Hard times for E-ZPass
Trenton Times Friday, May 03, 2002
TOM HESTER Jr.
TRENTON - Despite the rosy
picture the state once painted, it was unrealistic to believe New Jersey's
high-tech E-ZPass system would pay for itself, the former Turnpike Authority
director acknowledged yesterday.
"The initial (press) releases in
connection with this contract and the beginning of construction set forth
expectations that were very high," Edward Gross told the state Assembly
Transportation Committee. "I think that was a mistake."
Gross said there
was always the possibility the five highway and bridge agencies involved in the
electronic toll collection system would have to pay for operating and installing
the debt-ridden E-ZPass.
"Each member-agency clearly recognized their
obligation to pay for the system," Gross said during more than five hours of
Yet Assemblyman John Wisniewski, D-Sayreville, the
transportation committee chairman, read from 1998 state Transportation
Department press releases that touted E-ZPass as having no cost to
Officials had said fines from toll violations and money
generated by leasing its fiber-optic lines to private companies would pay for
"There was an expectation given by the agencies and the
government that this was going to be self-financed, and it was not," Wisniewski
said. "That's what has so many people scratching their heads
E-ZPass, a toll collection system that uses transponders attached
to windshields to collect tolls from either credit cards or prepaid accounts,
has become deeply indebted and plagued by equipment problems in New Jersey since
it was implemented about four years ago.
The committee is holding
hearings to try to determine what caused the problems and who is
With reports projecting deficits as high as $469 million,
Gov. James E. McGreevey has suspended expanding E-ZPass, which is in 360 lanes
on New Jersey toll roads and bridges. It was to be installed in about 380
The state has issued 1.6 million transponders, while
agencies in the New York City area have issued another 3.2 million.
Network Technologies was awarded the contract to install E-ZPass. A regional
consortium led by the Turnpike Authority borrowed $300 million by issuing bonds,
with the remaining $190 million to be collected by leasing the system's
fiber-optic lines and through $25 fines from toll cheats.
telecommunications industry hit financial troubles, and it cost the state $19.2
million to collect $13.3 million in fines, causing projections of surpluses to
turn into estimates of massive deficits.
"That, sir, is a debacle," Assemblyman Reed
Gusciora, D-Princeton Borough, told Gross, who resigned in January after
McGreevey said he was responsible for the shortfalls.
Gross insisted the
plan to pay for the system through toll fines and fiber-optic leases is
"This project is not a failure," he said.
The system, Gross
said, will become more manageable once a violations processing center and a
means to work with the municipal courts to collect fines is
"With the passing of time, it should only improve," Gross
said. "We need patience."
He did not receive much from the committee
members, who questioned the consortium's decision to make New Jersey the only
state to rely heavily on toll violators to finance the system.
"Nobody, it seems, is quite sure where the idea came
from," Wisniewski said.
Assemblyman Anthony Impreveduto,
D-Secaucus, said the plan to pay for the system through toll cheats was
"It sounds to me like it's too good to be true and some
used car salesman thought up the idea," he said.
MFS paid the state
millions of dollars in fines for missing various construction deadlines. The
company was later bought by Adesta Communications, which filed for bankruptcy
and sold the E-ZPass contract to WorldCom, which recently has had its own
This week, WorldCom's shares fell more than 28 percent on
concerns about its ability to meets its debt, and its debt-rating was cut to two
levels above junk status.
Gusciora pressed Gross on why the state did not
try to break the contract with MFS and its successors when deadlines and
requirements were not met.
"We are better continuing, having continuity
rather than stopping the project," Gross said.
He described the financing
plan as creative, drawing guffaws from the committee members. "What you call
creative I find to be incredulous," said Assemblywoman Linda Stender, D-Fanwood.
"I don't know whether it's delusional or
Committee members also questioned Gross on numerous
complaints from motorists who claim they were fined for violations they did not
commit and billed for trips they did not make.
Gross repeatedly defended
the system and the financing plan, noting E-ZPass has become even more popular
than expected. The complaints accounted for only about 2 percent of the system's
transactions, he said.
"It is a good feeling, a warm feeling, to know
that E-ZPass has become accepted as the premier method of receiving tolls,"
The committee asked Gross to be ready to return for further
"After five hours, I don't think we're any closer to a
resolution of this matter," Gusciora said.