In this case, the employer is the Port Authority of New York and New Jersey, an entity created by a contract between New York and New Jersey and jointly owned by the two states.  This entity is not accountable to elected officers or voters, except for the indirect influence that elected officials from the two states sitting on its board of directors have on the entity’s operations.  Oddly enough, entities like the Port Authority were created over several decades in the 20^th century because elected officials believed that they would operate in a more business-like fashion and not be subject to the corrupting influences of elected officials trying to “buy” votes by bestowing favors on constituents. However, the lack of public accountability means that the customers of the Port Authority, namely those who travel in the New York Metropolitan area, will bear the brunt of the abuses of the pension system.

In one sense, it should be easy to solve this problem: abolish this “pension spiking” scheme in the next collective bargaining session.  However, we get a hint of why these kinds of schemes are so hard to uproot. A toll collector named Princesella Smith is quoted as saying: “I’m blessed. I have a great job, and, in this economy, it’s great that I can cover everything with my eight hours a day and overs.”

Executives and union leaders who both know that paying a toll collector like Ms. Smith $89,599 per year is absurdly excessive also have to confront the fact that, but for her oversized compensation package, she probably would be living in a much more difficult economic situation.  She is a human face to the problem of reducing the government budget deficit.  I found that, at Pitney Bowes and at other large organizations, no matter how well these organizations were managed and how tightly costs were controlled, it was difficult to bring pay into line with what made sense for customers.

The overpaid employee is a real person, often well liked and appreciated for his or her organizational commitment.  While I do not know how good an employee Ms. Smith might be, she is clearly doing a job, collecting tolls on the George Washington Bridge, that few people would choose to do if they had other choices.

Not only are overpaid employees often liked and appreciated, but senior executives often know the families of these employees and the tragedies and challenges the employees face.  At Pitney Bowes’ Connecticut operations, there really are no executives living in enclaves that totally separate them from coming into contact with ordinary employees.  I was highly likely to interact with company employees outside the office. When my second son was younger, the president of the Little League baseball program was a product manager at the company. Our housekeeper’s husband worked at the company. When we went to school events, we would meet parents who were company employees and whose children were friends of our children.

It is easy to blame militant labor unions for fighting to preserve the jobs of overpaid and under-skilled employees.  However, my experience is that these problems would exist in any organization in which executives, voluntarily or otherwise, build close personal relationships with people up and down the organization.

Over time, I developed the skill of confronting people I knew and liked, but who had to leave the company.  I had to convince them that it was not only in our best interest, but in theirs, that we were taking them out of a job, reducing their pay, or in some other way taking an adverse employment action.  I operated on the simple principle that if I could not look them in the eye across a table and justify what we were doing, the action was indefensible.  Thankfully, I never had to make the judgment that an adverse employment action was indefensible when I used that test.

When we teach senior executives to care about employees as individuals, then we create a different problem.  It becomes challenging to look those overpaid and under-skilled employees in the eye, meet them in the coffee shop and deli, see their families in the school events, or run into them on the street, and tell them that you either have to eliminate their job or reduce their pay to bring it into line with what the market pay should be for their job.

Think about the job of a postal worker who manages mail sorting machines.  At Pitney Bowes, we were able to employ and retain people who would do this work at about 1/3 the rate that the Postal Service was paying for the same work.  We were consistent in our pay practices with the real market for this job.  The Postal Service’s pay rates were artificially high, both because of a collective bargaining agreement, and because of the political pressure that postal union workers could bring to bear on elected officials.

The concept of a “living wage” is that people must earn enough in any job to be able to afford a standard of living above the federal poverty line.  However, what “living wage” advocates forget is that the “living wage” movement would result in fewer jobs and more expensive products.  As I look across our economy, I see many candidates for job eliminations if wages for that job get too high, not the least of which is the toll collector job.

When I go to large retail grocery stores and pharmacies, I am increasing seeing self-service stations, including some at the checkout counter.  When I go into bathrooms, I see electrical hand driers, which clearly replace the job of transporting and stocking paper hand towels. Postal sorting machines have replaced most postal clerks who sort mail.  Automated banking kiosks replace tellers, as other vending machines provide 24×7 service in place of retail clerks.

The largest job elimination trend, which particularly comes into play at this time of year, is the substitution of online shopping for retail purchases.  In past years, my wife frantically traveled from store to store to buy Christmas gifts.  Today, she sits with her computer and orders everything online.  While the merchants that deliver in response to online orders certainly employ people, fewer people are needed for online transactions, compared with their retail counterparts.

In essence, the labor union and “living wage” movements, whether they want to admit this or not, are hastening the elimination of the jobs they are trying to protect and enhance. They will win for a few years, but eventually the desire for consumers to get the highest level of convenience and value at the lowest cost will override the desire to protect someone else’s overpaid job.

I do not believe we can solve the deficit problem without raising taxes.  I also do not think that all tax increases on wealthier people are inherently bad.  I do not think the proposed tax rates are inherently bad relative to their effect on economic growth.  Furthermore, although I think we have a certain amount of “crony capitalism” in our country at all levels, money that gets redirected from the general public to a few favored corporate and union welfare systems, I think a certain amount of that will happen in any democract.

However, I have three fundamental issues with our tax system:

• Everyone should pay income taxes, except for the very poorest members of our society, and, for them, only for the period of time in which they remain below the federal poverty level.  Today, over 50% of Americans pay no income taxes.  That is wrong.  It disconnects over half of Americans from any economic stake in how income tax dollars are spent.  It has the psychological effect of deluding those not paying taxes that money will always be available from “the rich.”  Everyone should pay something.
• We need far tighter controls on how our tax dollars are spent.  I understand that, in a democracy, some uses of our tax dollars will go to causes that I would not personally support.  The majority of the voting public should help guide elected officials on the allocation of tax revenues.
• We need much more common sense in the way governments account for what they are spending, and what the long-term costs of that spending might be.  The whole issue of excessive retirement benefits has arisen because governments have hidden the long-term costs of these retirement obligations by using accounting rules that were prohibited for private businesses over two decades ago.  The Congressional Budget Office “scoring” of legislation is fundamentally flawed in two respects: first, it limits its evaluation to the ten-year period after the law is passed; and, second, it does not take into account the highly likely behavioral responses to a piece of legislation.  For example, any tax increase on businesses headquartered in the United States will cause some businesses to shut down U.S. operations and move investments and jobs abroad.  That kind of highly likely reaction to a tax increase is not factored into the CBO scoring model at all, even though any common sense evaluation of a tax law would take it into account.

However, at all levels of government, but particularly at the state and local level, taxes and bond proceeds are solicited for one purpose, and diverted from a completely different one, usually the enrichment of union leaders and other state employees.  When Connecticut created a fund for transportation improvements in 1984, most Connecticut residents would gladly support tax increases to upgrade our badly maintained transportation system.  However, year after year, the Special Transportation Fund has been raided for “general revenues,” which is a euphemism for paying rich retirement benefits to unionized and militant state employees.

Similarly, Connecticut established a fund for smoking cessation programs when it received a major settlement from the tobacco companies in 1998.  It has never used a penny from that fund for its intended purpose.  Every year, the fund has been raided for “general revenues.”

Connecticut is not alone in this regard. Diversion of funds from one budget line item to others is a regular practice of many states and localities, as noted in the Monday, November 14, 2011, issue of The Wall Street Journal, in an article entitled “Cities Hit as Funds From Bonds Pay Other Bills.” In that article, reports Ianthe Jeanne Dugan, Justin Scheck and Bobby White recount many examples of cities like Miami that routinely divert funds from their intended purposes.  The reporters stated:

“Cities and states across the country are using money designated for specific purposes—such as fixing roads or sewers—in order to fill financial holes elsewhere, according to public officials and records.”

We cannot allow governments at any level to use these “bait-and-switch” tactics, which, if used by large public companies, would subject them to SEC fines and penalties and investor lawsuits.

Governments need to clean up their acts before I feel comfortable with tax increases on anyone.  This is not about  dissatisfaction with uses of public money with which I disagree; it is about corrupt and dishonest uses of public money.

Finally, I believe all of us should know how our money will be spent and what the consequences of a particular government spending decision would be.  The projections and predictions about government spending are so flawed, as has been seen in the retirement benefits area, that I do not feel confident that we are getting the straight story.  This is not a result of dishonesty, unlike the fund diversion issue; it is just bad accounting.

For all these reasons, I would like to see some fundamental changes made in our taxing and spending policies before I would support any tax increases at any level.  At that point, I would be very comfortable paying my fair share of taxes.

Sometimes, the influence of bad human decision making on the scope of a disaster is obvious: Hurricane Katrina would not have been anything more than just another bad Gulf Coast hurricane, had the levees protecting big portions of New Orleans not failed to protect the city against water damage.  The levees were not built to protect against Category 4 or 5 hurricanes, so a disaster of the type that happened was inevitable and experts were not surprised when it happened.  Experts warned of this kind of problem, but were ignored year after year. Nevertheless, most of the time, we forget the degree to which we can anticipate disasters and minimize their impact.

In 1991, after Hurricane Bob, which hit Long Island, the Eastern Connecticut coast, and Cape Cod very hard, the homeowners association of which I was a board member could not initially secure a renewal of our property and casualty insurance policy from any carrier.  National media carried stories about horrific beach erosion in the 4-mile stretch of beach, beginning half a mile west of us.  The beach and the houses on it had been completely washed away by both the hurricane and a nor’easter that followed it a few weeks later.  The media story was that nature was getting more ferocious over time, and people had to stop building homes on the beach.

While it may be good public policy to provide better beach access for all residents of a beachfront community and for visitors, and to reduce the building of private homes on the beach, the story was wrong.  The beach erosion was not a result of nature’s fury, but of a misguided decision by the Suffolk County New York Supervisor some years before to refuse to pay the County’s share of a project to extend protective beach barriers for the last 4 miles of the barrier island.  The 4-mile stretch bore all the force of the ocean tides, instead of having it spread over the entire island.  Ferocious winds and tides destroyed the beach, but it was vulnerable to destruction, because of human error, a decision to leave the beach unprotected.

Similarly, power outages and flooding are usually a result of a number of human decisions.  In many communities, utilities are not permitted by homeowners to trim branches from trees on an appropriate schedule, with the result that those branches break off during storm, hit overhead power lines, and cut the lines.  Street flooding is usually a result of poor drainage from inadequately built or maintained roads.  Basement flooding is often the result of building codes that do not require adequate soil fill under the foundation of a house or other kind of building.  We discovered this when our basement flooded many times in the last decade, because our builder cut corners in having only four inches of soil fill, when best practice indicated that 12 inches of fill was the minimum desirable.  Trees are often uprooted and destroy or damage whatever they fall on because poor soil drainage erodes the soil that holds roots in place.

In the storm’s aftermath, we are seeing the consequences of decades of underinvestment in our commuter rail systems.  The commuter railroads were not  able to resume service as rapidly as the New York subways because they have suffered far more preventable damage.

Wind damage results from structures that are not built to withstand winds above a certain level of intensity, and items inadequately secured to the ground or not stored properly in anticipation of a storm become projectiles that destroy everything in their path. In the spring of 1979, Chicago experienced a freak 70-mile per hour windstorm one afternoon, with the result that a thick wooden restaurant sign hanging by two chains to the restaurant’s patio came loose and killed a pedestrian.

The 1906 San Francisco earthquake caused most of its fatalities because the fire department had not properly secured its water lines, so it was unable to get water out to extinguish some of the fires.  Similarly, communities often fail to think through how they will get rescue vehicles to stranded residents, which created many issues in the Gulf Coast areas after Hurricane Katrina.

We are better at responding to disasters today because of the intense focus on what went wrong with Hurricane Katrina, but the problems with our infrastructure and the underinvestment in rebuilding, maintaining, and renovating roads, bridges, tunnels, and buildings will continue to make the impact of natural disasters far worse than they need to be.

We need better ways to hold elected officials accountable for decisions they make that put us at risk, not immediately, but over time.  Since we do not know when “natural disasters” will hit, it is tempting to defer maintenance, repair, and renovation that will secure our facilities from damage, but insurance companies, bond rating agencies, and watchdogs acting on behalf of voters should do a better job warning us.  As citizens, we need to send strong messages to elected officials that using their office to redistribute wealth and income from taxpaying citizens to favored constituents, instead of using taxes to maintain and strengthen the assets for which they are responsible is wrong.

However, I also believe that we could reduce the stress on our transportation systems with three non-transportation initiatives, all of which are far less expensive to implement than building a lot of new transportation infrastructure.

Reduce work-related travel

Since I left Pitney Bowes two years ago, I have not commuted daily to an outside office.  As a result, I have not contributed to the clogging of our highways during peak commuting hours.  The reason is that the Internet and mobile technology available makes face-to-face meetings less necessary.  Partial telecommuting is an easy solution to creating more transportation capacity with what we have.

In my last few years at Pitney Bowes, we moved more call center workers back into their homes, which reduced our real estate footprint, improved morale, and increased productivity, since individuals were never late for work when they did not have to travel.  We never eliminated the commute to work completely, because we found that individuals who came to the office once every two weeks maintained a connection to their co-workers, but they did not have to be in the office every day.  Many more jobs can be restructured to reduce daily commuting, especially jobs that do not require retail contact with customers.

Increase deliveries in place of face-to-face pick-ups

I am pleased to see that, even in our suburban area, more restaurants are making delivery services available.  It used to be the case that only pizza stores delivered, but today Chinese, Japanese, and other restaurants deliver.  One delivery truck substitutes for 5-10 cars coming to the restaurant.

In our town, the dry cleaner services deliver.  The independent pharmacy delivers to senior citizens.  Many people get grocery deliveries because they work long hours.  The delivery of items to multiple people saves on trips during the busiest parts of the workday.

Ride matching for trips to fixed destinations

One of the underused sources of reduced driving is ride matching.  Ride-sharing and van pooling trips to work do not work as well as they used to because people work variable hours, have the need to leave the workplace during the day, and do not want to be dependent on others to get them to and from work.

However, I have often thought that going to and from airports is a great opportunity for ride matching.  I drive alone to New York airports if I have a short trip and am returning to the same airport from which I am departing.  However, I would be happy to drive someone else from my town going to the same airport if we were catching a flight at the same time.

The same thing is true with a trip to the train station for either a commute into New York, or an Amtrak trip to Washington or Boston.  I could easily save one or more individuals the need to drive their own cars to the train station.  They could share the parking fees with me.

Another opportunity is a ride matching system for sporting events like football and professional baseball games, films, plays, concerts, and other events where many people are going to the event at the same time and will be returning home at the same time.

Unfortunately, the state of Connecticut Department of Transportation has not provided enough incentives for ride matching agencies to do their job in getting people together for these fixed-destination, fixed time trips.  The limousine companies certainly will not tell anyone that someone else is going to the airport at the same time, because they lose revenue.

Surprisingly, large companies which have many people going to the airport at the same time also do not encourage ride matching because everyone going to the airport calls the limousine service separately.

Back in the 1980’s, I commuted between New York and Connecticut.  There was no shuttle service between the Stamford train station and the office in those days.  I would start walking, and people from the company would pick me up.  I made many friends from the company, and ended up with great learning in the process.

If we can have match.com or eharmony.com, we should be able to get people together who are going to the same place to share a ride.

One of the reasons ride matching systems have not worked is that they have been marketed as being good for the environment, not that they save wear and tear on cars, gas, tolls, and parking fees.  The other thing they save for trips to the airport is even larger bus or limousine service fees.  Frankly, I am surprised that firms like Travelocity.com have not found a way to match people from the same geography who are flying from a particular airport at the same time, and to collect a fee from each of them for saving them the higher individual commuting fees they would have paid.  In a place like New York City, they might very well be in the same building or next door to each other.

Summary comments

These ideas will not solve the transportation crisis, but they will reduce the strain on our system, and they will change commuting and travel patterns sufficiently that they may end up changing the planning for the network of the future.

“I’d like to see the president go on television and, in a dramatic demonstration of real leadership, announce a plan geared toward increasing employment that is both big and visionary – something on the scale of the Manhattan Project, or the interstate highway program, or the Apollo spaceflight initiative.”

He goes to propose a “Rebuild America” campaign to put people to work rebuilding infrastructure, including roads, schools, electric power grids, and mass transportation. 

I agree completely with his sentiment, but he and others who propose similarly ambitious initiatives never understand why these kinds of initiatives seem beyond our reach today.  Even if we had the money for them, which we do not today, achieving their goals would be virtually impossible because of policies and practices we have put into place in the last 40-50 years:

• We have given individuals and interest groups far more power to stop and slow big projects than was the case when we built the interstate highway system.  Aside from laws mandating environmental impact statements, protection of endangered species,  protection of people with disabilities, rights of people affected to have notice and hearings, and reviews by metropolitan planning organizations, we have also put into place processes to protect against unfair and uncompetitive contracting.  While individually these rights are necessary, we must recognize that their cumulative effect is to make it difficult to get anything done, and, when anything does get done, its cost balloons out of sight.  For example, as Alan Altshuler and David Luberoff point out in their book Mega-Projects: The Changing Politics of Urban Public Investment, the infamous “Big Dig” project in Boston was estimated to cost $5 billion, but cost in excess of $16 billion.  Over 1,700 special agreements had to reached with home and business owners and other interest groups to get the project done.
• We have added too many unrelated goals to the completion of infrastructure projects, all of which add cost and time to the project. Two years ago, when I was invited to speak at the ground-breaking ceremony for the $80 million Urban Transitway project in Stamford, Connecticut, I was introduced to the U.S. Department of Transportation official responsible for diversity in contracting and employment.  He had a large and bewildering array of responsibilities mandated by federal law and executive order to enforce.  Additionally, the project was subject to prevailing wage regulations and a wide range of other non-transportation-related rules.  Again, I do not question the broad direction of these goals, or even whether they are appropriately applied to infrastructure projects, but let’s remember that they add cost and time to getting projects done, and almost none of these were in place 40-50 years ago.
• Unfortunately, there are a lot of “hands in the till” between the time projects are begun and when they are completed.  We have this idealized image of modern-day infrastructure projects that take unemployed people and put them to work within a few months after the project is commenced.  The reality is quite different.  There is some period of time in which currently employed government professionals have to work through mandated review processes.  Then, highly-paid outside engineering and construction firms get involved for design.  After that, well-paid planning and government affairs consultants and lawyers get involved.  Each of these groups takes their toll charge on a project for a long time before any unemployed person has the potential to get employed.  In some communities, the work may not even get done by unemployed local residents.  Some years ago, I visited with the head of a community development group in a depressed major city, who had put local residents to work on small construction projects.  He said his biggest adversary was the mayor, who was upset that the community development organization did not funnel work to the mayor’s friends and political contributors.  He said that, on other projects, work got diverted away from the unemployed to outside, but politically-connected firms.

As a society, we have to decide whether government exists to serve its citizens or to be a conduit for money from its citizens to resourceful and politically well-connected special interests, whether they be state employees, politically powerful contractors, lawyers, lobbyists, government affairs consultants, or engineering and design firms.  It’s nice to contemplate an idealized world in which none of these factors play a role, but it’s not the world we live in today, and it won’t be the world our children live in unless we do something about it.

Before I provide my views and financing and funding strategies, I want to make several preliminary observations:

• We cannot expect the public to support tax or fee increases for transportation if there is not complete transparency and logic for any movement of revenues or expenses between the General Fund and the Special Transportation Fund. The public will see such increases as general tax increases, to which they are resistant, as opposed to funding sources for transportation, which they would support.
• The public will also be reluctant to support increased transportation funding if we cannot have more discipline in making project cost estimates and approving appropriations for them.  When the General Assembly approves an expenditure based on Connecticut DOT project cost estimates, and then sees those estimates double or triple for no apparent good reason, the public and its elected representatives will be very reluctant to give ConnDOT more money to spend.
• Connecticut’s heavy dependence on federal transportation money puts it in peril if replacement funding sources are not found quickly because the Federal Highway Trust Fund is essentially insolvent.
• Reliance on motor fuel taxes as the primary funding source for covering bonded indebtedness for transportation projects is increasingly risky because of the likelihood that people will reduce fuel consumption over time.  This was emphatically pointed out by Mary Peters, the Commissioner of the U.S. Department of Transportation in her minority position statement on the Federal Surface Transportation Study released earlier this year.
• In the ConnDOT 2007 Master Transportation Plan, ConnDOT identifies a minimum of $3.27 billion funding gap between what is needed to keep the current transportation infrastructure in a state of good repair, and what is projected to be available from existing funding sources.  This gap does not take construction cost inflation into account, nor does it make any assumptions about reduced federal funding.  Whether this gap is higher or lower than it should be, nevertheless, it is indisputable that we have a significant funding gap if we do business as usual.

With this apparently grim picture, what can we do to improve mobility for people and goods to insure that we have a globally competitive economy in Connecticut and a higher quality life?  Also, what can we do to improve safety on our roads, bridges, tunnels, and public transportation systems?

The good news is that there are many cost-efficient strategies we could employ, but have not chosen to employ so far.  I will not discuss tolls or congestion pricing because those subjects are part of a study, the results of which will be released next year, and because the speakers following me will cover this in far more detail.  However, I will note that, without some form of fee based on road usage, any attractive public-private investment partnership option will be very difficult to implement.  I would hope that the toll study under way will have as broad a scope as possible in terms of technology, pricing, and process options.

Today, I will focus on other alternatives for addressing mobility and safety issues.

Strategy 1:  Use private sector sponsors to fund programs to reduce demand.

Reduce trips

The least resource-intensive way to improve mobility for those who have to travel on our roads or use our public transportation infrastructure is to reduce trip demand from those who could employ other alternatives:

• There are many private sector companies, like Cisco Systems, HP, Microsoft, ATT and the other telecom service providers, and Research in Motion who benefit from individuals working at home or at satellite locations closer to home.  Early telecommuting experiments failed in many organizations because they were too ambitious or because organizations did not understand execution imperatives.  Allowing employees to work more flexibly from a more convenient location even one day a week is a very popular benefit, and it is less risky than adopting a full telecommuting program.  Over time, as organizations learn what works best, they can expand these programs.  ConnDOT and the Department of Labor should convene a group of large employers, as well as technology providers, and workflow consultants, to identify and promote best practices in alternative work locations.  To the degree that these practices become widespread, our traffic volumes will shrink just enough to increase traffic flow significantly, as they do on certain religious holidays that are not broad work holidays.
• We have learned in the past two decades that we have mobility issues throughout the day and evening, not just at peak commuting times.  We are increasingly a just-in-time society, with retailers and manufacturers holding smaller volumes of inventory and expecting suppliers to deliver products, parts, and materials at greater frequency.  We also have many individuals making retail trips by automobile to do errands that could be avoided if a convenient home delivery infrastructure were in place.  The good news is that there are many delivery options available today that would reduce both the redundant delivery systems many retailers and manufacturers use today and the consumer travel to the retail site.  Recently, DHL announced an agreement to eliminate its residential delivery system and to use the U.S. Postal Service system.  We need to encourage other delivery services to focus on their core capabilities and to join forces to reduce traffic congestion, fuel consumption costs, and environmental emissions.
• We also might find that some of these delivery companies are better equipped to provide residential delivery services for other firms to increase convenience for consumers, such as the elderly, who would welcome more deliveries to their homes, rather than having to go to as many locations to collect items they have purchased.  Once again, state and local governments can convene meetings that enable every firm with a delivery capability to leverage that capability for more purposes.  Web-based systems could also be created to match small retailers with delivery needs to those with excess delivery capacity.
• Similarly, ConnDOT should be doing a better job promoting ride-matching services that would allow individuals to access rides in automobiles from other individuals commuting to or from nearby locations at the same times of day.  The State of Virginia has used this system effectively to reduce single-occupant vehicle demand on the highways.  Our NuRides program needs to be modified to allow payment to the ride brokerage agencies based on the number of road miles they eliminate, as opposed to a flat fee.  Houston has implemented such a system, with an annual cap that protects the government from budget overruns.

Reduce motorized travel

There are two big opportunities for reducing motorized travel demand:

• To increase bicycle access at train stations and bus terminals; and
• To make bicycle and pedestrian travel more viable options for short trips.

ConnDOT and the towns which operate rail stations have a severe rail station access issue.  There is far more demand for rail station parking than the available supply of parking spaces.  At a minimum, there needs to be a central system for identifying and allocating parking spaces.  Today, individual towns treat parking spaces like season tickets for popular sports franchises.  They issue parking permits to residents, who then keep them as long as they want, and who derive value that can be passed down to future owners or residents.  Parking access should be priced at its true value, should be continuously re-offered to those willing to pay that value, and the revenues collected should be used to improve the stations, not for the general funds in the towns.

However, beyond a more effective revenue collection system, ConnDOT and the towns need to learn from the experience of major cities like Amsterdam that make bicycle and pedestrian access to the trains and the stations very easy.

For shorter trips, bicycles are used more extensively for more of the year in many parts of North America, including Canadian cities like Montreal, than they are here in Connecticut.  One of the most absurdly inefficient uses of motorized travel is the use of motor vehicles to drive single children or to have them drive themselves to high school and middle school, when bicycle alternatives would work just fine most of the year.  We should be accessing funding from the Safe Routes to School program, but, beyond that, major bicycle or athlete clothing and equipment companies, like Nike or Adidas, could support these efforts.

Strategy 2: Use private sector solutions to get better usage of existing transportation assets.

Raise revenue and improve system-wide efficiency through better travel information.

From studies we found during the work on the Reform Commission, people who use roads and public transit will pay more for better information on whether there are travel delays, to give them an opportunity to make alternative arrangements.  Today, ConnDOT travel information is limited to interstate highway data, and, for people already in transit, is insufficiently detailed and timely to be useful.  ConnDOT also has to recognize that its transportation information infrastructure is more designed to achieve compliance with Federal Highway Administration requirements than it is to give useful information to travelers or others, like supply chain managers, who depend on accurate, precise, and timely transportation information.

Private companies are far better able to provide the level of detail needed by transportation asset users, but the ConnDOT can participate in a partnership that enables it to capture additional revenues, either in the form of higher fares or a fee-based service for which citizens would pay.

That information would include real-time data on the interstate highways and on principal arterial roads like Route 1 and Route 7.  It would also include specific information on available parking at specific rail stations.

Incent Private Sector Developers to Increase Parking At and Around Rail Stations.
I began my transportation volunteer work in 1985 to try to get funding for rail station parking in Southwestern Connecticut.  Today, we still have a shortage of parking spaces.  There are many solutions that the State could use more aggressively to increase the supply of parking.  As major development projects get approved by the State Traffic Council near major rail stations, the Council could require the dedication of parking spaces to rail station users.

Reduce unpredictable delays by reducing the number and severity of motor vehicle accidents.

By using the technological and business capabilities of the State’s licensed automobile insurers, and the trade associations that represent trucking companies, the state can take a wide range of steps to reduce the frequency and severity of motor vehicle accidents.  For example, Progressive Insurance offers an insurance plan in some states called MyRate that rewards safe, low-mileage drivers with discounts, by validating their safe driving behaviors with an on-board device.  This insurance plan is not allowed in Connecticut.  The state should allow it, but make sure it is voluntary and that appropriate privacy protections are in place for those who choose it.

Similarly, cameras are used in many states and cities around the world, including here in the United States, such as the City of Chicago, to identify vehicles committing moving violations.  Whether this technology is deployed, or others are used in its place, there is no question that technology that detects unsafe driving behavior and makes information on that behavior available to law enforcement authorities significantly reduces motor vehicle accidents.

These kinds of solutions can reduce unpredictable delays from accidents and significantly improve mobility and safety throughout the year.

Strategy 3: Increase the supply, efficiency, financial attractiveness and reliability of motorized transportation.

In a recent article in the New York Times, the Rochester, New York, Transit Authority was profiled because it actually has a budget surplus.  The reporter noted that Rochester had re-evaluated all of its bus routes, had eliminated some, changed the routing on others, but, most importantly, had identified specific large customers, such as the school districts and the major businesses, which were willing to supplement fare revenues to get more customized services and to eliminate redundant bus services they had in place.  We have a highly fragmented infrastructure for delivering bus service here in Connecticut.  That service has a lot of actual and potential innovation, but there are also opportunities for reconfiguring the networks to have those who can benefit pay more.

Expand Alternative Travel Outreach

We have many great programs here in Connecticut, such as TransitChek, which can be implemented faster and at much lower expense than building additional capacity on highways, rail systems, or even bus systems.  These programs are generally thinly-funded and poorly-marketed.  We need to look at selectively increasing funding and marketing for programs that can get the most immediate and largest paybacks in decreasing the number of people who use single-occupant vehicles.

Strategy 4: Engage Private Investment and Operational Capital for Selected State Transportation Assets

I believe that public-private partnerships for investment or operation of selected state assets would make a great deal of sense in conserving scarce state transportation capital.  Realistically, the attractiveness of selling highway assets is limited unless we have tolls with congestion pricing potential, so I would not recommend that we consider that option at this time.

On the other hand, there are asset categories which we should consider opening more fully to private investment and operation, but with appropriate state oversight:

Highway Service Areas

As noted in our Reform Commission report, one of the areas in which Connecticut is below average in transportation assets is the quality and condition of its service areas.  Many are over 50 years old.  Getting the private sector to invest significant capital in these areas could achieve several benefits, aside from making them far more attractive for travelers:

• A private sector operator could move more aggressively to increase revenue yield, the benefit of which could be shared with the state.  While these service areas are net profit contributors to the state today, they could be greater profit contributors with more focus.
• Service areas along I-95, I-91 and I-84 could be equipped more modern technology and other amenities for truckers, which would make them more attractive for truckers to get badly-needed rest and reduce fatigue-related highway accidents. A simple investment in technology that would allow truckers to keep electric power going while they eat and rest would be significant.
• Culverts and other topographical and environmental issues adjacent to the service areas could be addressed in the renovation of these service areas.

Bradley and Other Airports

It became clear to me during the work we did on the Reform Commission that our airports had great underutilized potential.  While Bradley is a net profit contributor with a strong management team and board, it is inevitably constrained by annual budgeting processes as to its ability to maximize revenue potential. For example, at a time when the New York area airports are increasingly unattractive because of air traffic congestion delays, Bradley could have a service reach much farther into Fairfield County than it does today, were it to have a more focused marketing plan.  The management team at Bradley is capable of developing and implementing such a plan, but annual and inflexible budget constraints limit Bradley’s potential.

A private operator with appropriate state oversight could do far more with Bradley, and with other airports that have potential for commercial service.  To effect this result, the state would need a more centralized management structure than it has today, and would need to consider packaging a number of airports, including Tweed-New Haven, to make them attractive to a private operator.

Strategy 5: Employ and Provide More Incentives for Smart Growth Strategies

I support Connecticut’s fledging effort to study transit oriented development, which was approved in last October’s bonding package.  However, the funding needs to be more narrowly focused on transportation and other development projects that specifically focus on creating walkable environments and on developments that occur within a walkable distance from public transportation facilities.  Transit-oriented development will relieve the funding crisis in two ways:

• It will enable developers to create more demand and, therefore, more revenue for public transportation without significant state expenditures; and
• It will cause individuals to engage in activities closer to where they live, thereby reducing the need for single-occupant vehicles and the stress they cause on scarce roadways.

The State also needs to empower the State Traffic Commission to exercise its power in issuing Major Traffic Generator Certificates of Operation to induce communities to require a master plan that takes transportation impacts more fully into account, consistent with smart growth and transit-oriented development strategies.

Concluding Observations

What I want to leave with you today are the following observations:

• While there is no “silver bullet” solution that, by itself, will have a big impact on our funding crisis, there are many smaller initiatives that cumulatively would close the funding gap.
• To take advantage of those initiatives, we need to rely far more heavily on private sector assistance and partnership than we do today.  Some of the best initiatives would require little or no public funding.
• To the extent that the State plays a major role in driving these initiatives, we need appropriate oversight, but we also need methodologies that enable us to make sensible multi-year decisions that will be investments in the future of our transportation network.

In the absence of significant changes in the way we look at transportation, we will become far less competitive in the national and global economy.

Thank you for giving me the opportunity to present my views today.

Having run businesses that had many different kinds of fees, particularly financial services businesses, and having been a consumer for many decades, I have some observations about what makes fees acceptable, and what causes them to be annoyances to consumers.

The consumer has to believe that the purpose of the fee is valid.

There are three types of fees that are arguably valid: those that are charged for extra services, those that reflect added transaction costs, and those specifically designed to discourage certain conduct.  Some fees fit into more than one category, such as fees for late payment of a bill.  Late charges are a form of extra credit to the late payer, so there is value given by the biller, but they also reflect the cost of the biller being deprived of cash for a longer period of time, and needing to reflect that in a fee.  Generally, if a fee is justified by one of these purposes, consumers are more likely to accept it.

If the cost of doing business requires a fee for something that used to be free, it is far more palatable to the consumer if the seller also adds something of value at the same time.

In 1991, when I ran our HR function, I had the unenviable task of increasing health care premiums so that the employees’ total payments would approach 20% of our total cost.  This was much higher than we had asked them to pay before.

However, we simultaneously offered them broader coverage in the form of preventive screenings.  While they did not like the cost increases, they accepted them because we gave them something of value that they had not been given before.

The marketer cannot get greedy.

Even if the fee is for a valid purpose, consumers resent it if they think they are being gouged.  The amount of the fee has to bear some relationship to value or cost.  For example, if a late fee is more than a certain percentage of the outstanding balance, even if it is legally valid, it starts to look like loan sharking if it is too high.  Consumers also expect that fees will be reduced or eliminated when the reasons for imposing them disappear.  They do not like to feel that the marketer is using an external event as an excuse to raise prices and keep them raised.

Consumers do not like to be surprised by fees.

Fees need to be openly disclosed, not buried in the fine print of a lengthy contract, and the marketer is always better off explaining why the fee has been imposed.  For example, no one likes to pay a fee for checked luggage on airline flights, but when airlines explain that the extra weight of each piece of luggage adds significantly to fuel costs, the fee becomes more understandable when gasoline becomes so much more expensive.

Over time, consumers prefer high fixed rate charges to a charge that varies by the level of fees charged.

ATT and other telecoms have discovered over the years that consumers prefer predictable bills to lower, but significantly variable, bills.  They want the comfort of knowing the maximum amount they will pay, even if it is higher than what a variable fee-based bill would cost them.

Much of what I have said is common sense, but it is surprising how many marketers fail to adhere to it.

Clearly, we have a crisis in terms of traffic congestion, overburdened existing transportation infrastructure, too many bridges that are structurally deficient and functionally obsolete, and too many preventable safety-related problems.  In the July 28, 2008, USA Today, a federal transportation official was quoted as saying that we need an additional $225 billion in transportation spending to address this crisis.  Moreover, in the July 29 New York Times, an articled reported that the Federal Highway Trust Fund, the main source of federal dollars for road and bridge projects is in such dire financial straits that money may need to be borrowed from a federal mass transit fund.

Decades ago, our country made the decision to finance transportation construction, maintenance, and repair, and public transportation asset acquisition primarily through taxes and fees levied on purchases of gasoline and other fossil fuels.  Today, that decision is painful and being stress-tested to the limit because of the $4 a gallon price for gasoline.

Elected officials are reacting to this crisis by proposing temporary gasoline tax holidays, rollbacks of gasoline tax increases, and even reductions of current gasoline tax levels.  At the same time, they and the public are resistant to implementing or increasing tolls or congestion pricing that could potentially provide a supplemental source of financing.  There is also a lot of resistance to privatizing transportation assets in many states and regions, although some states, such as Indiana and Illinois, have jointly outsourced the tollway that operates at the border of both states.

This collective denial and refusal to face up to this crisis has serious consequences, particularly in an environment in which delay is causing significant increases in the price tags of any transportation project governments may wish to undertake.  The same forces that are causing a rapid increase in gasoline prices are operating to increase the prices of the basis commodities used in construction: steel, plastics, nickel, zinc, copper, aluminum, and cement.  As the clock ticks, inflation ravages the purchasing power of tax dollars at a level unseen since the 1970’s.  Unlike the 1970’s, when we basically had a self-inflicted set of problems that drove inflation, this inflationary spiral is driven by global forces that are largely outside our control, such as demand in China, India, and the Middle East for the same construction materials.

The only thing that appears to motivate elected officials who do not want to collect gasoline taxes, do not want to institute or raise tolls, and do not want to privatize assets is that they are hoping against all odds that this crisis will go away on its own.  Unfortunately, it won’t.  This crisis is not like fine wine.  It will not get better with age.  

We need elected officials who have the moral courage to describe in specific detail what it will take for our transportation crisis to be addressed, and to propose unpopular, but necessary, steps to deal with it.

I understand that there is a lack of trust in many departments of transportation in terms of their cost estimates and their competence in carrying out big projects.  But even if they had exaggerated the problem by doubling cost estimates, and even if they were exceptionally competent, we would still have a major crisis.

I believe there are some creative ideas for reducing the scope of the problem.  Private sector money could be used for assets such as bicycle paths, rail station parking areas, or even airport improvements.  Traffic information systems could be provided far more cost-effectively by the private sector than by the cumbersome processes used in government procurement, and they would be far more responsive to the needs of both individual and business travelers, as well as logistics and delivery firms that depend on correct, real-time information.  I also believe that demand reduction is a viable strategy today, a far less expensive and faster one than adding capacity.

But none of these ideas will see the light of day until elected and appointed government officials face honestly up to the problem, and have an intelligent dialogue with the public.  While there will also be those members of the public who do not want to face reality, the majority of Americans will support prudent investments in our critical infrastructure.

The biggest opportunity to address both in one strategy is the reduction of carbon from vehicle emissions into the air. Better fuel economy, reduced driving, and reduced emissions improve air quality, reduce traffic congestion, reduce asthma from bad air, and reduce the carbon footprint of driving.

That is one of the reasons we have advocated substituting remote commerce for face-to-face commerce relative to citizen interactions with government and other private sector transactional activity that reduces unnecessary vehicle trips. What are some of the “no-brainers” here?

• Why not eliminate all toll plazas and substitute either E-Z-Pass-type solutions or photos that capture a driver’s license plate number and result in a bill being sent to the driver? The highest emissions come from car engines running at low or idling speeds, as opposed to 55-mile-an-hour travel. Why do we keep toll plazas in place? For example, Ireland, which I visited this past week, is on the way to eliminating them.

• Why not substitute photo capture of speeders and motorists who violate other traffic rules for stationing policemen with idling engines? Everywhere photo enforcement systems have been used, they reduce accidents, reduce incident-related congestion, and increase fines and penalties revenues.

• Why not give many more voters the chance to vote by mail? California offers voters the choice of voting by mail or in person. 35% of the voters have chosen to vote by mail, reducing those vehicle trips.

• Why not have more government license acquisition transactions done by mail or over the Internet?

• Why not have more pharmaceuticals delivered by mail or through a local delivery system serving a number of small merchants, particularly to elderly citizens?

Beyond these obvious carbon-reducing actions, governments need to change other policies that discourage or fail to encourage private decisions that reduce fuel consumption and carbon emissions:

• Connecticut levies a heavy tax on new vehicles and very little on old ones. This discourages new vehicle purchases, and keeps higher-polluting older vehicles on the road longer. It is justified as a device to help lower-income residents who are driving older cars, but the system could be altered to provide tax credits for lower-income citizens who drive old vehicles. The taxes on wealthier families who keep an older vehicle, particularly a gas-guzzling SUV, could be increased to cover the revenue shortfall.

• Parking fees and taxes should be far greater for larger vehicles, particularly SUV’s, than for smaller or energy-efficient vehicles. New York City does this to a degree with its higher parking fees for oversized vehicles, but it probably needs to have an even steeper differentiation than it does today. Most states or localities that have parking taxes and fees have no incentive for reducing vehicle sizes. The Gristmill blog discusses some relevant points related to the connection between congestion pricing and carbon taxes.

• I am on the Board of Directors of Eaton Corporation which provides cutting-edge engine air management technologies for automobiles that reduces emissions, while maintaining vehicle performance. Governments do not provide sufficient incentives for adoption of that technology or others that may attempt to accomplish the same goal a different way. Hybrid cars, for instance, are a great alternative proven to reduce carbon emissions, as cited in the BioStock blog.

• New Jersey has started to allocate its transportation capital projects dollars to favor smart growth planning and zoning which discourage unnecessary uses of motor vehicles. Many other states have not followed that path.

• Too many states and localities address traffic congestion with a focus on increasing road capacity and, even with a focus on public transportation, increasing railcars and buses. There needs to be an equal or greater emphasis on eliminating unnecessary trips by individuals and substituting telecommuting or other ways of keeping the individual off the road. By the way, while rail is certainly better than driving because it is group travel alternative, there is still a trip, often by car, to the train station, and the railcar has a carbon footprint, although a smaller one per person.

The Carbon Clear Blog outlines some additional good low-carbon strategies to fight global warming. I specifically agree with the “Planes, Trains and Automobiles, Part III” post, which touches upon ways to reduce driving-related climate pollution.

Ultimately, we need to look at all of our governmental and private sector actions through a different set of lenses. These are just a few examples.

Two things are worth noting, one of which is a broader point about our society today:

• Traffic congestion is popping up in areas in which we have never experienced it before. For the past 15 years, my family and I have been going down to South Bethany Beach, Delaware for a week’s vacation. This year, for the first time, we experienced horrific traffic delays at odd times at places like the Delaware Memorial Bridge going into Delaware, State Route 113 south of Dover, and even some of the county roads between Route 113 and Bethany Beach. Much of this is a result of continuous over-building of new housing in areas in which the infrastructure is not there to support traffic.
• The bigger issue is that our infrastructure in many places has no flexible capacity. Driving from Peabody, Massachusetts, into Cambridge, Mass. last week, we experienced a horrific delay getting across the Tobin Bridge because of a problem on Storrow Drive that had an effect that radiated across a good part of Boston.

It is this second problem that gives me deep concern about our future. When we spend too little money on flexible capacity, we guarantee that small problems have huge disruptive consequences. Businesses experience this in many circumstances:

• When public companies are expected to lever up or to return every bit of spare cash to shareholders if they do not have an immediate use for it, they are succumbing to a pressure that will deprive them of ability to respond to unanticipated conditions.
• When organizations cut every bit of “excess” staff, they lose the flexibility to address unanticipated growth opportunities or risks. For example, if there were a serious pandemic, most organizations would collapse because of their inability to deploy trained staff.
• When companies operate with a “just-in-time” supply chain strategy, they cannot manage supply chain disruption effectively.

Governments, as well, are operating in ways that do not prepare them to address unanticipated problems. “Rainy funds” are hard to maintain because citizens demand either tax reductions, spending on social needs, or spending on capital projects when there are budget surpluses.

Today, we experience this chronic underinvestment in our transportation network, as well as the lack of “rainy day” funds. To some degree, politicians who want to get re-elected succumb to short-term pressures.

However, there are mechanisms to insulate certain funds from these pressures to spend money foolishly or to reduce taxes that cannot easily be increased in more challenging times. We saw politicians become very creative in dealing with the difficult issue of military base closures. They agreed to have a neutral Defense Base Closure and Realignment Commission make recommendations that would have to be approved or rejected as a package.

Today, we desperately need creative political and business leadership that can recognize the pressure to think short term, and to find ways to insulate themselves from that pressure. As we look at those who vie for our support in 2008 for federal elective office, as well as those who will run for state and local offices between now and then, identifying those who have the will and the skill sets to devise mechanisms to recognize the pressure to take destructive short-term actions and to counteract is a task all of us have to undertake.

I would love it if those who question candidates during pre-election debates would zero in on this issue and ask candidates about how they would address this type of problem. For anyone reading this blog, I would be interested in your ideas on this suggestion.