Mackinac Bridge Token System May See Changes To Curtail Abuse
By Karen Gould

The Mackinac Bridge Authority is expected to change its commuter discount program this fall to curtail abuses estimated to cost up to $500,000 in revenue. The expected plan, which was discussed by the board in July, will move the discounted commuter rates to a digitized debit card and eliminate tokens as a commuter perk. The prices of tokens would be hiked to full rate, but, presumably, they still could be used at the commuter gate.

Such a plan is now being drafted by the staff and could be approved at the authority's November meeting.

"We're getting a tremendous number of abuses with the commuter tokens," said Bob Sweeney, executive secretary of the Mackinac Bridge Authority (MBA). And, while overall bridge traffic declines, he noted, commuter traffic is increasing.

The authority met at Community Hall on Mackinac Island for two days in late July to discuss the commuter token program and approved a 2008 operating budget of $22.4 million.

With declining traffic, lower revenues, and an upcoming major bridge painting project, the Authority plans to use $10 million from its savings next year to make up a projected deficit budget.

Fixing the token abuse is only part of the revenue problem, but the abuse, apparently, is growing.

Commuter traffic comprises between 12% and 15% of total traffic, the MBA estimates (up from about 7% when fares were raised in 2002), but commuter tokens are used in 25% of all bridge crossings.

"We do not feel that 25% of traffic across the bridge is from commuters," said Mr. Sweeney. "We feel the [rising] trend is from unintended use of tokens."

Unintended use includes the practice of reselling the tokens to vacationers for a profit or by distributing them to non-commuters as marketing gimmicks by businesses.

The toll for a car is now $2.50, while commuters using either metal tokens and commuter cards pay $1.50 each way.

A roll of tokens sells in rolls of 24 for $36, and there are 400,000 tokens in circulation, Mr. Sweeney told the Mackinac Bridge Authority.

"We do see the value of the tokens as a potential marketing tool for local business," he said, "however, we cannot afford to lose the revenue. Full-fare token sales could benefit both the MBA and area businesses," by eliminating the revenue loss and by legalizing the marketing of tokens.

"It robs of us of nearly a halfmillion dollars a year in bridge revenue,"of the resale practice. "

We've really had some problems with people purchasing commuter tokens and then reselling them," said Bill Gnodtke, MBA chairman. "That really robs the bridge of revenue and defeats the real purpose of why we give the deep discount to commuters."

Authority member Murray Wikol agreed.

"We need less deterioration of our revenue," he said.

"I've heard only positive comments on the current card," said board Vice Chair Barbara Brown.

The staff also will research implementing a transponder system, which would operate much like the commuter card, with the fare automatically deducted from a balance maintained in a user account. Already in operation at bridges in other states, transponders can be mounted inside a vehicle's window and feed account information as it passes the toll booth.

MBA has contacted businesses it discovers are selling or giving away tokens, Mr. Sweeney said, and, so far, it has been successful in getting most of them to stop, although a few will not. He said some businesses are claiming to be authorized dealers of tokens and that others are selling tokens to drivers who do not qualify for the commuter rate, such as vehicles towing trailers and motor homes.

The authority also discussed the sale of large quantities of tokens. Commuters are allowed to purchase a maximum of three rolls at administrative building in St. Ignace, but not at the toll booths. One business was allowed to purchase 10,000 tokens, but at full fare value.

Lost revenue from the illegal use of discounted tokens is only use of discounted tokens is only part of the revenue problem facing the MBA. Bridge traffic has been declining for seven years, with a resulting decline in fare revenue. While bridge tolls pay for the every-day maintenance of the bridge, larger projects will need to be paid for with other funds, the MBA predicts. The $10 million shortfall projected for next year, to pay, in part, for the painting project, is a harbinger, members say.

In its current business plan, the MBA will begin next year dipping into an investment fund that contains more than $28 million to pay for a new, four-year, $75 million painting project. As toll revenue fails to match increasing maintenance costs, and necessary preservation work on the 50-year-old structure mounts, Mr. Wikol said the MBA will need to take more than $19.6 million from its investment fund to supplement annual budget needs over the next five years.

"We kind of burn through our capital fund over that period of time," he noted.

A $200 million deck replacement is planned in 10 years, and that project may have to be funded by a bond sale, said Mr. Sweeney.

More than 80% of the new budget is earmarked for bridge maintenance and preservation. Bridge operations, which include such projects, are completely funded by tolls and investment income. The investment income be about $1.2 million in 2008, said Mark Haas, the state chief deputy treasurer, who attended the meetings and overseas investments for the MBA. But he noted that as the MBA eats into its investment funds, the $1.2 million earned each year from those funds also will drop.

"We have tried to keep whatever expenditures that we have control over, such as labor, to a minimum," said Mike Litzner, the chief financial officer at the bridge, in presenting the $22.4 million budget for 2008. "Purchasing, such as office supplies, we keep within the governor's directives."

"We face three challenges to look at in 2008, and in the 20- year projections," said Mr. Wikol, who is chairman of the finance committee. With upcoming budget deficits, the MBA can either cut expenses, raise revenues, which is difficult in the declining traffic environment, he said, or look at a combination of both.

"I think, sooner or later we are going to have to address a combination of both," he said.

Fare increases are not being contemplated at this time, however, Mr. Gnodtke told The St. Ignace News.

"There have been no discussions of fare increases in the Fares, Fees, and Classifications Committee," he said, "and no meetings are scheduled in the immediate future."

He added, however, "At some point, we will have to find additional revenue. Nothing is off the table."

Possible funding options include seeking a direct appropriation from the legislature, receiving subsidy from the Michigan Department of Transportation, tapping Federal Highway funds, and issuing revenue bonds.

Traffic crossing the Mackinac Bridge has dropped 16.3% between 1999 and 2006, said Mr. Sweeney. Over the seven-year period, the average annual decline is 2.51%, equating to 114,801 fewer vehicles making the crossing annually. At its peak in 1999, a record 4,936,417 vehicles crossed the link between the upper and lower peninsulas, while in 2006, 4,132,810 vehicles made the trip.

If traffic patterns continue, Mr. Sweeney said, the MBA will see a $350,000 drop in revenue in 2007.

A decline in state population and higher gas prices have reduced travel on roads leading to the bridge, said Kirk Steudle, director of the Michigan Department of Transportation. Mr. Steudle gave a report to MBA on state travel trends and bridge traffic from 2005 to 2006.

"It appears as though people are traveling," he said. "They just aren't traveling very far."

Between 1998 and 2006, the two key roadways leading to the bridge, US-127 south of M-55 and I-75 north of M-55, show a sharp decline in traffic.

"What we're seeing at the Mackinac Bridge," he said, "I don't think we expect to see a turnaround [in traffic volume] anytime soon. It's a long-term trend."