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BHI FaxSheet: Information and Updates on Current Issues
Big Digging for Dollars: How Increasing Turnpike Efficiency Can Help
February 2000
Massachusetts is in the process of determining how it can defray an additional $1.4 billion in cost overruns on the Big Dig Project. Since 1997, the Massachusetts Turnpike Authority (MTA) has had responsibility, not only for managing the Turnpike itself, but also for managing and financing a significant portion of the Big Dig.
As of December 1999, the MTA was slated to defray $1.355 billion or 11.6% of Big Dig costs. The MTA had planned to raise tolls on the Turnpike and tunnels in 2002 in order to help meet this obligation. Now, the need to raise an additional $1.4 billion in funding has prompted plans to move up the toll increase to 2001.
However, this one-year speedup in toll increases will provide only a small portion of the funds needed to cover $1.4 billion in new spending. This has led to doubts about the "affordability" of proposed state tax cuts and to speculation about the need for further tax and toll increases.
Ignored so far is the possibility that the MTA itself might undertake efficiency measures and cost cuts that might free up toll revenues to defray Big Dig costs. An assessment of the cost-effectiveness with which the Turnpike currently operates would, in this regard, prove instructive.
Comparing Costs
One approach to providing this assessment is to compare MTA operating expenses with those of comparable road systems. In taking this approach, it is necessary to identify road systems that are comparable with respect to factors such as weather, access from secondary roadways and presence of toll facilities. On the bases of these considerations, it is possible to compare the MTA to (1) the system of Massachusetts roads and highways (MRHS), excluding the Turnpike, that are maintained and operated out of state funds and (2) the New York Thruway Authority (NYT). The NYT has toll facilities and similar weather conditions. The MRHS does not have toll facilities but, as a Massachusetts road system, is closely comparable in other respects.
The MRHS and NYT differ in length, number of lanes and utilization. However, we can adjust for these differences by comparing annual operating expenditures per vehicle mile traveled (OE/AVMT). An alternative measure is operating expenditures per lane mile. But OE/AVMT provides the better measure insofar as it permits comparisons between systems that are otherwise comparable but that vary in length, number of lanes and utilization. We therefore compare OE/AVMT for the three road systems in 1998, the most recent year for which data are available.1
Our measure of operating expenditures includes expenditures on maintenance, toll collection and police protection as well as other operating expenditures. It excludes debt service, retirement costs and depreciation.
Table 1. Operating Expenditure Comparison
MTA MRHS* NYT OE/AVMT $0.0491 $0.0178 $0.0199 MTA Cost Comparision 175% 147% Estimated Cost Savings ($ millions) 73.48 68.55 *Differences due to rounding.
Table 1 shows that in 1998, it cost 4.91¢ for the MTA to provide one vehicle mile of service on the Turnpike, while it cost only 1.78¢ and 1.99¢ for the MRHS and the NYT, respectively. We find, therefore, that operating cost per vehicle mile traveled on the Turnpike exceeded that of the MRHS by 175% and of the NYT by 147%.
By this standard the MTA could have saved $73.48 million or $68.55 million, respectively, if it had provided one vehicle mile of service as efficiently as the MRHS and NYT in 1998. Taking the average of these two, the potential cost saving was $71.01 million. This cost saving, if implemented permanently, would permit the MTA to support debt service on about $856 million of new debt, enough to defray 61% of the additional costs.
To assess further the efficiency with which the MTA conducts its operations, we compared MTA toll collection and police protection expenditures per vehicle mile — as the largest line item in the operating budget — to those of the NYT. As Table 2 shows, the MTA spent 247% more on toll collection and police protection per vehicle mile than the NYT in 1998.
Methodology
In 1998, total daily vehicle miles traveled (DVMT) on all urban and rural state-agency owned roads in Massachusetts were 71 million, and annual vehicle miles traveled were 25,791 million. 2 Annual vehicle miles traveled on the Massachusetts Turnpike were 2,348 million. Thus, AVMT for the MRHS were 25,791 million — 2,348 million = 23,443 million. 3AVMT for the NYT were 9,551 million. 4 Operating expenditures for the MTA were $115 million.5 Operating expenditures were $418 million for the MRHS6 and $190 million for the NYT. 7
Operating expenditure per AVMT were $0.0491 (=115 million/2,348 million) for the MTA; $0.0178 (= 418 million/23,443 million) for the MRHS; and $.0199 (= $190 million/9,551 million) for the NYT. 8These calculations suggest that, in 1998, the MTA could have saved $71.01 million had the MTA operated as efficiently as MRHS and the NYT. 9
The next comparison involved expenditures on toll collection and police protection by the MTA and the NYT. These expenditures were 246% more per AVMT for the MTA than for the NYT.
Table 2. Operating Expenditure and Toll Collection Comparison
Operating Expenditure ($ millions 115.32 418.30 190.31 AVMT (millions) 2,347.59 23,443.68 9,551.00 OE/AVMT $0.0491 $0.0178 $0.0199 MTA Cost Comparison 175% %147 Estimated Cost Savings ($ millions) 73.48 68.55 Toll Collection and Police Protection Comparison Toll and police Exp./ AVMT $0.0308 $0.0089 MTA Cost Comparison 246%
Footnotes
[1]Annual traffic data (AVMT) for Massachusetts were provided by Highway Statistics 1998, published by the Federal Highway Administration. Traffic data for the Massachusetts Turnpike were provided by Peter Forbes at the Massachusetts Turnpike Authority and for the New York Thruway by the Department of Public Affairs of the New York Thruway Authority.
[2] Federal Highway Administration. Highway Statistics 1998, Table HM-81.
[3] Annual vehicle miles traveled (AVMT) for all Massachusetts roads and highways = 70.661 * 365 = 25.791 billion. Differences due to rounding.
[4] AVMT on the New York Thruway in 1998: DVMT * 365 = 26,167,242 *365=9,551 million.
[5] Highway Statistics 1998, Table SF-4B .
[6] Highway Statistics 1998, Table SF-4 Calculated as $533.708 million - $115.32 million = $418.3 million
[7] 1998 Annual Report of the New York Thruway Authority.
[8] All numbers presented here are correctly rounded. Some differences are owed to rounding that occurred in presenting the numbers from which they were obtained.
[9] MRHS saving: ($0.0491 - $0.0178 = $0.0313 * 2347.588 AVMT (million) = $73.48 million. NYT saving: ($0.0491 - $0.0199) = $0.0292 * 2347.588 AVMT (million) = $68.55 million. Average saving: $73.48 million + $68.55 million = $71.01 million.
Posted on February 11, 2000
Revised formatting on July 12, 2007 10:37 AM
