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Two-Way Tolls

Like most people, I don’t mind paying for what I consume, but I don’t like the “I just got ripped-off” feeling when I find I’ve been overcharged.

I get that feeling every time I pay a toll at a bridge or tunnel in the New York City area. The region’s politicians and transportation administrators treat drivers like cash cows, which are best milked twice a day on their way to and from work. While some of the money goes to maintain the infrastructure those drivers use, a big share goes for other purposes, such as subway and commuter rail fares, which are subsidized well below the cost of providing the service, or construction projects far removed from the transportation scene. The practice goes back at least as far as the mid-20th century heyday of Robert Moses, New York's “master builder,” who recognized that tolls could provide an evergreen source of spendable cash without the necessity of facing voters for bond issuances or tax increases.

I don’t get that feeling when I drive on Florida’s toll roads, whose rates are reasonably linked to the cost of providing the service. And these days, I especially won’t get that feeling when I drive on the toll highways in Miami-Dade County, where toll revenues will soon flow in both directions: coming from drivers to the extent needed and returning to many of those same drivers (primarily the area’s commuters and cab drivers) when excess money is collected.

The new program, recently approved by the Miami-Dade Expressway Authority (or MDX), is believed to be the first of its kind in the nation. The agency’s board of directors unanimously voted to refund any money left over once construction costs are paid, debts are serviced and pending capital plans are funded. Maritza Gutierrez, the board’s outgoing chairwoman, told the Miami Herald that the toll refunds would probably come to around $3 million this year, though the final surplus numbers won’t be finalized until October.

Called the “MDX Cash Back Toll Dividend Program,” the program is a sort of compact with the region’s drivers. “Toll revenues that we do not need to spend because of efficiency savings do not belong to us,” Gutierrez said, “and we will return those monies to those customers who invested in our expressways in the first place - the daily commuter and daily commercial user.”

According to the MDX website, the board would like to distribute a “cash-back toll dividend” in every year it exceeds financial projections. The exact size of the refund will depend on the size of the surplus and how many qualified recipients participate. To qualify, a driver must be a SunPass transponder customer (which is to say a participant in Florida’s prepaid cashless tolling program, which operates in most of the state). All SunPass holders who spend at least $2 weekly, or $100 for the year, on MDX tolls can register during a six-week open enrollment period. Drivers will need to re-register each year to continue to qualify; as long as they do, they can expect a check reflecting their cut of any surplus to arrive sometime in December.

The new program from MDX seems to run counter to the philosophy embedded in other toll-collecting agencies, such as New York’s. Most have no difficulty finding uses for surplus money, whether productive or not; if nothing occurs to the directors immediately, they can just put such a surplus in the agency’s reserves. Fiscal environments like this are petri dishes for bloated costs and patronage jobs.

So MDX deserves applause for its philosophy that while roads should be paid for by the people who use them, those people should not be made to pay for other things that they don’t use. Such projects are what general taxation is for. I say this as someone who only occasionally pays tolls in Miami-Dade, and who walks to work at my office in Fort Lauderdale. Toll rebates in Miami won’t do anything for me personally, nor should they. Why should my co-workers who drive to work pay higher tolls than necessary just so I can enjoy lower taxes?

MDX’s approach is novel for toll agencies, but hardly for business in general. The airlines I frequent reward me with the occasional free flight or amenity upgrade. So do the hotels I use. Some credit cards and big-box stores want to give me a discount based on the volume of business I do with them. Mutual insurance companies have returned excess premiums to policyholders via dividends not unlike those proposed by MDX for over a century. It is a normal business practice in many industries. MDX’s innovation was merely to apply the principle to a toll system, under the not-unreasonable philosophy that cost savings on public spending belong to the slice of the public that provided the money in the first place.

If more agencies took MDX’s view, more locales would be open to the idea of expanding infrastructure with toll roads. The occasional car user would continue to pay, through gas taxes and undiscounted tolls, only for what he or she used, while heavier-paying commuters reaped the benefits of any windfalls.

We often say we want government to run like a business. When a public agency does so, we should take note and appreciate it.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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