ILLINOIS:Governor Installs New Board and New CEO

He has complained about queueing at toll plazas and suggested the system should eventually be made free. About a fifth of toll transactions are done by electronic transponder (e-tag) here called I-PASS, but the governor has not mentioned the system. It is as if he is unaware of how it usually enables patrons to bypass the queues.

“It is time for changes and those changes begin today,” said Ryan in a press release October 5 in which he announced his nomination of Cuculich and the three new board members. It seems traditional in Illinois for the governor to get his way on the Tollway board and an official there said that although such moves have to be formally confirmed by the state Senate there is precedent for the governors nominees on the ISTHA board to act while still just nominees.

The governor’s press release says: “Gov Ryan’s vision for the tollway system is to make it more efficient for motorists, with the longterm goal of reducing or phasing out tolls charged to motorists. He has directed state transp officials to develop options for changes in the system.”

Announcing the new appointments the Gov was quoted: “I will expect that Tom (Cuculich, new CEO) and the Toll Authority board to pursue the direction I’ve set for them, and I’ll be looking for them to give me their recommendations in 60 days.”

The statement notes that the present exec-director Ralph C. Wehner announced his retirement for the end of this year. Cuculich has already taken over though Wehner is remaining at the Tollway until the end of the year. The new board appointees are Norman Gold, 69, an accountant and attorney, Carl Kramp, 65, and former Kane co treasurer, Gordon Volkman, 68, a banker. The governor announced the reappointment of Paula Fasseas, 44, a banker. None of these people have expressed any concern about the governor’s apparent complete takeover of the tollway or the fact that the board now seems rather superfluous. Of course this would not be the first toll road board composed of pliant flunkeys.

Governor Ryan is increasingly deeply embroiled in a corruption and extortion scandal arising from his previous position of Secretary of State, where he was in charge of motor vehicle inspections. Two of his subordinates are under indictment, charged with demanding campaign contributions for Ryan in return for leniency in inspecting truck fleets and driver licenses. The investigator recently refused to rule out the governor as a target in the criminal investigation.

It is widely believed Ryan is stirring things at the Tollway, in part to distract attention from his corruption problems, as well as to gain short-term political sympathy. Arthur Philip, the chairman of the Tollway Board, appointed to that position July 23 by Ryan said the same day that tolls would have to be increased to maintain, modernize and expand the toll system, saying it was “time to bite the bullet.” Most tolls are presently 40c per mainline plaza or an average 2c/km (3.5c/mi) whereas they probably need to be raised to $1.00 (5c/km).

Two thirds of the 437km (273mi) system is basically 1956-58 construction, which engineering consultants have said is most economical to completely rebuild. Moreover there has been overwhelming legislative support for extensions to the tollway system, all of which require substantially higher toll rates in order to support the revenue bonds that need to be issued.

We haven’t been able to talk directly to Cuculich but those who know him speak well of him, as hardworking, astute and open-minded. He is getting advice from all over. One said he’d advised Cuculich to tell the governor: “Governor I fully support your proposal to abolish tolls, along with the need to abolish state income tax, reduce the state’s debt, implement your pledge to end marital disharmony, cure cancer, help all the lonely guys sleep with a Playboy centerfold, improve education, stop air pollution, promote world peace...dammit, of course you’re in favor of abolishing tolls, but realistically not within your term of office. Indeed you have no alternative but to raise tolls substantially, while of course maintaining you longterm objective of eventually freeing the tollway.”

Another helpful suggestion: Illinois could follow the example of the Pennsylvania Turnpike, which got rid of ‘tolls’ back in the 1960s. They renamed them ‘fares’ – after some PR genius thought the new word would make the, err, road payments more acceptable to patrons. Heck, they DID abolish ‘tolls.’ In Singapore they don’t call them tolls either, they call them ‘erps’ – from Electronic Road Payments. A little semantic dickering would be a great way for the Tollway to gain the attention of those curmudgeonly Chicagonan commentators and columnists, and to set off the radio talk show guys. Just imagine the fun!

Meanwhile...

In an interview with the Chicago TRIBUNE (Oct 14) Cuculich said: “My mission is to make the tollway system as convenient as possible for our customers, the motorists, and to look at the elimination of tolls.” He said privatization of the tollway would be among the options he would present to the governor. He said he will be focussing on ways of improving travel times on the tollways. He is not sure if this means fewer toll plazas, as suggested by the governor: “Whether it can be done or not remains to be seen.”

Cuculich said that a very difficult question is the future of I-PASS, the electronic toll system in process of implementation. The tollway has all its lanes wired and a longterm plan for phasing in highway speed open road ET, but presently less than a quarter of transactions are electronic. The low rate of ET usage appears to be the result of a lack of strong marketing or any financial incentive to get a tag.

“If we are looking at, in the long term, eliminating the tollway system, how do we balance that with continuing to invest in I-PASS,” Cuculich said to the TRIBUNE. “It’s something of a Catch-22, because I-PASS at some point does ease congestion.”

Reaching a decision on any further expansion and spending on I-PASS will come in the next few months, he said, adding that the Governor had not told him to freeze spending on anything so far.

After a stint as Ryan’s chief of staff, when he was Lt Gov, he was deputy director of drivers’ services under secretary of state Ryan, then he joined the dept of commerce where worked to relocate businesses to the state. He developed a reputation as a detail man with disciplined work habits and good people-management skills, the TRIBUNE says, but most important is his personal and political relationship to Ryan.

Cuculich is in the bizarre situation of formally working for a board of directors whose chairman Art Philip, a new appointee of the governor, has publicly argued for higher toll rates, while being assigned to his job at the behest of the governor to keep tolls down, and if possible get rid of them. Cuculich made it clear he’s working only for the governor, saying: “I’m not here to make a career out of this. I am here to carry out the governor’s mission, which is to find a way to reduce the authority, and to get it out of motorists’ lives.”

Tollway’s Study

Quite by coincidence ISTHA has near completion a “Long Range Toll Collection Alternatives Study.” Commissioned from Wilbur Smith early-1998, well before the Governor’s election and his anti-toll views were expressed, the study is extremely relevant to Cuculich’s assignment from the governor. Some of the results were presented at IBTTA by ISTHA’s chief planner Lidia Pilecky and the WSA study lead Paul Marcella. Pilecky said that electronic tolling (ET) is the “key to the survival” of the system since it would be unthinkable to physically enlarge the system’s toll plazas to cope with extra traffic.

“We have to live within our existing toll plazas, and the only way to get traffic through better is electronic tolling,” said Pilecky. The question posed in the Wilbur Smith study was how fast should ISTHA try to increase ET usage, and what measures would achieve different levels of ET-usage, and how much would they cost.

ISTHA has already completed retrofit of ET to all 525 toll lanes in its 20 mainline plazas and 46 ramp plazas. Over 300k patrons are equipped with e-tags and they are used for just under a quarter of toll transactions in the weekday peaks and just under a fifth overall. ISTHA has spent some $50m on ET conversion. At close to 2m transactions/day it is by far the busiest toll system in the US, though in revenue terms it is #3 or #4. Its large number of low tolls (mostly 40c) and heavy usage of low cost automatic coin machines (which take 80% of tolls) make ET conversion less compelling a financial case than say in New York with high tolls and little coin usage and heavy prior dependence on collectors.

ISTHA already has dedicated ET lanes at all its mainline plazas at which unlike the east coast, it encourages 30mph cruise through. And again, in advance of the east coast, and following Houston it has begun to demolish conventional toll lanes to build full highway speed toll lanes at plazas it is rebuilding. But these require overhead bridges or underpavement tunnels for staff if manual and coin collection is to be continued on either side, so there is major capital expense – usually 8-figures/plaza.

WSA’s study developed projections of ET usage in a base case in which no changes are made to deliberately speed ET penetration. In this case the ET share would rise to about 40% overall and 45% in weekday peaks by 2015. So with the present ISTHA arrangements of a $38 downpayment for an e-tag and no toll rate break WSA projects approx a one percentage point increase annually in the ET share. WSA looked at a variety of strategies to speed that: ET toll discounts of 20, 33 and 45%, and universal free distribution of e-tags.

The study very clearly supports a strategy of high ET discounts on financial grounds. Given the projected growth of traffic on the tollways congestion at toll plazas will grow if there is no deliberate effort to move motorists to ET, and the cost of expanding conventional toll collection by enlarging toll plazas will be greater than the losses from discounts needed to move patrons to ET. So both capital and operating costs are reduced by ET discounts. And WSA finds that high discounts work better for ISTHA than low discounts, producing a $280m net saving as compared to the base case.

An active program of building highway speed or express toll lanes (XTLs) does NOT make sense financially, according to the WSA study, because of very high costs and small savings. The same goes for an effort to have all vehicles in the Chicago area use e-tags. They make sense for regular users but the further you go into the population of occasional tollway users the more expensive it becomes in both tags and account management.

The WSA study’s conclusion is that highway speed tolling should only be installed when a toll plaza needs to be rebuilt anyway, rather than for its own sake.

As for the pessimism about the universal tag effort, WSA apparently calculates that even if every motorist in the Chicago tollway area is given a free e-tag (1) some of them won’t install it, and therefore won’t use them, and (2) there is sufficient through traffic of residents of Wisconsin, Indiana and other nearby states that won’t get the free tags, so there will still be a need for some kind of non-ET collection.

ISTHA and WSA do not seem to have thought it worthwhile costing out three other alternatives:

- a special low-cost/low-user e-tag program in which a basic read-only e-tag is supplied instead of the bells-&-whistles version with its memory and display that ISTHA normally supplies, say $15 vs $35, and a no-monthly statement account

- a 91X requirement that all users have e-tags and abolishing all on-road toll collection so converting the whole system to open road tolling

- a 407/CityLink style program of imaging license plates and mail-billing those without e-tags also allowing the abolition of on-road tolling

The toll agency is now fighting for its survival in the face of an impetuous governor bent on dramatic change. So it must now be examining a wider range of options and more radical moves than those which simply make the most financial sense. (Contact Lidia Pilecky ISTHA 630 241 6100)