even in the
face of public opposition, without severe penalties that will
ultimately be borne by taxpayers.
______
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to
Steve Grabell
Question 1. At the hearing, Mr. Baroni referenced many discounts
that the Port Authority of New York and New Jersey has provided for
truck traffic. Have the ``discounts'' provided by the Port Authority
mitigated the effects of the toll rates? To what extent are you able to
take advantage of reduced rates?
Answer. The PA offers discounts for E-ZPass, off-peak and overnight
hours. Most carriers routinely operating in the area are likely using
E-ZPass. However, many carriers do not have flexibility in their pick-
up and delivery schedules, and are unable to take advantage of the off-
peak or overnight discounts. The PA's ``Truck Repeat Volume Program''
offers a 10 percent discount on trucks' monthly tolls, provided they
take 100 trips or more through Port Authority crossings during off-peak
hours within 30 days. Many truckers entering New York City will not be
eligible for the program because if their customers do not give them
the flexibility to enable deliveries during overnight hours. In these
cases, trucks MUST travel into New York City during high congestion
times. Furthermore, most trucking companies are small operators and
simply do not have the necessary volumes to qualify. In addition, in
order to qualify for the discount, the truck must have either a New
York or New Jersey E-ZPass transponder. Transponders from other states
do not qualify. This is complicated by the fact that many other states
follow the same practice of only allowing discounts for home-state
transponders, and using multiple transponders is impractical. This
situation prevents carriers operating multi-state fleets from fully
utilizing available discounts.
It is important to note that even if carriers are able to take
advantage of these discounts, the rate increase is still unacceptably
high. The lowest rate for a 5-axle truck that takes advantage of all
available discounts will be approximately $70 in 2015. This is nearly
twice as high as the highest rate for any other bridge or tunnel
crossing in the country.
Question 2. With tolls increasing annually, what alternative routes
will your company consider? What additional impacts could these
diversions have on New Jersey?
Answer. NFI is currently utilizing the following alternative
routes:
I-295 instead of the NJ Turnpike
Route 422 instead of I-476 through PA
I-68 and I-70 through Maryland instead of the PA Turnpike
between Pittsburgh and Philadelphia area
Unfortunately, because of the PANYNJ's monopolization of routes
between New York City and New Jersey, there are no feasible alternative
routes.
Diversion of vehicles, particularly trucks, from Interstate and
other primary highways to lower-order roads could pose severe
consequences for New Jersey and other affected states. Roads are built
to engineering standards commensurate with anticipated traffic levels,
including the projected number of ESALs. It is likely, therefore, that
a significant, unanticipated increase in heavy traffic will increase
pavement wear on these alternative routes, resulting in additional
maintenance costs or even the need to reconstruct the roadway to a
higher standard. Similarly, the life of bridges on diversion routes
could be shortened, resulting in unanticipated maintenance,
strengthening or replacement costs.
Furthermore, alternative routes would likely see an increase in
traffic, with higher levels of congestion. This will result in
additional air quality impacts. This will be further exacerbated by the
fact that many of these routes are likely to include intersections that
force vehicles into acceleration-deceleration modes that are not
present on most toll roads.
We are also very concerned about the safety impacts of toll
evasion. Toll roads such as the New Jersey Turnpike and Garden State
Parkway are generally far safer than their alternative routes. While on
average Interstates have a fatal crash rate that is four times lower
than the rate for surface streets, in some cases the disparity is much
greater. For example, the fatal crash rate of one alternative route
used by vehicles avoiding high tolls on the Ohio Turnpike was 17 times
higher than the Turnpike's rate, according to an Ohio DOT report.
Question 3. Mr. Baroni claimed that the hearings leading up to the
recent toll increase were the most open and transparent in its history.
Was that your experience and the experience of the trucking industry in
general?
Answer. The manner in which the Authority conducted the public
hearings associated with the toll increase did not allow commuters and
carriers with legitimate concerns, and who would likely suffer
significant hardship as a result of the increases, with sufficient
opportunity to provide input. The proposal was announced on August 5,
2011, and only one day of hearings was scheduled, for August 16, 2011.
This allowed less than two weeks for the public to analyze the proposal
and prepare remarks. The hearings were held at locations that were
difficult for the public to reach, and at inconvenient times of the
day. Following the hearings, the Port Authority Board met on August 19,
2011 and approved a revised toll increase schedule which was apparently
negotiated with both Governor Cuomo (NY) and Governor Christie (NJ). As
a result, the public was not even provided an opportunity to comment on
the final proposal. The approved toll increase was set to go into
effect on September 18, 2011, providing less than a month for motorists
to prepare for the exorbitant increases associated with the first phase
of the 5-year planned increases. This is especially problematic for
trucking companies, which cannot easily renegotiate contracts with
customers or, in many cases, cannot effectuate the rate increases with
customers within such a short period. The result for NFI and other
truckers is that we will absorb a disproportionate amount of the toll
increase for a period of time.
The hearings associated with the proposed increases were frankly
just window dressing. The way in which the whole process was conducted
sent a very clear message that the decision to increase tolls had
already been made, without regard to public input. The increases were
forced on motorists during a slow recovery from one of the worst
economic recessions in history, with little to no time for commuters or
businesses to determine how they would budget for the increased costs.
The process and the outcome points to an Authority with unchecked power
that shows little regard for the impacts of its decisions on the
community which it purports to serve. Mr. Baroni's characterization of
this process as ``the most open and transparent'' in the PA's history
certainly does not speak well of past Authority practices. The PA has a
long way to go to fulfill its responsibilities as a public institution,
and as long as it continues to operate with impunity, it is likely to
continue to place its own goals ahead of the public's interest.
______
Response to Written Questions Submitted by Hon. John D. Rockefeller IV
to Chris Plaushin
Question 1. I'm troubled by reports of mismanagement, misuse of
funds, and a general lack of accountability at multiple tolling
entities around the country recently, several of which operate as
interstate compacts. Given the Federal government's role in
establishing interstate compacts, what should the Federal role be in
overseeing these organizations to ensure that they act with the
traveling public's best interests in mind?
Answer. Mr. Chairman, AAA supports S. 2006, ``The Commuter
Protection Act,'' introduced by Senator Lautenberg that would protect
commuters, truckers and other highway users from paying tolls that go
to non-transportation related purposes. This bill restores the U.S.
Department of Transportation's (USDOT) ability to determine whether
toll rates on bridges and tunnels imposed by local authorities are
``just and reasonable.'' Up until 1987, USDOT had the authority to
determine whether any tolls charged to drivers were ``just and
reasonable'' upon a complaint. Under the ``Commuter Protection Act,''
if the tolls were deemed unfair, USDOT could prescribe a more
reasonable maximum toll that could be charged. This authority served to
protect Interstate commerce and facilitate Interstate travel.
As background, in the summer of 2011, dramatic toll hikes took
effect in the New York and New Jersey region, where revenues were
planned to be diverted to non-transportation related real estate
development projects. While and Senator Lautenberg introduced the
``Commuter Protection Act'' in response this particular egregious
action, there now exists a troubling new precedent whereby drivers
using Interstate facilities are being forced to pay for non-
transportation related costs, such as real estate development and
athletic stadiums. The bill is also endorsed by the American Trucking
Associations, American Highway Users Alliance, American Motorcyclist
Association, Owner-Operator Independent Drivers Association and NATSO.
Question 2. When done responsibly, tolling can be a useful and
necessary method of raising revenue for needed transportation
improvements. However, tolls can also disproportionately impact some
citizens, such as those required to commute on tolled facilities during
peak hours to and from work on a daily basis. With this in mind, beyond
congestion pricing schemes, what options are there for tolling entities
to lessen the burden on those who must commute during peak hours?
Answer. Mr. Chairman, AAA's position remains that tolling can be a
part of the solution for our funding problems if the fees charged are
just and reasonable and the revenue is directed to improving the
facility where the tolls are applied. We would evaluate other similar
proposals or pricing schemes on a case-by-case basis.
Question 3. Your organization has spoken against tolls on existing
roads, bridges, and tunnels. Beyond increasing the gas tax, what other
methods do you support to increase funding for transportation projects?
Do your organizations support tolling as a means to finance new
transportation projects?
Answer. Mr. Chairman, AAA will support a gas tax increase, provided
it's tied to a significantly restructured program that is performance
based, and ensures accountability and transparency. We agree with the
experts who have concluded that, at least for the next decade, the
Federal gas tax remains the best way available to generate significant
amounts of revenue. It is fraud-resistant, easy to administer, and it
maintains the user-fee principle that has served as the backbone of the
transportation program for over 50 years.
AAA acknowledges that additional revenue sources will be needed now
and into the future, and that we will need to begin transitioning to a
successor funding system. We're willing to consider all funding
options, including vehicle miles traveled tax systems, tolling and
public-private partnerships. But for AAA, protecting the public
interest will continue to be paramount, and all funding options will be
evaluated in this context.
Tolling and pricing are among future solutions to increase capacity
and manage congestion. However, they are not a panacea. We won't fix
the Nation's transportation funding shortfall by assuming that tolled
or priced projects will fill the gap. Expansion of tolling and pricing
projects must be thoughtfully and carefully implemented. Every project
must be judged on its merits. Motorists must be assured that tolls are
fair and equitable, transparent, and are used for the purposes for
which they are collected.
Private investment has been touted as a simple, ``tax free'' way to
raise large amounts of money for transportation. But the reality is
private investment will likely only constitute a small portion of
revenue for transportation in the near term, and it is not ``free''
money. Transportation users will be paying private investors back in
the form of tolls or some other method of taxation for years.
AAA has significant concerns about how private investment has been
portrayed in recent years, particularly with regards to the long-term
lease of existing assets. These are complex financial and operational
arrangements and they warrant close scrutiny. The problems we now face
have been years, if not decades, in the making. We are kidding
ourselves if we think there is a quick or easy fix.
Our roads and bridges are not financial assets to be sold to the
highest bidder. AAA recommends creating a Federal framework for public-
private partnerships that ensures the public interest is not ignored in
the quest to receive the highest bid price. In any of these
arrangements, motorist fees must be fair and equitable, up-front lease
payments should not be diverted for non-transportation purposes, and
high levels of public oversight must be maintained, among other
protections.
Question 4. The public has the right to see exactly how tolling
entities use their revenues in order to ensure that these organizations
are spending funds with the public interest in mind. In your opinion,
how can tolling authorities best achieve this?
Answer. Mr. Chairman, there are a few practices and procedures that
can help protect motorists in the context of tolling arrangements. A
capital plan should accompany all tolling proposals so that the public
is clear as to why additional funds are required and what exactly they
will be spent on. Authorities should conduct an evaluation of the
impact tolls will have on those who live and work along the affected
corridor. Hearings on tolling proposals should be held at a variety of
locations, times and days in order to generate the highest public
attendance possible. There should be a reasonable period of time,
months not weeks, between the unveiling of a tolling proposal and
subsequent hearings and legislative votes on the proposal. Tolling
commissioners (some or all) should be required to be present at public
hearings. Authorities should explore creating ``citizens advisory
committees'' which represent the community and have an opportunity to
communicate their ideas and suggestions, seek information, and question
decisions being made through regularly scheduled meetings with
officials who set toll rates.
______
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to
Chris Plaushin
Question 1. At the hearing, Mr. Baroni referenced many discounts
that the Port Authority of New York and New Jersey has provided for
commuters. Have the ``discounts'' provided by the Port Authority
mitigated the effects of the toll rates? To what extent are your
members able to take advantage of reduced rates?
Answer. Mr. Chairman, it is important to note that the discount
plan was announced after the huge public uproar over the Port
Authority's proposal. The discount represents a small decrease if you
have an E-ZPass, and a slightly larger discount if you have a Port
Authority-issued E-ZPass. Though while the discount does help mitigate
the costs for some commuters, it is important to remember that all
tolls went up by such a large rate that the savings from those
discounts likely served as cold comfort to commuters. Even with the
discounts, the toll rate increases are putting a significant burden on
commuters.
Question 2. Mr. Baroni claimed that the hearings leading up to the
recent toll increase were the most open and transparent in its history.
Did your members believe this was the case?
Answer. Mr. Chairman, AAA does not believe this to be the case. The
hearings seemed to serve as a ``check-box'' for the Port Authority as
the hearings were all held on one day, the bare minimum required, and
no commissioners personally attended the hearings. Also, the hearings
were in the dead of summer with little notice, at inconvenient times
and locations for the working public. This is hardly the type of
transparency commuters are looking for.
The most recent hikes were announced August 5, and implemented on
Sept 18, providing motorists a little more than six weeks to formulate
questions regarding the proposal. By way of comparison, the prior toll
fare hike was announced on November 19, 2007 and implemented March 8,
2008--a window of more than 3 months. Also, in 2008 the public hearings
were spread over a nearly two week period--much more accommodating for
the general public.
Finally, it is important to remember that the previous toll fare
hikes were accompanied by a Capital Plan detailing the projects to be
financed. As of today the Port Authority still has not released a
Capital Plan for their latest toll increases but rather only released a
``preliminary budget''.
Question 3. What issues have your members had with transparency at
the Port Authority?
Answer. There exists a widespread concern that the Port Authority
is operating under little oversight and the public cannot be guaranteed
that their toll money is being utilized in a wise, responsible manner.
Therefore, we are pleased to see the inclusion of a General
Accountability office (GAO) report in MAP-21 that will provide further
information on the transparency and accountability practices of tolling
authorities.
______
Response to Written Questions Submitted by Hon. John D. Rockefeller IV
to Hon. Eugene A. Conti, Jr.
Question 1. I'm troubled by reports of mismanagement, misuse of
funds, and a general lack of accountability at multiple tolling
entities around the country recently, several of which operate as
interstate compacts. Given the Federal government's role in
establishing interstate compacts, what should the Federal role be in
overseeing these organizations to ensure that they act with the
traveling public's best interests in mind?
Answer. The State transportation agencies recognize the importance
of transparency and the need to ensure the public that facilities
operated under Interstate compacts are well-managed and accountable.
The establishment of tolling authorities under interstate compacts,
which are provided for in the Constitution, generally include
provisions to ensure that the public's interest for which such
facilities are provided are fully protected. Because these compacts are
created at the behest of the affected States, we believe that it is
more appropriate for those States to maintain--and improve as
necessary--procedures to ensure protection of the public, oversight and
accountability, and resolution of disputes that best fit each state's
context. With such procedures in place, heavy Federal oversight would
be duplicative and is therefore not necessary.
Question 2. When done responsibly, tolling can be a useful and
necessary method of raising revenue for needed transportation
improvements. However, tolls can also disproportionately impact some
citizens, such as those required to commute on tolled facilities during
peak hours to and from work on a daily basis. With this in mind, beyond
congestion pricing schemes, what options are there for tolling entities
to lessen the burden on those who must commute during peak hours?
Answer. Many tolling entities make special provisions for frequent
users by providing special discounts based on their residency and/or
income. While toll rates are generally set to meet bond coverage ratios
as required by bond covenants to cover the operating and maintenance
costs of the facilities, states are fully cognizant of equity issues
associated with tolling, and continue to strive to ensure access for
all users in a financially responsible manner
Question 3. The public has the right to see exactly how tolling
entities use their revenues in order to ensure that these organizations
are spending funds with the public interest in mind. In your opinion,
how can tolling authority's best achieve this?
Answer. There are many approaches to ensure tolling entities are
open and transparent about how the money that is collected is spent.
For example, most tolling entities require periodic audits or budget
reviews, the results of which are available to the public. In addition,
toll increases generally require a public process at which details of
toll increases are provided and public comment is obtained. Such public
involvement opportunities hold toll agencies accountable by providing
regular avenues of public input and engagement.
______
Response to Written Questions Submitted by Hon. Kay Bailey Hutchison to
Hon. Eugene A. Conti, Jr.
Question 1. What is the anticipated timeline, including major
milestones, for final approval of North Carolina's I-95 Federal tolling
application?
Answer. Following is the anticipated time and major milestones for
final approval:
Completion of the Economic Assessment--early 2013
In-depth funding assessment can be done concurrently with
Economic Assessment
Phasing & Finance Plan--3 to 4 months after economic
assessment
Final environmental document (for concept of tolling)--3-6
months after Economic Assessment
FHWA could potentially grant final approval by summer 2013.
Question 2. What, if any, is the anticipated net increase in
crashes, and in road maintenance and improvement costs, associated with
traffic diversion as a result of tolls on I-95?
Answer. When we have a final Phasing & Finance plan that determines
the number and location of gantries, it then will be possible to
estimate traffic diversion. When we are able to accurately estimate
diversion, we will estimate maintenance costs based on the anticipated
traffic volumes and current roadway conditions.
Question 3. Since both North Carolina and Virginia are applying for
I-95 tolling authority, will your traffic and revenue and economic
impact analyses factor in the effects of the combined tolls?
Answer. Once we have the final details of their plan, including
toll locations and rates, traffic volumes, etc., we intend to consider
the effects of the combined tolls.
Question 4. What process will NCDOT use to receive input from the
public as it works towards approval of the application?
Answer. NC DOT intends to use traditional and cutting-edge public
outreach methods, including public hearings/workshops, e-mail
notification, project website, social media, radio, newspaper, TV news,
bilingual hotline, virtual meetings, charrettes, town hall meetings,
community involvement.
______
July 24, 2012
Patrick Foye,
Executive Director,
Port Authority of New York and New Jersey,
New York, NY.
David Samson,
Chairman,
Port Authority of New York and New Jersey,
New York, NY.
Dear Mr. Foye and Chairman Samson:
Since the United States Congress ratified the interstate compact
that created the Port Authority of New York and New Jersey in 1921, the
United States Senate Commerce Committee has exercised oversight of the
Port Authority and its impact on interstate commerce. Pursuant to this
power, on April 18, 2012, the Surface Transportation Subcommittee of
the Senate Commerce Committee held a hearing entitled ``Protecting
Commuters: Ensuring Accountability and Oversight in Tolling.'' The
purpose of this hearing was to gather information on the Authority's
use of tolls, in particular the toll increases that the Authority
announced on August 19, 2011.
As you know, the executive who appeared on behalf of the Authority
at the April 18 hearing, Mr. Bill Baroni, was argumentative and
unresponsive to the Subcommittee's questions about how the Port
Authority's toll rate decisions impact consumers in New York and New
Jersey. Mr. Baroni also failed to meet the basic standards of civility
and decorum that the Committee expects from its witnesses.
Following the hearing, the Committee gave the Port Authority
another opportunity to answer the questions posed in the hearing by
responding to written questions to be included in the record.
Unfortunately, the Port Authority again failed to provide serious,
complete responses to the Committee. The answers we received were
largely incomplete or did not respond to the questions posed and, at
least in one case, the Port Authority asserted--without any legal
authority--that providing requested information would be
``inappropriate.''
This repeated failure to respond to the Committee's questions not
only shows a lack of respect for legitimate congressional oversight; it
also directly contradicts repeated assertions by Port Authority
officials that the agency is increasing its transparency. Port
Authority Chairman Samson recently stated that the Authority was
attempting to be ``the national leader in transparency and open
government,'' but our Committee has experienced the opposite, which we
find highly disappointing given the issue of the hearing. Transparency
about tolling decisions is particularly important because tolls have a
serious impact on hundreds of thousands of commuters in the region.
Leadership at the Port Authority has stated that, despite the fact
that he was asked to respond on behalf of the agency, Mr. Baroni's
responses to the written questions for the record do not reflect the
official position of the Port Authority. If this is the case, it is
hard to understand how an accountable and transparent organization
would allow a rogue actor to behave in such an unbecoming way without
correcting the record.
Due to the important subject matter of this hearing and the
Committee's ongoing oversight responsibilities, it is important that
the congressional record be complete. If the answers that Mr. Baroni
provided or failed to provide do not reflect the official position of
the Port Authority, then we ask the Port Authority to correct the
record or provide a legitimate legal basis for any specific instances
that it cannot provide the requested information. With that in mind,
please provide this information to the Committee no later than August
14, 2012.
Sincerely,
John D. Rockefeller IV,
Chairman, U.S. Senate Committee on Commerce, Science, and
Transportation
Frank R. Lautenberg,
Chairman, U.S. Senate Commerce Subcommittee on Surface Transportation
and Merchant Marine Infrastructure, Safety, and Security
cc:
Scott Rechler, Vice-Chairman
Richard Bagger, Board Member
H. Sidney Holmes III, Board Member
Jeffrey Lynford, Board Member
Jeffrey Moerdler, Board Member
Raymond Pocino, Board Member
Rossana Rosado, Board Member
James Rubin, Board Member
Anthony Sartor, Board Member
William Schuber, Board Member
David Steiner, Board Member
William Baroni, Jr., Deputy Executive Director
______
August 14, 2012
Hon. John D. Rockefeller IV,
Chairman,
U.S. Senate Committee on Commerce, Science, and Transportation.
Hon. Frank R. Lautenberg,
Chairman,
U.S. Senate Commerce Subcommittee on Surface Transportation and
Merchant Marine Infrastructure, Safety and Security,
Washington, DC.
Dear Chairman Rockefeller and Chairman Lautenberg:
Thank you for your letter to Chairman David Samson and me,
regarding the matters raised at the April 18, 2012 hearing held by the
United States Senate Commerce Committee entitled: ``Protecting
Commuters: Ensuring Accountability and Oversight in Tolling.'' The Port
Authority greatly appreciates the opportunity to supplement the
responses previously provided to the questions for the record (QFRs)
issued following the April 2012 hearing. We take this opportunity to
set forth in detail answers, which we sincerely hope, will clarify our
positions on the issues you have raised. We offer these responses in
the spirit of continued collaboration and partnership, which we
recognize is vital to ensuring that the Port Authority fulfills its
mission of providing the highest level of service to the public.
Please be assured that the Port Authority appreciates and respects
the significant role that Congress and the Federal government have
played in the history of this agency, from the Congressional approval
of the Compact that gave birth to this agency, to the Federal role in
the development of the Port Authority. For over 90 years, the Port
Authority has benefited from an alliance with the Federal government
and it is because of this strong alliance that the Port Authority has
become one of the largest providers of transportation services in the
world, as well as a critical provider of transportation at the heart of
this region's transportation and commercial interests. We hold the
Senate Commerce Committee and its members, particularly Chairmen
Rockefeller and Lautenberg, and Senators Hutchison and Wicker, in the
highest regard, and we welcome the support and guidance that the
Committee can provide as the Port Authority works to further its
mission to provide efficient and safe transportation for people and
goods in the bi-state region.
The 2011 Toll and Fare Increase--Questions 1 through 6
The following information responds to the first six questions,
which all relate to the most recent toll and fare increase adopted by
the Port Authority.
The Interstate Transportation Network
The Port Authority owns, operates and maintains the Interstate
Transportation Network (``ITN''), a critical component of the
transportation infrastructure of the New York and New Jersey
Metropolitan Region. The ITN consists of four vehicular bridges (the
George Washington, Bayonne and Goethals bridges as well as the
Outerbridge Crossing), two vehicular tunnels (the Holland and Lincoln),
the Port Authority Trans-Hudson rail system (``PATH''), two bus
terminals and a bus station (the Port Authority Bus Terminal, the
Journal Square Transportation Center and the George Washington Bridge
Bus Station) and the Trans-Hudson Ferry Service.
The Port Authority does not receive tax revenue and, while it has
received select funds from the United States Department of Homeland
Security for security and seismic improvements and funds under
discretionary programs for promotion of commuter bus alternatives, the
toll and fare structure is the Port Authority's primary means of
funding the region's ITN.
While the Port Authority raised tolls in 2008, the severe recession
in that same year significantly impacted all of the Port Authority's
transportation facilities, including the ITN, in the form of
substantial declines in usage and traffic across all vehicle classes.
Those declines resulted in operating revenues and financial capacity
far lower than the original projections. Specifically, the aggregate
toll revenue variance resulting from recessionary traffic declines for
the 2008-2016 forecast marked a shortfall of $789 million from the
revenues expected prior to the recession. In addition, the effects of
age and extensive usage on these ITN facilities have generated further
and significant capital needs for the ITN. In short, the ITN was
producing revenues that were insufficient to fund its needs, and the
Port Authority therefore had to increase tolls. The extent of the ITN
deficit is borne out by financial analyses, which, as described further
below, demonstrate that the recent toll increase will reduce the
deficit but not eliminate it. In fact, even with the revenues from the
recent toll increase, which will be used only to fund ITN-related
projects, the ITN will continue to run a deficit until 2020 and its
capital needs will not be fully met.
That the revenue from the 2011 toll and fare increases is needed to
reduce the ITN deficit, will be used to pay for only ITN-related
expenses and projects and to contribute to statutorily required reserve
funds demonstrates that the increases are just and reasonable and
satisfy Constitutional requirements. Furthermore, in assessing the
reasonableness of the Port Authority's toll structure, it is
significant that Port Authority tolls remain in line with those for
similar bridges and tunnels in the region.
The Capital Investment Needs of the ITN
The inability of the then-existing ITN toll and fare structure to
support the current and future capital needs of the ITN facilities
caused the Port Authority to adopt the 2011 toll and fare increases.
The projected capital spending for the ITN over the next 10 years
amounts to $10.786 billion. Even with this level of spending and with
the revenue generated by the 2011 toll and fare increases, the ITN will
have unmet capital needs totaling $4.3 billion.
Over the next decades, the Port Authority must begin work on
critical infrastructure projects in order to continue to provide the
region with safe and reliable transportation at the highest level of
service. During 2010, the Port Authority bridges and tunnels handled
121.2 million vehicles, while the PATH system served 73.9 million
passengers at an average of 247,000 passengers per weekday. In 2011,
the bridges and tunnels handled 119.2 million vehicles, while PATH
ridership rose to 76.6 million trips or an average of 256,000 per
weekday--the highest ridership since the Port Authority took over PATH
operations in 1962. In 2010, the bus terminals had 3.3 million bus
movements serving 75.4 million passengers, which rose to 3.4 million
bus movements serving 76.5 million passengers in 2011. As ridership and
traffic increases, so does the age of our ITN facilities, most of which
are more than eighty years old and, thus, the ITN infrastructure now
requires significant ongoing maintenance and regular capital investment
to sustain operational safety and a state of good repair. Given the age
and wear of the ITN facilities, many of the bridges and tunnels are
outdated, compromising their ability to serve the volume and vehicle
designs of this century. Deferral of large state-of-good-repair
projects only creates more frequent and costly emergency and corrective
repairs that adversely affect service levels and travel reliability for
customers.
During the next ten years, the Port Authority is planning to expend
$10.786 billion on capital improvements to maintain the ITN. The Port
Authority is strategically programming asset replacement projects
designed to deal with critical state-of-good-repair needs and
infrastructure obsolescence. The ongoing PATH safety program includes
installation of improved tunnel and station ventilation systems. Port
Authority investment in the George Washington Bridge Bus Station will
be used to construct new bus platforms and a new passenger waiting
area. The Port Authority Bus Terminal and Journal Square Transportation
Center will receive investments for state-of-good-repair projects,
security enhancements and rehabilitation.
The following are highlights of the major projects planned for the
ITN for 2011-2020:
Replacement of the George Washington Bridge Suspender Ropes:
The George Washington Bridge opened more than 80 years ago in
1931. Its suspender ropes have never been replaced and have
reached the end of their useful life. The Robert F. Kennedy
Bridge, the Bronx-Whitestone Bridge and the Verrazano-Narrows
Bridge were all built after the George Washington Bridge and
have had some or all of their suspender ropes replaced. The
total cost of replacing the suspenders is more than one billion
dollars with $544 million of planned expenditures through 2020.
The Bayonne Bridge Navigational Clearance Program
(``BBNCP''): The Bayonne Bridge roadway over the Kill Van Kull
will be rehabilitated to increase its vertical clearance to
meet modern highway and structural design standards. In
addition, the raising of the roadway will provide enough
vertical clearance to allow access to larger container vessels
calling on the port as a result of the Panama Canal expansion
in 2015. The acceptance of the Port Authority's application for
expedited review of the BBNCP under the Federal Infrastructure
Dashboard (the ``Dashboard'')--believed to be the first
submitted application in the nation--was supported by all
members of the New York/New Jersey Senatorial delegation. On
July 19, 2012, the White House announced the President's
inclusion of the BBNCP on the Dashboard, now known as the
administration's ``We Can't Wait Initiative''. The total cost
of the BBNCP project is more than $1.28 billion.
The Goethals Bridge Replacement Project: The Goethals Bridge
Replacement Project will replace the existing structure, which
is functionally obsolete, with a new six-lane bridge. This
bridge serves as a critical crossing on the congested I-287
corridor, important to regional mobility, yet has obsolete ten
foot wide lanes and no shoulders or medians, making it
susceptible to severe traffic congestion in the case of even
minor accidents or inclement weather. The Port Authority will
expend $294 million for planning and construction. The balance
of the cost of this program of approximately $1.37 billion will
be financed by the Port Authority through a private financing
arrangement rather than the issuance of Consolidated Bonds. To
be clear, the contemplated private financing arrangement
requires that the Port Authority make annual payments to the
private developer, creating a financial obligation requiring
Port Authority toll revenue to cover.
The Lincoln Tunnel Helix Restoration: The Lincoln Tunnel
Helix is a bridge structure that connects New Jersey highways
and local roads to the Lincoln Tunnel in New Jersey. It was
constructed in 1937 and is in need of rehabilitation due to age
and deterioration. The Lincoln Tunnel Helix Restoration Program
will address the interim need for pavement replacement and
maintenance, the mid-term need for structural rehabilitation
and repaving, and the long-term need for Helix replacement. The
Port Authority has begun an $88 million project to perform a
rehabilitation of the deck and supporting structure as an
interim measure until the Lincoln Tunnel Helix can be replaced.
The mid-term structural rehabilitation and repaving
improvements only serve as a temporary solution, but are
necessary in order to maintain the helix in an operational
condition while a plan is developed for its replacement. The
extensive engineering analysis and design work required for the
Helix replacement has begun in order to develop a feasible plan
for reconstructing the Helix while maintaining traffic flow.
The estimated cost of the Helix Replacement is $1.5--$2.0
billion.
The Lincoln Tunnel Access Roadway Infrastructure Projects:
Expenditures for three projects to improve roadway approaches
to the Lincoln Tunnel will total $1.8 billion.
PATH Improvements: Planned expenditures for capital
improvements and safety enhancements in PATH facilities will
cost more than $3.1 billion.
In addition, the 2012 Preliminary Capital Budget lists expenditures
for the following projects for the ITN:
Holland Tunnel Electrical/Mechanical Rehabilitation of
Ventilation Systems Upgrade: Providing for upgraded and
modernized tunnel ventilation, fan blowers and motors in all
four vent buildings, a new automatic control system, and a new
low-and-high-voltage switch gear. The project will rehabilitate
an existing ventilation system that is currently beyond its
useful life. Replacement of the system's fans and motors will
prevent the Port Authority from having to shut down the tunnel
to all vehicles in order to address a non-functioning system.
The 2011-2020 spending to complete this project is estimated at
$60 million, of which $13 million is planned to be spent in
2012. The total cost of this project, including prior spending,
is $160 million.
George Washington Bridge Upper Level Deck Rehabilitation:
Rehabilitation of the structural steel of the George Washington
Bridge's Upper Level roadway deck and support structure to
maintain structural integrity, ensure state of good repair, and
extend useful life. This project will extend the useful life of
the deck another 15-20 years and reduce maintenance costs. The
2011-2020 spending for this project is estimated at $137
million, with $26 million planned for 2012. The total cost of
this project, including prior spending, is $143 million.
George Washington Bridge Bus Station Redevelopment:
Modernize bus operations on the upper level of the existing
George Washington Bridge Bus Station, as well as develop
approximately 120,000 square feet of retail space creating a
new revenue stream for the agency. Provide a modernized
intermodal transportation facility and services that promote
reliable travel and seamless connectivity among modes, and more
attractive transit alternatives for users of the George
Washington Bridge Bus Station. The Port Authority's share of
the spending for this project is estimated to be $82 million,
of which $34 million was budgeted to be spent in 2012.
Toll Collection System Replacement: Provide a new toll
collection system to replace the current system, which is
beyond its useful life. Deploy a system that has the capability
for All-Electronic Tolling, which will enable the Port
Authority to eliminate cash payments in toll lanes, thereby
enhancing system capacity and traffic flow at the interstate
crossings. Replacement of the aging toll collection system and
equipment will serve to protect toll revenue and help to recoup
revenue loss as a result of the antiquated system. The 2011-
2020 spending for this project is estimated at $162 million,
with $15 million planned for 2012. The total cost of this
project, including prior spending, is $177 million.
It is also important to note that, in addition to addressing the
critical needs of the ITN, the $10.786 billion of ITN capital spending
included in the preliminary 2011-2020 capital plan is expected to
result in nearly 21,000 direct job-years. Including indirect and
induced effects (purchases by both workers and suppliers to the
project), the total economic impact amounts to an estimated 47,000 job-
years, $2.8 billion in wages and $10.9 billion in economic activity
over the ten-year period. The important impact that the full
implementation of this plan will have for the people of this region in
terms of both services and jobs cannot be underestimated.
Public/Private Partnerships
In order to meet its mandate of providing the highest level of
service for the public using the ITN facilities, the Port Authority has
increased its capacity to serve those needs through the implementation
of ITN projects using a public/private partnership model. In addition
to the Goethals Bridge Replacement Project, mentioned above, the Port
Authority has also embarked on the following ITN projects, also
mentioned above, partnering with private entities:
George Washington Bridge Bus Station (``GWBBS'')
Redevelopment: As noted above, the Port Authority has executed
a long-term 49-year lease agreement with a private developer as
part of a public-private partnership that will result in the
investment of $180 million for redevelopment of the GWBBS.
Through this creative partnership arrangement, the majority of
the total investment will come from the developer helping to
keep the agency's capital expenditures to a minimum. The
redevelopment will provide complete modernization of the bus
operating and passenger areas along with extensive retail
development, which will revitalize both the GWBBS and the
surrounding Washington Heights community. The project is
currently in the final phase of design.
The Goethals Bridge Replacement Project: As noted above, the
Port Authority will be expending $294 million for the planning
and construction of the Goethals Bridge replacement project.
The balance of the cost of this program of approximately $1.37
billion will be financed by the Port Authority through a
private financing arrangement rather than the issuance of
Consolidated Bonds. Nevertheless, as described above, the
private financing obligation will create a financial obligation
by the Port Authority to repay the developer if they meet
certain asset delivery and performance obligations.
Unmet Capital Needs
Even with the revenue generated by the September 2011 toll and fare
increases, there remain many unmet capital investment needs for aging
ITN facilities. While life-safety, state-of-good repair, and security
projects have been given priority treatment, there are projects within
these categories that will not be funded under the current preliminary
ten-year capital plan and consequently must be deferred due to the lack
of sufficient investment capacity generated by projected revenues. Such
deferred projects include replacing the bridge decks for the George
Washington Bridge and Outerbridge Crossing, rehabilitating the Hudson
River ramps for the George Washington Bridge, and replacing the
traffic-bearing slabs for the Port Authority Bus Terminal. The
projected future unmet needs for such projects total a sizeable $4.3
billion, with an additional $3.6 billion programmed for beyond 2020.
Additionally, given the cost constrained environment the Port Authority
has been working under, only 76 percent of all priority preventative
routines scheduled for 2011 were completed in that year, increasing the
risk of more costly repairs as these maintenance routines are deferred.
Past and Projected ITN Revenues and Expenses Will Result in a Deficit
A cash flow analysis of the sources of past and future revenues and
operating and capital expenses for the ITN shows it will run a deficit
until 2020. For the period 2011-2020, even after the toll and fare
increases approved by the Board of Commissioners in August of 2011, the
ITN will generate a net loss of $51 million by 2020. The cash flow
analysis is appended to the Affidavit of Michael Fabiano, Exhibits B-E,
which was provided to the Committee as an attachment to the June 7,
2012 letter.
For the four-year period from 2007-2010, the ITN generated actual
net operating revenues of $1.193 billion. The ITN, however, showed a
cumulative net loss of $636 million over that period, after deducting
direct payments for capital expenditures and debt service allocated to
the Port Authority's Consolidated Bonds issued for capital
expenditures, and payments into the General Reserve Fund, which are
statutorily required because of the issuance of Consolidated Bonds for
the ITN. As stated earlier, for the period 2011-2020, the cash flow
analysis, which incorporates the toll and fare increases, shows a net
loss of $51 million for the ITN by 2020.\1\
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\1\ This cash flow analysis is based on the historical Port
Authority practice of using equal amounts of debt and direct payments
to finance capital expenditures. The use of a mixture of debt and
direct payment of capital expenditures is an efficient way to finance
these projects as evidenced by a comparison between the all cash method
and the 50 percent cash (direct payment)--50 percent debt method.
Assuming the Port Authority paid $10.786 billion in ITN capital
expenditures all cash (direct payment) method, the ITN cash flow to the
Port Authority at the end of 2020 would result in a loss of $2.854
billion in contrast to the $51 million net projected loss of the ITN at
year-end 2020 with the 50 percent cash--50 percent debt method.
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The cash flow schedules clearly demonstrate that every dollar of
the toll and fare increase is and will be devoted to payment of ITN
operating expenses and capital improvements and contributions to
statutorily required reserve funds. The revenue from the September 2011
toll and fare increases will not be utilized outside of ITN-related
projects.
Comparison to Similar Regional Tolls
It is also important to note that Port Authority tolls continue to
be in line with those for similar bridges and tunnels in the region.
The Port Authority's average toll is 4.5 percent lower than the average
toll for the major crossings operated by the region's other toll bridge
and tunnel operator--the Metropolitan Transportation Authority
(``MTA''). The MTA's network includes the Verrazano Narrows, Robert F.
Kennedy, Bronx-Whitestone and Throgs-Neck bridges and the Brooklyn
Battery and Queens Midtown tunnels. Round trip tolls for comparable MTA
bridges and tunnels (i.e., the Verrazano-Narrows, Robert F. Kennedy,
Bronx-Whitestone and Throgs Neck bridges as well as the Brooklyn-
Battery and Queens-Midtown tunnels) are set forth in Exhibit A. The
round-trip toll rates for the Port Authority's tunnels and bridges for
the years 1970-2011 are set forth in Exhibit B. This schedule reflects
the discounts offered to E-ZPass account holders, registered
carpoolers, truckers traveling during weekday overnight hours and green
pass vehicles, which are E-ZPass customers driving qualifying low-
emission, high-efficiency vehicles in off-peak hours.
A comparison of the Port Authority and MTA bridge and tunnel tolls
shows that the Port Authority's 2011 tolls are the same as, or lower
than, the round-trip tolls for these comparable MTA facilities as set
in 2010. The lower tolls charged by the Port Authority are demonstrated
by comparing the tolls charged by each agency for cars. The MTA charges
$13.00 round trip for cash customers and $9.60 round trip for E-ZPass
customers at all times. By comparison, the Port Authority 2011 round-
trip toll for vehicles is $12.00 for cash customers (i.e., 7.7 percent
lower than the MTA), $9.50 for E-ZPass customers during peak hours
(i.e., 1.0 percent lower than the MTA), and $7.50 for E-ZPass
customers during off-peak hours (i.e., 21.9 percent lower than the
MTA). The Port Authority provides a toll discount for all E-ZPass
transactions, without limitations as to where one's account is
established. This policy provides discounts to the largest population
of users possible. The MTA offers E-ZPass discounts only to account
holders of their New York Customer Service Centers, limiting the value
of E-ZPass discounts to a smaller population.
Similarly, a comparison of PATH fares to MTA subway and NJ Transit
fares shows that, based on full fare rates, PATH fares are the lowest,
with PATH riders paying $2.00 per trip, MTA riders paying 2.25 per trip
and NJ Transit riders, at the least expensive NJ Transit fare, paying
$4.00 per trip.
Toll and Fare Increase Hearings
In conformance with its policy to facilitate public input into the
process for consideration of toll and fare adjustments, the Port
Authority held an extensive public notice and comment process
undertaken in connection with the 2011 toll and fare increases during
which almost 600 speakers or comments were received. The Port Authority
received more than twice the public participation that it had during
the hearings in December of 2007 for the last toll increase proposal.
In accordance with the Port Authority's policy, adopted on June 9,
1977, and pursuant to the By-Laws, on August 16, 2011, nine public
hearings (four in each state and one via the Internet) and one public
meeting were held in the Port District to solicit public comments on
proposed changes in the toll structure for the Port Authority's six
vehicular crossings and a proposed increase in the fare charged on the
PATH system. Notices of the hearings were published in The Daily News,
Newsday and The Staten Island Advance in accordance with Port Authority
policy of publishing such notices ten days prior to the hearings. In
addition, arrangements were also made for the New York Times, The Star
Ledger and The Bergen Record to publish the notice at a later date.
Proof of publication was placed on file with the Port Authority and was
made part of the record of the toll and fare proceedings. Michael
Francois, Chief of Real Estate & Development, Ernesto L. Butcher, Chief
Operating Officer, Michael DePallo, Director/General Manager of PATH,
Cedrick Fulton, Director of Tunnels, Bridges & Terminals and Kirby
King, Director of Technology Services, presided at the hearings.
The hearings were held at: (1) Newark Liberty International
Airport, 1 Conrad Road, Building 157, Bay 3, Newark, New Jersey from
8:00 a.m. to 9:09 a.m.; (2) Port Authority Technical Center, 241 Erie
Street, Room 212, Jersey City, New Jersey from 8:00 a.m. to 9:16 a.m.;
(3) Port Ivory/Howland Hook, 40 Western Avenue, Staten Island, New York
from 8:15 a.m. to 10:30 a.m.; (4) Port Authority Bus Terminal, 625 8th
Avenue, Times Square Conference Room--2nd Floor, New York, New York
from 8:00 a.m. to 9:25 a.m.; (5) George Washington Bridge
Administration Building, 220 Bruce Reynolds Way, Fort Lee, New Jersey
from 6:00 p.m. to 7:52 p.m.; (7) Holland Tunnel Administration
Building, 13th Street & Provost Street, Jersey City, New Jersey, from
6:00 p.m. to 7:58 p.m.; (8) George Washington Bridge Bus Station, 4211
Broadway, Lower Level Conference Room, New York, New York from 6:00
p.m. to 7:16 p.m.; (9) John F. Kennedy International Airport, Port
Authority Administration Building 14, 2nd Floor Conference Room,
Jamaica, New York, from 6:00 p.m. to 7:02 p.m.; and (10) via the
Internet from 2:00 p.m. to 3:05 p.m.
At the opening of each session, the hearing officers made a brief
statement outlining the purpose of the hearings--to solicit the
comments and opinions of the public--as well as the procedural rules
governing the conduct of the hearings, which were adopted to provide
maximum opportunity for all views to be heard without interruption or
dispute. In addition, at the opening of each hearing, the hearing
officers provided a statement setting forth the reasons for the
proposed changes in the Port Authority toll structure and the PATH fare
structure. Copies of the statements were placed in the record.
Additionally, at the request of James Molinaro, the Borough
President of Staten Island, Mr. Butcher attended an August 16, 2011
public meeting in Staten Island at the Michael J. Petrides Educational
Complex, from 6:00 p.m. to 8:40 p.m., at which members of the public
provided additional comments.
Summary of Testimony
During the course of the hearings and at the public meeting, a
total of 589 speakers and/or commenters testified and/or submitted
written comments. This represents almost twice the public participation
received during the hearings held for the last toll increase held in
December of 2007 where 255 speakers and/or commenters testified and/or
submitted written comments. Of those who testified or commented in the
August 2011 hearings, 211 opposed the toll increase and 199 opposed the
PATH fare increase, 306 supported the toll increase without commenting
on the PATH fare increase and 10 took no position on the toll increase
or on the PATH fare increase.
The principal concern expressed by those who either testified and/
or submitted comments in opposition was that the proposed increases in
the tolls and fares were too high. Those who testified at the hearings,
including many public officials, also raised concerns that revenues
generated by the toll increase would not be used to benefit those
bridge and tunnel users who were being asked to pay the higher tolls.
They also raised concern that increased toll revenues would be used for
Port Authority airports, the World Trade Center and marine terminals.
While many speakers expressed general support for the proposed Ten-Year
Capital Plan (``Capital Plan'') supported by the toll and fare
proposal, they questioned the use of toll revenues as an appropriate
source to fund the Capital Plan. Many speakers in Staten Island
testified about the lack of investment in mass transit on Staten
Island.
Finally, several commenters also suggested that PATH should offer a
discount for seniors, the disabled and students. Several groups
representing truckers testified that the tolls pricing plan did not
recognize the fact that their schedules were dictated by their
customers. Hudson County officials and residents were against the PATH
fare increase, with some testifying that the proposal would discourage
mass transit ridership and fall on those who could ill afford its
impact.
However, speakers at all venues offered support for the toll and
fare proposals. The Capital Plan to be funded by the pricing plan drew
praise from transportation planning organizations who commented on the
need to invest in the region's transportation network. Associations and
unions also offered support and praise for the new Capital Plan
proposals, recognizing that it would lead to the creation of jobs and
stimulate the regional economy. Some officials on Staten Island spoke
favorably of the new Capital Plan while urging the Port Authority to
reexamine the proposal's impact on low-income families and captive
Staten Island commuters. A few speakers also argued for a more gradual
increase in the toll schedule and for a more modest increase in the
PATH fare.
The written comments raised issues identical in most respects to
those raised during the testimony at the nine hearings and at the one
public meeting. Those identifying themselves as commuters wrote that
the increases would impose an economic hardship on people with limited
incomes and no other transportation alternatives. The PATH fare
increase was criticized as both unfair and ineffective in meeting the
goals of alleviating road congestion and encouraging the use of mass
transit. A number of commenters expressed concern that the revenue from
increased tolls and fares would be used to subsidize unrelated Port
Authority projects rather than to improve PATH service and bridge and
tunnel maintenance. On the other hand, as during the hearings, many
commenters did not oppose a modest increase in PATH fares if it would
result in improved PATH service.
A report on the public input received during the notice and comment
process was provided to the Port Authority Board of Commissioners in
connection with its consideration of the recommended toll increase. The
Commissioners were also provided with the actual transcripts of the
public hearings.
The Port Authority's Procedure for Toll and Fare Adjustments
While the public hearings and meeting leading up to the 2011 toll
and fare increases produced a large volume of public responses, we
continue to seek better ways of conducting our affairs. To that end, as
part of a continuing review of governance enhancements, the Chairman
and Vice Chairman recommended in June of this year that the By-Laws of
the Port Authority (and its wholly owned subsidiary corporations) be
amended to address several areas. The resulting amendments to the By-
Laws include codification of procedural requirements for public
hearings in connection with toll and fare adjustments as well as a
requirement that Commissioners attend toll and fare hearings. The
relevant excerpt from those By-Laws, which was approved unanimously by
the Board of Commissioners, is set forth below:
VI. Public Hearings
A. Public hearings shall be held on matters requiring public
consideration or public comment and information and may be held
upon the request of (i) the Chairman of the Port Authority or
(ii) any two Commissioners, one from each State.
B. Pursuant to direction by the Board of Commissioners, the Executive
Director shall have authority to arrange for public hearings,
in connection with the budgeting, planning, and programming of
the Port Authority, including proposals for instituting or
changing tolls and fares imposed for use of the Port
Authority's vehicular tunnels and bridges and passenger rail
facilities. In connection therewith, the Executive Director
shall:
(1) determine the dates, times, and locations in each of the two
States for the conduct of such hearings, which shall be
designed to encourage the broadest possible attendance and
participation, and which, in the case of each hearing
pertaining to proposals for instituting or changing tolls
and fares imposed for use of the Port Authority's vehicular
tunnels and bridges and passenger rail facilities, shall
include the attendance of at least two Commissioners, one
from each State;
(2) provide for appropriate notice to be given not less than ten
days in advance of such hearings, with notice to be
published within the Port District in one or more
newspapers of general circulation in each State, on the
Port Authority Internet site or any successor electronic
media designated by the Executive Director, and through
other available electronic media used by the Port
Authority, and which, in the case of each hearing
pertaining to proposals for instituting or changing tolls
and fares imposed for use of the Port Authority's vehicular
tunnels and bridges and passenger rail facilities, shall
include the charge or charges proposed to be instituted or
changed, shall set forth a comparison of the existing
charges with the proposed charges, and shall state the
purpose or purposes for which such tolls, fares or other
charges are to be instituted or changed and an estimate of
the overall increase or decrease in revenues to the Port
Authority resulting from such proposed charges;
(3) designate hearing officers (if any) in connection therewith;
(4) arrange for transcripts and reports of the hearings, which
shall be made available to all Commissioners prior to the
consideration of any proposal; and
(5) take such other action as will effectuate the Port Authority's
policy, as established by the Board of Commissioners, for
the conduct of public hearings.
The Toll Increase is Consistent with Applicable Law
The Port Authority believes that the toll and fare increases that
went into effect in September of 2011 are ``just and reasonable'' under
The Federal-Aid Highway Act of 1987 (the ``Highway Act''), the Commerce
Clause of the United States Constitution and New York and New Jersey
law.
The Highway Act
The establishment and maintenance of tolls on the Port Authority
bridges is governed by the Highway Act which provides that:
Tolls for passage or transit over any bridge constructed under
the authority of the Act of March 23, 1906 (34 Stat. 84; 33
U.S.C. 491-498), commonly known as the ``Bridge Act of 1906'',
the General Bridge Act of 1946, and the International Bridge
Act of 1972 shall be just and reasonable.
33 U.S.C. Sec. 508. In Automobile Club of New York, Inc. v. Port
Authority, 887 F.2d 417 (2d Cir. 1989), the United States Court of
Appeals for the Second Circuit articulated the standard for ``just and
reasonable'' tolls on the Port Authority bridges. The court held that
such tolls were ``just and reasonable'' if the revenues produced by the
Port Authority were used to fund the operating and capital needs of the
ITN, including those of PATH, the Port Authority bus terminals and
stations and Port Authority bus program. Id. at 423. The Second Circuit
affirmed the finding of the District Court finding ``that the Port
Authority's bridges, tunnels, bus terminals, bus programs and PATH
constitute an `integrated, interdependent transportation system.' ''
Id. (quoting Automobile Club v. Port Authority, 706 F. Supp. 264, 280
(S.D.N.Y. 1989)). As described above, the operating and capital needs
of the ITN are greater than the revenue produced by the tolls.
Specifically, even with the toll increase, the ITN will still lose $51
million by the end of 2020. Accordingly, the Port Authority 2011 toll
rates are clearly ``just and reasonable'' under the Highway Act.
The Commerce Clause
The tolls for the Port Authority interstate bridges and tunnels
must also satisfy the test established by the United States Supreme
Court for tolls levied for the use of interstate transportation
facilities governed by the Commerce Clause of the United States
Constitution. The Commerce Clause grants Congress the power ``[t]o
regulate Commerce . . . among the several States.'' U.S. Const. Art. I,
Sec. 8, cl. 3. The Supreme Court has long held that this power contains
negative implications, commonly referred to as the ``dormant Commerce
Clause'' restricting States' power to regulate interstate commerce. CTS
Corp. v. Dynamics Corp. of Am., 481 U.S. 69, 87 (1987).
The Supreme Court first articulated the rule for determining the
constitutionality of user fees charged by states for use of interstate
transportation facilities under the dormant Commerce Clause in
Evansville-Vanderburgh Airport Authority District v. Delta Airlines,
Inc., 405 U.S. 707 (1972). In this case, the Supreme Court stated that:
[A] charge designed only to make the user of state-provided
facilities pay a reasonable fee to help defray the costs of
their construction and maintenance may constitutionally be
imposed . . . so long as the toll is based on some fair
approximation of use or privilege for use . . . and is neither
discriminatory against interstate commerce nor excessive in
comparison with the governmental benefit conferred.
Id. at 714, 716-17.
In Northwest Airlines, Inc. v. County of Kent, 510 U.S. 355 (1994),
the Supreme Court formulated a three-pronged test to determine the
reasonableness of fees for the use of state-provided facilities under
the Evansville rule. Under the Court's test, a fee is reasonable and
constitutionally permissible ``if it (1) is based on some fair
approximation of use of the facilities, (2) is not excessive in
relation to the benefits conferred and (3) does not discriminate
against interstate commerce.'' Id. at 369 (citing Evansville-
Vandenburgh Airport Auth. Dist., 405 U.S. 707).\2\
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\2\ In 2009, the Second Circuit endorsed the Northwest Airlines
test for determining the constitutionality of highway tolls. See
Selevan v. N.Y. Thruway Auth., 584 F.3d 82, 98 (2d Cir. 2009).
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The current Port Authority bridge and tunnel tolls satisfy all
three elements of the Northwest Airlines test. The tolls do not
discriminate against interstate commerce because each vehicle within
the same classification is subject to the same toll. As revenues from
the tolls are being used to support the ITN and the ITN will continue
to operate at a deficit following the increases, the toll revenues are
based on a fair approximation of use of those facilities and are not
excessive in relation to the benefits conferred. As the tolls increase
adopted will result in the collection of no more revenue than is needed
to meet the ITN's capital, operations and maintenance needs and its
share of the reserve requirements--the tolls plainly satisfy that test.
State Law
By legislation adopted in both New York and New Jersey, the Port
Authority is authorized to establish, levy and collect such tolls and
other charges sufficient to meet expenses of construction, operation
and maintenance, as well as debt service on obligations, in connection
with the ITN vehicular bridges and tunnels as it may deem necessary,
proper or desirable. Furthermore, the two States have pledged that they
will not impair the power of the Port Authority to establish, levy and
collect rentals, tolls, fares, fees, or other charges on facilities
whose revenues have been pledged as security for outstanding bonds. In
addition, the Port Authority has agreed with the holders of its
Consolidated Bonds to establish and collect fees, rents, tolls, fares
and other charges to produce sufficient net revenues to provide for
debt service on such bonds. That all of the ITN's revenues will be
expended to pay ITN operating expenses and for capital improvements and
contributions to statutorily required reserve funds satisfies the
applicable state law regarding the assessment of tolls on the Port
Authority bridges and tunnels.
Question 11
The tolls at the Port Authority interstate bridges and tunnels and
PATH fares were raised to generate additional revenue needed for ITN
expenditures. In summary, as stated above, (1) the Port Authority
operates ITN facilities supported by toll revenues and PATH fares as an
integrated, interdependent transportation network system; (2) major ITN
capital projects will be funded over the next ten years; and (3) all of
the ITN revenues, including those produced by the 2011 toll and fare
increases, are needed to fund the operating expenses and capital needs
of the ITN. Further, ITN revenues will not be used for ``non-
transportation, economic development projects.'' The ITN will operate
at a deficit, so that ITN revenues will not fund non-ITN activities. To
the contrary, the ITN will require funding from non-ITN activities in
order to meet ITN needs, continuing past practice. Descriptions of the
major ITN capital projects to be funded over the decade have been set
forth above. To comprehensively respond to the request for ``all of the
specific projects and activities that will be funded by the toll
increase'', we respectfully refer you to the entire preliminary capital
plan (2011-2020) for the ITN which was appended to the Affidavit of
Michael Fabiano, as Exhibit A, and provided as an attachment to the
June 7, 2012 letter. Those ITN capital projects will require the
expenditure of a total amount of $10.78 billion.
Question 12
In March 2011, in view of the ongoing needs of the Port Authority's
facilities for efficient transportation access and egress for goods and
people, the Port Authority Board of Commissioners authorized the
Executive Director, in consultation with the Chairman of the Committee
on Operations, to effectuate the Port Authority's participation in
cooperation with the New Jersey Department of Transportation (NJDOT) on
the Route 1 & 9 Pulaski Skyway; Route 139 (Hoboken and Conrail
Viaducts); Route 7 Hackensack River (Wittpenn) Bridge; and Route 1 & 9
(New Road) projects. Port Authority participation in these projects (or
suitable replacement projects mutually agreed upon with NJDOT) is
consistent with the Port Authority's Capital Infrastructure Fund
provided for in the Port Authority's Annual Budget and its Capital
Plan. The Executive Director was authorized to enter into an agreement
or agreements with NJDOT relating to such Port Authority participation.
Improvements to the main routes in the area of the approaches and
connections for these facilities to the Port Authority facilities will
improve and strengthen access to and between the Hudson River
crossings.
The Preliminary 2012 Budget dated December 11, 2011 includes the
following expenditures for these projects:
Pulaski Skyway: Infrastructure design and construction of
improvements to the existing bridge structures and its
approaches, including replacing the entire concrete deck of the
bridge and all ramp structures, repairing/replacing structural
steel members and connections, rehabilitating the substructure
and other elements of the bridge such as safety, security, and
aesthetics. ($164 million)
Route 7 Wittpenn Bridge Infrastructure: Replace bridge over
the Hackensack River and roadway realignment on the west side
of the river. The new bridge will be located north of the
existing bridge with an increase in vertical clearance to a
minimum of 70 feet in the closed position. ($174 million)
Route 1 & 9 New Road: Infrastructure design and construction
of an extension of Route 1 & 9 from St. Paul's Avenue to
Secaucus Road in Jersey City, New Jersey. ($5 million)
Question 13
As recognized in the By-Laws, it is the goal and policy of the Port
Authority to conduct its business and activities in the public interest
and therefore the public should have access to the records of the Port
Authority consistent with the freedom of information laws of New York
and New Jersey. In order for the goal of greater transparency in
governance to be achieved, a more efficient and clear policy statement,
both for the guidance of staff and for the expectations of the public,
was adopted in March 2012, to provide a streamlined process, with
timely results and subject to judicial recourse in the States of New
York and New Jersey. In addition, we will be utilizing the ever-
expanding resources of the electronic information age to take advantage
of the ability to disseminate information through the Port Authority's
Website and other similar tools, and, as such, the fee provisions of
the Freedom of Information Code were suspended, on a trial basis, to
determine whether the proposed posting of information on the Port
Authority's Website may preclude the necessity for imposing such fees.
The Governance and Ethics Committee of the Port Authority's Board
of Commissioners, after consulting with General Counsel, will review on
a regular basis the Port Authority's transparency efforts.
Question 14
For 2011, taking into account the partial year toll increase
(implemented September 18, 2011), the Port Authority's bridges and
tunnels handled 119.1 million vehicles, or 2.1 million vehicles less
than were handled in 2010. Total revenues were $1.03 billion and
increased by $71.5 million, 7.4 percent higher than 2010 revenues. The
average toll paid for all vehicles (autos, buses and trucks) in 2010
was $7.93 and the average in 2011 will be $8.67.
For 2012, the estimated toll revenue for the full year is $1.265
billion reflecting an anticipated increase of $304.1 million or (31.67
percent) above 2010. The estimated traffic change is 600,000 fewer
vehicles relative to 2010 (2.2 percent).
Toll revenue overall for 2013, the full year during which the
December 2012 toll increase will be in effect is expected to be $1.38
billion--an increase of $113 million in revenues (9.0 percent) over the
comparable 2012 estimated toll revenue. A decline in traffic, relative
to 2012 of 2.1 million vehicles (1.8 percent) is expected. By vehicle
category, on average, autos would pay an extra 69 cents or 7.7 percent,
trucks will add $7.17 or 20.4 percent and buses will pay an additional
75 cents or 7.2 percent.
While Question 14 asks for driver diversion rates, presumably due
to increased tolls, the projected traffic decreases for 2012, as
compared to 2011 and 2013 provided above, are attributable to the
regional economic outlook and the toll increases.
Question 15
The Port Authority is committed to providing greater cross-Hudson
capacity to benefit all commuters using ITN cross-Hudson facilities.
The growing number of PATH riders will benefit from investments in a
new rail station in Harrison, an entirely new fleet of PATH cars, and
enhanced system signaling. Commuters who use the Lincoln Tunnel will
benefit from the rehabilitation of the Lincoln Tunnel Helix, which will
reduce the need to interfere with traffic by conducting interim and
emergency repairs. Bus riders will benefit from investments in a
refurbished George Washington Bridge Bus Station and ongoing
improvements to the Port Authority Bus Terminal at 42nd Street. In
addition, the Port Authority is undertaking a detailed and thorough
review of bus transportation at the 42nd Street terminal to achieve
increased bus usage and parking capacity on the west side of Manhattan.
* * *
The Port Authority believes the responses provided to the Committee
on June 7, 2012 as supplemented by the responses enclosed herein
adequately reflect the position of the Port Authority, and provide a
thorough and complete summary as to why the Port Authority raised tolls
and fares. Again, on behalf of the agency, I thank you for the
opportunity to provide this supplemental response to the QFRs. In
closing, I also wish to reiterate the agency's appreciation and
recognition of the ongoing support of the Congress and Federal
government. If you should have any further questions, please let me
know. If it would be of assistance to the Committee, I can arrange to
meet with you and/or your staffs to discuss these matters further.
Sincerely,
Patrick J. Foye,
Executive Director.
cc: Hon. David Samson, Chairman
Hon. Richard H. Bagger
Hon. H. Sidney Holmes III
Hon. Jeffrey H. Lynford
Hon. Jeffrey A. Moerdler
Hon. Raymond M. Pocino
Hon. Scott H. Rechler
Hon. Rossana Rosado
Hon. James P. Rubin
Hon. Anthony J. Sartor
Hon. William Schuber
Hon. David S. Steiner
William Baroni, Jr., Deputy Executive Director
Exhibit A
Exhibit B
______
September 24, 2012
David Samson,
Chairman,
Port Authority of New York and New Jersey
New York, NY.
Bill Baroni,
Deputy Executive Director,
Port Authority of New York and New Jersey,
New York, NY.
Dear Chairman Samson and Mr. Baroni:
We write to express continued disappointment with the Port
Authority's failure to answer several questions raised as part of the
Surface Transportation Subcommittee of the Senate Commerce Committee's
hearing entitled ``Protecting Commuters: Ensuring Accountability and
Oversight in Tolling.''
As you know, the Port Authority failed to sufficiently respond to
the Committee's written questions following the hearing, and the
Committee provided the Port Authority additional time to amend the
record. On August 14, the Port Authority sent an updated response,
which once again failed to respond in whole or respond at all to many
of the Committee's questions.
It is unacceptable that the Port Authority is unable to answer
straightforward inquiries or supply information about the toll
increases in question and this behavior raises serious concerns about
the agency's reform efforts. While the Port Authority has publicly
committed to being a transparent and accountable agency, there are
growing concerns that these efforts are being subverted by
obstructionists who appear to put politics above the people and
Authority they serve.
We understand that Mr. Foye, Executive Director of the Port
Authority, worked in good faith to answer the Committee's questions. It
is regrettable that a similar good faith effort apparently was not made
by all of Port Authority's leadership.
Decisions about tolls have serious ramifications for interstate
commerce in the region, and we are disappointed that prominent Port
Authority officials continue to shirk the oversight of the Committee
and the commuters that use their facilities every day.
Sincerely,
John D. Rockefeller IV,
Chairman, U.S. Senate Committee on Commerce, Science, and
Transportation
Frank R. Lautenberg,
Chairman, U.S. Senate Commerce Subcommittee on Surface Transportation
and Merchant Marine Infrastructure, Safety, and Security
cc:
Scott Rechler, Vice-Chairman
Richard Bagger, Board Member
H. Sidney Holmes III, Board Member
Jeffrey Lynford, Board Member
Jeffrey Moerdler, Board Member
Raymond Pocino, Board Member
Rossana Rosado, Board Member
James Rubin, Board Member
Anthony Sartor, Board Member
William Schuber, Board Member
David Steiner, Board Member
Patrick Foye, Executive Director