ILLINOIS TOLLWAY:Cuculich Lays Out the Options

Cuculich’s deep involvement in the report undercuts any suggestion that it is simply a self-interested document designed to perpetuate the state owned Tollway as it is known locally (formally Illinois State Toll Highway Authority or ISTHA). Cuculich is the Governor’s appointee after a clash the Governor had with the Tollway chairman. The report was prepared under Cuculich’s direction and with his active involvement, by senior Tollway staff working with traffic and revenue consultants Wilbur Smith Assoc and engineering consultants CTE.

Cuculich, an associate of the governor was installed as executive-director last fall after the Republican Governor George Ryan reacted strongly against a statement by Art Philip, the governor’s new Tollway chairman that toll increases were inevitable. The Governor, George Ryan reacted saying there must be no toll increases. Ryan then said on several occasions that he’d like do away with tolls and absorb the tollways into the state system of free roads. He also backtracked a bit, on occasions, saying he wants to reduce toll delays and to reduce the number of tolling points in the system. But the thrust of his comments through the winter was clearly that tolls were undesirable and should be phased out.

Not once during that period did the Governor, or any of his spokesmen, acknowledge the effectiveness of “I-PASS” electronic tolling (ET) in overcoming toll plaza delays, the principal complaint of Chicago motorists. Following the Cuculich report the Governor has changed his tune. He now says ET has an important role.

A press release from the Governor’s office (3/30/00) says that following Cuculich’s report “the state would redouble its efforts to promote and expand the use of the Tollway’s I-PASS electronic collection system, a move that will reduce traffic congestion by moving vehicles more swiftly through toll plazas.” By also extending ET to commercial vehicles “Ryan believes that congestion could be reduced significantly,” the press release says.

Ryan called on the state legislature to restructure ISTHA’s bond debt “to eliminate restrictions in the bond agreements that limit sharply limit the toll authority’s ability to change its operations. In particular the current bond agreements limit the Authority’s power to close down toll plazas, or waive the payment of tolls during construction, or peak usage when the plazas contribute to traffic tie-ups.”

The last point was seized upon in one local report to suggest that the Governor proposed to do away with tolls in peak hours at busy plazas on a systematic basis – a kind of inverse congestion pricing. But this seems to have been a misinterpretation of a desire for the flexibility to waive tolls during extraordinary incidents.

Cuculich in a letter to the Governor at the front of the report says: “The ability to remove tolls solely at your discretion is severely limited due to the legal commitment to collect tolls for the retirement of bond debt. The present structure of this commitment, the trust indenture, would need to be altered in order to make sweeping changes. Legislative consensus would be necessary to accomplish most of the options outlined...”

Ryan has endorsed that: “Unless the tollway bonds are refinanced and those restrictions lifted, we can’t even think of restructuring the system to make it more user-friendly,” he is quoted in the press release. He proposes to offer legislation for the state “to pledge the full faith of the State of Illinois to the $354m currently being collected from toll revenue” and says that with the additional pledge “a less restrictive trust indenture could be written that would give the Tollway Authority the necessary flexibility to operate and reform the current system.”

Toll Abolition Havoc

The report shows that abolition of tolls would

• immediately double the level of congestion in the system

• cost $260m/year in revenue

• leave the system without funding for $164m/yr non-toll maintenance and operations

• end the means for financing reconstruction, widening and extensions

• require a payoff of $854m of outstanding bonds

• produce a demolition bill of $320m for removal of the system’s 93 toll plazas, a job estimated to take 3 years

• necessitate union negotiations over the terms for terminating 1,248 Tollway employees

The report states that once accomplished removal of toll plazas would eliminate congestion there: “However this benefit would be offset by an estimated 33% increase in overall usage, adding significantly to overall congestion levels and road maintenance needs.” (p47).

Elimination of tolls completely would “have a profound impact with virtually the entire eastern half of the Northwest and East-West tollways, and about two-thirds of the Tri-State Tollway operating at or close to capacity, shortly following the removal of tolls.” (p64)

So much for Option 1. Eliminating tolls on end sections of the system (Options 2) would not affect overall revenue or expenses much, but have no benefit at all for the bulk of patrons.

Options 3: A flat rate per trip toll (like Tokyo’s), eliminating most of the mainline plazas would produce significant savings in toll collector costs. But it would significantly reduce toll equity by creating a great array of per-mile toll rates, be of greatest benefit to out-of-state motorists, and require $620m of toll plaza reconstruction. Flat-rate tolls would increase the average trip length from the present 25km (15.6mi) by 21% to 30km (19mi). They would reduce trips but the extra trip lengths would offset that.

Options 4: Removal of some or all ramp plazas would benefit selected groups of motorists, but not save much in toll collection costs (since these are mostly unmanned coin machine or ET lanes) while doing nothing for the mainline congestion. It also would “severely compromise” toll equity by making a number of trips free, while leaving others tolled.

Options 5: Removal of ramp plazas and collecting cash tolls only at mainline plazas with a policy of charging transponder users per mile (an ET-trip toll system registering entries and exits with ramp gantries) would lead to a big increase in cash tolls for long trips, so that “overall toll equity would completely break down.”

Both 4&5 to the extent they eliminated ramp tolling would generate increases – up to 29% – in untolled traffic going on and off between the mainline toll plazas, worsening congestion through mainline overload.

(Option 6 is listed as no change, the base case, by definition unacceptable.)

By Elimination Suggests ETX lanes

None of the 22 options is painless, but by a process of elimination, the report points clearly in the direction of accelerating the uptake of electronic toll (ET) transponders by increasing cash tolls (from the present 40c to 50c or 75c) but leaving ET toll-rates at present levels (mostly 40c), while accelerating the adaptation of toll plazas for electronic toll express (ETX) operations – as the Tollway calls full highway speed electronic tolling.

These are Options 7a and 7b. (table p2) These options would install ETX lanes, with their segregating Jersey barriers, on the approaches and departures in all 20 mainline plazas at a cost of $355m. They would eliminate toll plaza congestion for all but occasional users without transponders, reduce congestion on the mainline a bit, and encourage a rapid uptake of transponders (especially 7b with its 75c cash toll, a 35c differential cash – ET). Most important these options would assure a future revenue stream for the roads, and would maintain the integrity of the system as a comprehensive closed toll system, charging roughly the same per mile.

Options 7 would “substantially reduce mainline plaza delay” and reduce congestion in some tollway sections, while cutting toll collector costs “by over one-third.” The Cuculich report says these positive benefits “could be accomplished without increasing toll rates to (transponder) customers” and indeed “could be developed to decrease costs to (transponder) customers.” (p51)

“Option 5e, options 7a and 7b have the advantage of eliminating most congestion at toll plazas through pricing strategies and conversion to express plazas (ETX), while not degrading the LOS on the tollway mainline.” (p64)

Blow to toll-abolitionists

The report is a serious blow to toll-abolitionists. It says that traffic would increase trip numbers 33% and vehicle miles traveled 23%. WSA modeling shows this would double the mileage of the system with congested conditions (LOS E/F) from the present 98km (61mi) to 202km (126mi).

Moreover the cost of demolition of toll plazas is about the same as the cost of equipping all mainline plazas with ET express (ETX) lanes.

Spend (1) $321m to demolish all the toll plazas and rebuild them as sections of freeway - freeway in Illinois means a non-tolled motorway - and you get worse congestion and lose a secure revenue source for operating the system and upgrading it, or (2) Spend $355m and equip all the mainline plazas with ETX (express) lanes and you have halved congestion and retained a revenue stream for building it out in the future.

It seems a no-brainer. But the system is in the hands of a bunch of politicians, so who knows?

Ryan himself has been swirling on the edge of a vortex of a corruption scandal from his period as head of the state’s state dept where almost 30 subordinates have been indicted and many pled guilty to rackets involving sale of truck driver licenses in return for political campaign contributions. One ‘bought’ drivers license was associated with a fatal truck wreck, giving the story ‘legs.’ Some have said that Ryan’s assault on the Tollway was a smoke-blowing tactic designed to lessen the media and public focus on his driver-license problems, but it is nevertheless true that ISTHA as an institution is regarded with a large measure of popular cynicism and sometimes virulent dislike in the Chicago area, which makes it vulnerable to opportunistic political attack.

Public Opinion

The report says that a primary object of any strategy must be to increase the efficiency of toll collection, reduce the number of tolls especially those requiring a stop, and reduce the time needed to pay tolls.

“There has been considerable evidence in public opinion surveys suggesting that motorists are less concerned with the (cost of) tolls than with the delay and time required in the payment process itself.” (p61)

Capital Needs

The report highlights the deterioration of the original roadway pavement saying it “began showing signs of marked deterioration and distress” at about age 40 (1998). The routine has been to overlay the concrete pavement with 6" of asphalt at age 17, and to remove the overlay, repair the concrete and replace the overlay at age 26 and age 36, but it now finds the asphalt breaking up prematurely because of concrete crumbling underneath.

280km (175mi) are now 42 years old constituting 1590 lane-km (884 ln-mi) and 238 ramp-km (149 ln-mi). Only 238 ln-km (157 lane-mi) of this has been reconstructed. Similarly 230 mainline bridge decks and 126 overhead bridge-decks are over 40 years old and have passed the end of their useful service life.

The report says (p28) that it is possible to delay reconstruction with more frequent repairs, but this costs more in life-cycle terms than full reconstruction and also has roadway lanes out of service for much longer periods, so worsens congestion problems. Such repairs are estimated to cost $2.6b over 17 years or $153m/yr.

In the central portion of the system, the report says “a motorist’s travel through a toll plaza is constrained not by the toll plaza itself but rather by backups downstream which extend to the plaza. Thus congestion relief at plaza locations can only be realized if free-flow travel is available along the mainline downstream of the plaza.” (p26)

65km (40mi) or 15% of the mainline is classed as ‘congested’ now, a number expected to grow to 33% to 140km (88mi) by 2015 without widening.

$6.3b over 17 years or $370m/yr would buy reconstruction of the 1958 roadway slab and original bridge decks, extra ETR-only and ETX lanes to improve plaza operations and a couple of new interchanges, 154km (96mi) of extra lanes in congested segments but no tollway extensions. [At another point projects for 2020 are listed as 98km (61mi) of widening.]

$10.3b over 17 years ($606m/yr) would fund all that plus three extensions of the tollway totaling 62km (39mi) that are already authorized by the legislature: (1) I-355 south to I-80, 19km (2) the O’Hare Extension, south and west of the airport, 21km (3) the northern extension of the North-South (IL-53), 37km. [NOTE: These add to 77km (48mi), suggesting some portions not built by 2017, or an arithmetic error.]

Defeasance

Paying off ISTHA bonds “triggers the abolition” of the toll authority, the report says, ending any power to levy tolls. If the ISTHA bonds are to be paid off (‘defeased’), but tolls were still to be collected, new legislation would be needed authorizing toll collection at ISTHA, or at Illinois DOT, if it were to take over the tollways.

The report notes that if elimination of tolls, or a sizable amount of them is decided upon, alternative revenues need to be identified.

“Current revenue projections cannot meet the needs of maintenance and improvements to the infrastructure, nor the demolition costs (of toll plazas)” (p115) This is because current revenues of $354m, after $105m of toll collection related expenditures generates $250m that is split between $60m non-toll roadway operations and maintenance, $80m of debt service, and $110m for capital works.

Keeping Tolls

A key sentence in a ‘Closing’ section of the report says: “If elimination of 100% of the tollway is not chosen as a short-term goal, and tolls will continue to be collected, then electronic toll collection should be pursued aggressively as the most effective congestion relief tool available. (ET) usage would need to increase from the present 25% of cars to what is considered by industry standards to be the maximum of approximately 70%. (ET) would also need to be (extended) to trucks.” (p115)

The report says that this is expensive because it is “duplicative,” in effect installing a second toll collection infrastructure: “However a case can be made for the trade-off of (the) cost of (the) investment (in ET) vs congestion relief.” (p115)

The report is called a “starting point” from which to base some general decisions about the future direction of the tollway system. After these decisions are made, the financial and engineering implications can be honed in more detailed analysis and planning.

ISTHA future in doubt

While the Cuculich report has made a strong case for continuation of tolling as such, ISTHA as an institution may well die. The report does not address the best way to administer tolling in the future. The Governor, having let loose expectations of radical change, may well see in abolition of the Tollway Authority, a useful political symbol of his seriousness about changing things. He would also be answering the call from legislators to make the authority more “accountable.” The tollways would be swept into the jurisdiction of the Illinois department of transp (DOT), administered as a Tollway Division of the department. This would follow the pattern set in Texas, Indiana, Florida, New Hampshire and Delaware.

COMMENT: The report shows signs of haste in its assembly. Numbers mentioned different places sometimes don’t match. In one place we are told the proportion of electronic toll transactions is now 25% of cars, elsewhere 31%, for example. There are some errors in terminology. For example the important Options 7A&B are labeled “I-PASS ONLY” (roll-though or 30mph) when the text makes it clear they mean “I-PASS EXPRESS” (specially widened lanes, barriered for 55mph). And the expression is clumsy in places (In direct quotes, above, we have often put needed words in parentheses and omitted defective words).

Gov Ryan demanded the report quickly, so there was haste at the Tollway to do the governor’s bidding. Then, when the report was ready, like a potentate, Ryan took months to get around to accepting a briefing on it.

It is disappointing that some major potential reforms do not even get a line of discussion, for example: (1) contracting out of toll operations (2) concessioning the roads (3) using variable time of day or congestion-related pricing to manage traffic (4) modern traveler information services (5) use of transponders for parking and drive-through purchases.

Why is it that American state and local governments are so desperate to keep toll roads, Soviet-style, as government business undertakings, when they know that business is best left to businesses? Why the fixation on preserving this statist New Deal era ‘toll authority’ form? Or much worse, why the desire to further aggrandize already overlarge state bureaucracies of transport, and further complicate their already overcomplicated decisionmaking procedures?

Toll road ownership causes the politicians no end of grief with the voters, so either (1) they are blinkered to maintain the status quo, or (2) they’re in love with the power they throw around controlling the toll roads, or (3) they think the ‘pork’ aspects of toll road patronage, contracting, and favor-trading among different constituencies are worth the pain.

Such bigger issues were clearly beyond the scope of the Cuculich report.

What the report attempted to do – lay out toll options and their costs and consequences – it did well. Cuculich tells the Governor and the legislators: abolishing tolls will be very expensive, because not only will you have to find money to pay off the $850m debt, or money to service the debt if it is refinanced on the state’s books, you’ll need to come up with $320m or so to demolish toll plazas. Meanwhile you’ll have a big surge of extra traffic attracted by the lack of tolls which will greatly worsen congestion and increase wear and tear on the roads, so then you’ll have to find replacement revenue sources for maintenance, and be under heavier pressure to add lanes. All this without having any future toll revenue to offer as security to service any borrowings. Various partial toll plaza removals will be attractive to one group or another, but they will annoy the groups who miss out on benefits, and they won’t get to the root of the system’s problem – inefficient toll collection. That can be addressed by one means only – electronic toll collection, especially in full express lanes.

If there is no immediate prospect for abolishing tolls entirely, you’re better off modernizing toll collection by giving motorists a strong incentive to switch to electronic tolling, and pushing electronic toll express lanes. (Contact Thomas Cuculich 630 241 6800x1000)