NTTA will keep big fines and I wonder: What am I missing?
By Michael Lindenberger
The Dallas Morning News
Copyright 2011The NTTA board voted 8-1 to continue its policy of throwing the book at drivers who do not have toll tags
and then ignore mailed bills. They will fine you $8.33 for every toll transaction if you ignore your bill for 45 days.If you don't pay within 30 days of that date, the rate triples to $25 per transaction and the bill is sent to collections.The policy has seemed harsh to many observers, though NTTA points out that it spends more to collect unpaid tolls each year than it receives in total fines.
I've pressed NTTA executive director Allen Clemson on this point, and maybe too far. It's not my place to say what the NTTA collection policy should be. But it has been frustrating to hear the staff defend repeatedly the policy with analogies and rationales that simply don't tell the whole story. There is either a breakdown in logic, or the staff is so constrained by its tight budget that it feels it can't change the policy without losing big chunks of revenue it badly needs.
I am writing this long piece about why I think the staff explanation just doesn't seem to make sense in part because I want feedback from the board members. And in part because I'd like to hear what you as readers and NTTA customers think about it, too.NTTA paid big bucks to the state for Sam Rayburn Tollway rights, now it expects big bucks from toll violators.
Before I do that, let me add that I Clemson I get calls and emails from drivers who feel they're ignored or mistreated by NTTA, and he said he'd like to talk to every one of the cases, to make sure they are being treated fairly. He is confident his staff is doing just that.
If you send a brief summary of your experience -- either to my email, at firstname.lastname@example.org -- or in the comments below, I will forward each one to Clemson. I am only going to forward the ones that include a full name and a valid method of contacting you. (Here are some folks who wrote last summer and again in December.)
Follow me to the jump to discuss what seems so confusing about NTTA's view of the fines.
Below I've bolded a central argument NTTA has advanced for why it charges customers a fine for every transaction they incur, sometimes totally hundreds or even thousands of dollars.
Even the steep penalties don't cover NTTA's cost for collections. Therefore, Clemson and others said, the fines are legitimate.
It's true that NTTA pays more to collect unpaid tolls than it receives in fines. So in one sense, that statement is accurate, but only in a pretty narrow sense. On several other levels, it seems flawed.NTTA says that sending out a late notice, to drivers who don't pay within 30 days, costs the authority $3.86. It loses money on that, because the flat late fee for the whole invoice -- no matter how many individual transactions are involved -- is just a $2.50.If no payment is received in about 15 more days, NTTA sends out a violation notice, a step that costs NTTA $4.61 more per invoice. That means it has spent $8.47 so far to get delinquent customer to pay up.To cover those costs, NTTA now adds an $8.33 fine for every transaction on that invoice, on top of the $2.50 late fee. Even if the invoice was for just one day's worth of tolls, it can easily include 10 transactions, as that is how many a round trip on the full length of the President George Bush Turnpike will incur.
So now, to use this example, NTTA's costs are $8.47 to send an invoice to a violator, and if he or she pays, NTTA gets the tolls owed, plus $2.50 late fee, plus $83.33 in fines.
If the invoice covers less than 10 transactions, the fees are less, but if it covers severals days, or a week's worth, they are much much more.
This isn't covering costs, it's winning the lottery.
If folks still don't pay, the bill goes to collections, and NTTA's costs go up by another 90 cents, to $9.37. The driver who used the PGBT is now charged $250 in fines for that one day's worth of tolls, though some of those revenues if paid are shared with the collection agency.
NTTA looks at these same numbers and says it's losing money, and that as steep as its fines are they are actually less than what the toll scoffers are costing the agency. In a way, it has to say that, because state law says they can charge fines of up to $100 per transaction, but only to cover the costs of collections.
NTTA says the fines are inadequate to cover collection costs because when it figures up those totals, it adds all the costs incurred in collecting fees from every driver who doesn't pay. That's a big number. To find out what the per-person cost would be, it doesn't divide by the total number of those drivers. It divides by the number of drivers who pay, a far smaller group.
(In fact, NTTA says the average fine amount collected for each invoice sent after 30 days with a $2.50 fine is just 46 cents. The average fine collected per invoice with the $8.33 fine per transaction is just $6.46.)
NTTA says its not fair for paying customers it the authority ignores drivers who ignore their bills. Clemson says that would be asking paying customers to subside the users who don't pay.But if they are using that rationale to justify the steep fees, shouldn't they just charge amounts that approximate what an individual's non-compliance costs them?
If you tell me it costs $1 each to send out late fees to 1,000 delinquents, I'll believe you when you tell me your collection costs are $1,000. But what if you tell me that only 10 percent of those people will pay, and therefore you are going to send every one of them an invoice with a $10 fee.
Actually, you say, you are going to charge that $10 fee not per invoice, but per transaction. So if a single that has a dozen transactions, your costs are about $1, but you are going to charge me $120.
I'm not going to feel very good about the system.That is what NTTA is doing when it sends an invoice with $83 in fines attached to 10 transactions is says cost it about $8.47 to collect.
This isn't all academic. State law says NTTA can charge up to $100 per transaction fee for unpaid fees. Of course that statute was written when NTTA operated cash toll booths, and every violation required you to smash though a new toll gate. But it also says that the fine needs to be up to the amount to cover the collection costs.
"The department may impose and collect the administrative fee, so as to recover the cost of collecting the unpaid toll, not to exceed $100." Sec. 228.055(b)Our collection costs are much higher than what we receive fees.The problem with this basic assumption is that ignores history. Until a few years ago, NTTA collected all tolls in cash, at toll booths. Violations were much rarer.To eliminate many tens of millions of dollars in annual staffing costs -- we're talking phasing out hundreds of jobs -- NTTA proposed converting to an all-electronic toll system, a process still underway.
The move involved many benefits beyond the staffing reduction. It allowed the NTTA drivers to maintain higher average speeds, which pleases the drivers, and helps NTTA accommodate more traffic. That's something it can use to lenders to justify higher debt.But it involved costs, too. The capital construction costs to convert the plazas has been in the millions. They also had to buy millions of dollars in cameras. They also expected that cameras wouldn't be able to accurately identify every customer. (The had no idea how many of these cases there would be, however.)Another costs was it was going to stem from the collection efforts. You got to mail the bills out to non toll tag users, and track down the folks who don't pay.But if the change has resulted in significant savings, expectations of increased traffic, and generally more efficient operations, is it really fair to say that every penny that the agency must spend in collections is the fault of the folks who don't pay? After all, NTTA made it much easier to use their roads without paying for them, it seems to me at least an arguable proposition that NTTA should assume some portion of their collections costs as simply cost of doing business in a manner that eliminated the cash toll booths.Ignoring your toll bills is no different than other criminal activities, and should be punished sharply.
This is kind of speaking out of the other side of the mouth, in that while NTTA says the purpose of the fines are compensatory, not punitive, they also are quick to point out that they really are no different than criminal sanctions of bad behavior.
Allen Clemson told me, for instance: Listen, walk into Wal-mart and steal a six pack on Monday and you are going to be charged with a crime. Do it again on Tuesday, you get another charge. Thursday makes three, etc.Or this. Jump on a DART train without a ticket, and you're cited for fare evasion. Do it again later that day, and you'll get another citation, and if you do it every day for a week you could be charged five times.
Ditto for writing a bad check every day, or any other criminal act.But these aren't real equivalents. Not even close.A real equivalent would be if you were charged with six counts of shoplifting because the six pack had six cans. Or if the city wrote you an entirely new parking ticket for every hour you left your car next to an expired meter. Five hours late, equals five parking tickets. Or if you faced five counts of check kiting because your $50 bounced check bought you five items from the grocery.
Others at NTTA have said, look we know the fines are steep, but what do you think your credit card company will do if you miss your payment. What about if you miss your mortgage payment?Both of those entities would charge a fee, but probably just one for each month.
The only equivalent system in the world, as far as I can tell, is the way banks will charge you $32 (or whatever) for every time a debit purchase is approved when your checking account balance is too low to cover it. If you have 50 cents in your account, you could buy 10 items at $1 each, and face charges of $320. That's similarly disproportionate.
But even that situation -- which I don't need to remind you has seen so much scrutiny (the word rapacious is kicked about) by Congress and consumer groups that even big banks are reconsidering -- is different in a way than NTTA's policy.You have to make 10 purchases to earn those fees, whereas you can rack up four or five toll transactions in a single drive from one end of the road to the other.Maybe NTTA just needs the revenue so badly, it is willing to throw the book at customers who don't pay, soaking not all the delinquents, but just the ones they can catch. It doesn't seem like a policy that is in keeping with the often stated concerns of its chairman Paul Wageman, who worries that tolls are becoming so frequent in North Texas, drivers could rebel.Some drivers already are.
But in any case, NTTA board members have voted, and the policy review has been completed. You're stuck with it for a while. I can't help but wonder if there are fairer ways to discourage freeloaders without sending bills to some for thousands of dollars in fines just for ignoring a month or two's worth of toll bills.
Or maybe the logical disconnect is all mine. Tell me what you think.
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