Freebie E-ZPasses developing as major scandal for MTA NY - 24,000 says CBS News

CBS TV News in New York is reporting that MTA Bridges and Tunnels (MTAB&T) have given away 24,000 E-ZPasses so the favored can have free rides over the toller's nine toll bridges and tunnels in New York City, and presumably over other toll facilities in the regional E-ZPass system as well since the it can't discriminate.

CBS have a lot of indignant people on camera. Among them city councilman Michael McMahon saying: "That's the most outrageous thing I've ever heard, and if it's true, whoever's doing it should go to jail... That makes it even more clear they're not entitled to a fare hike, they're mismanaging and obviously stealing from taxpayers."

CBS reports that MTAB&T confirmed the 24k number but refuse to identify the people who have the no-pay or 'non-revenue' E-ZPass transponder accounts. They say retired MTAB&T workers account for nearly 1,000, former board members 52, present board members 34.

But that leaves 22,900 or so unaccounted for.

The 'bigwigs,' they say, can have as many free transponders as they want. Former MTA chairman Peter Kalikow has eight non-revenue E-ZPass accounts. He says he needs eight because he's a car collector and has eight cars.

CBS reporters claimed they kept Dave Moretti head of MTAB&T hiding from their cameras for 45 minutes before he came out and said in answer to the question how he thought the public would react to the E-ZPass freebies: "That's really up to the public to decide. I wouldn't speculate on it."

The story is running in the context of MTA hearings on fare and toll increases, though the relevance of that is not obvious. If free tolls are wrong then they are wrong regardless of whether the toll is $4 or $5.

If it is a racket with higher tolls it's still a racket even if toll rates are frozen.

But some reporters think hearings on a toll increase are a "news peg."

BACKGROUND: We've never systematically investigated policy on no-pay transponders or 'non-revenue accounts' as they are known. But we know the practice is fairly widespread, mostly as a staff perk. In some cases free use of the toll road is written into labor agreements.

Also free rides go back long before transponders. They used to issue 'no revenue' decal stickers for the toll collector to identify drivers who weren't to be charged in the cash lanes.

Sometimes all government vehicles go free. Sometimes just certain categories. Obviously emergency services go free when they have their lights and sirens on.

Back in the middle ages and beyond, the monarch and the court, aristocrats, clergy and certain other categories of priveleged people went toll-free.

Some of the 19th century toll bridge charters required free crossing for long lists of the favored. Delaware River bridges under private toll operation were required by charter to allow church-goers and funerals to go toll free in some instances.

Many were the reports during Prohibition of undertakers transporting illicit booze inside the coffin in the hearse, taking advantage of the toll free status of the hearse and the reticence of toll collectors or others to check on the contents.

Twenty four thousand

Twenty four thousand is a humongous number. Of course it has to be set against the large total number of E-ZPass accounts the MTAB&T system supports - about 2m. 24k is probably a bit over one percent, still a lot.

Some toll agencies are quite sensitive about the potential for scandal and have strict rules against free rides. On the New Jersey Turnpike several years ago toll collectors complained bitterly that they had to pay the toll to get to work, indicating the NJTA was being stingy with no-pay accounts. Not sure whether they've stuck with that.

Toll authorities sometimes pledge not to give more than very limited free rides in the fine print of their bond covenants when they raise capital by issuing debentures. If they breach those promises they set themselves up for law suits.

Sweetheart scandals

In our book the bigger scandal among the public toll agencies is the sweetheart agreements with unions over pay rates which have toll collector staff paid $25 to $45 an hour for jobs where the market rate is about $12 to $15. We asked the chief executive of one large state toll agency once if they'd ever advertised a toll collector job and he replied: "You think we're crazy? We'd have a mob of thousands milling around the doors, our pay scales are so high. We'd have a riot."

Jobs are filled by word of mouth among the toll agency fraternity and the union local. They keep waiting lists.

When the Chicago Skyway was privatized not a single toll collector from the City took job offers from the new management. They all stayed with the City, finding jobs in other departments.

The parking garage company that was subcontracted to staff the Skyway toll booths under the concession offered $15 an hour with modest benefits, and got plenty of qualified applicants.

The City collectors had been getting $25 and more plus lifetime benefits. The Massachusetts Turnpike typically pays $45/hour.

The major reason concessionaires can drive down costs is by employing staff at market rates and reducing toll collection costs to 10 or 15c or so per transaction or by substituting electronic tolling at 5c or so per transaction. Toll authorities with the help of labor unions run manual toll collection costs at 20c to 35c/transaction.

Some government owned tollers especially in the south follow private sector practice and subcontract or employ non-union labor, and are able to lower their hourly costs to the same level.

The cost of labor racketeering with unions is probably many higher than the cost of toll free rides for the favored.

Most reporters are pro-union so they are reluctant to question wage rates. Manual toll collector is a technologically doomed job category but over-market pay rates and conditions only make the case for electronic tolling more compelling.

Free transponders are an easier subject over which to arouse indignation. Still with a number like 24 thousand it's hard not to be indignant.

MTA Bridges and Tunnels, historically known as the Triborough Bridge and Tunnel Authority are the largest grossing toll authority in the US garnering about $1,500m/year in revenues – a cash cow for the City's expensive subways and buses which lose billions of dollars a year. Almost everyone gets free rides relative to the costs of rail.

The out-of-sight losses on rail transit in New York City, now that's a scandal of real financial substance! But it is the unequal treatment involved in free E-ZPass accounts, not the amount of money lost, that raises hackles.

COMMENT: MTA obviously have some serious explaining to do about:

- what is the E-ZPass freebie policy

- who decided and who decides who gets free accounts

- and why

- and how much is it costing

From what we know of MTA, these matters are likely to be decided at a higher level than Dave Moretti and MTAB&T.

A couple of toll increases back the B&T division of MTA didn't even get asked about the new toll rate. They were "told" what it was going to be by the transit bosses at MTA.

The toll division just makes the money. The transit people there do the important work spending the money, and it is they who decide how much they need by way of toll profits.

Our guess would be the transit people make the decisions on E-ZPass freebies, but the New York media will soon turn up the facts.

History

The Triborough Bridge Authority was the first of America's public toll authorities. It was conceived in the details of its organizational structure and enabling legislation by a young reform lawyer named Robert Moses. Then of course he went on to manage it, and as a master bureaucrat politician he went on to develop it so successfully that it became the model for all the other public toll authorities we know in America today.

Moses was part of a civic reform movement that developed in reaction to the corruption of the Tweed gang and Tammany Hall which was associated with various crooked public-private partnerships in which taxpayer and investor money was mixed up to pay for toll charter projects. Taxpayers usually ended up paying most while the crooks put in little and then enriched themselves through various schemes.

Much of the political momentum for the Triborough Bridge Authority was a reaction to the racketeering of the New York Bridge Company (NYBC) which in the building of the Brooklyn Bridge took Brooklyn and New York city stock subscription money and thieved it. When the rackets were exposed the NYBC, which had begun the Brooklyn Bridge, had its charter (toll concession) revoked by the state assembly.

The great bridge, initiated and largely built by the chartered company, opened as a city bridge.

Public ownership of toll facilities was unusual in those days, but that was to change largely due to the New York experience.

When public and private money were mixed the "investors" were usually crooks, bribing politicians to hand over city money, then working various rackets with contractors during construction. They had little interest in the longterm toll returns.

Public toll authorities were set up to be clean and free of Tweed type corruption.

They were to be run by technocrats at arms length from politicians and business alike, looking to the public interest and to the longrun financial viability of the project.

At least that was their claim to legitimacy by contrast with the shennanigans surrounding the NYBC and the Brooklyn Bridge.

Moses, whatever his other faults, was Mr Clean.

As the founder and dominant figure in the Tribrough Authority for several decades he would have been appalled by 24,000 toll-free passes.

It would have seemed to him as though the Tweed Gang was back on top in City Hall.

TOLLROADSnews 2007-11-17