Depending on the PPP structure, the amount of future toll increases can be specified or left to the private sector's discretion. Both the Chicago Skyway and the Indiana Toll Road have specified toll schedules that limit the average or maximum toll collected. In the case of the Skyway, a static schedule lasts until 2017; in Indiana, it lasts until 2010. After those dates, with a few variations in each lease, the agreements call for increasing tolls each year based upon the greatest of three calculations:
• A given percent minimum,
• The rate of inflation, or
• The rate of increase in the per capita nominal gross domestic product.
This methodology can present risks under certain economic conditions. If high rates of economic growth are not matched by increasing wage rates among middle and lower income groups, then those groups may be subject to higher toll rates while their disposable income is static or shrinking.
For example, in 2004 the U.S. economy added 2.2 million jobs and produced strong growth in corporate profits, yet wages for the average worker actually fell.15 Under similar conditions, and with a toll schedule determined as it was in Chicago and Indiana, toll rates would grow faster than incomes. New Jersey may or may not follow this precedent when it establishes its future toll schedules. Regardless of the specific toll schedule proposed, there should be public discussion of this important element of the PPP.
The ability of, and any incentives for, private road operators to use variable tolls is another key element, and should be part of the public debate. The Chicago Skyway allows the operator to raise tolls above the toll rate caps for vehicles with three or more axles at times of congestion. The SR-125 PPP toll road in California provides flexibility for toll rates to vary by various classes of vehicles, vehicle occupancy levels, times of use and section of roadway, but sets a limit on the overall rate of return by the private partner. A PPP may or may not have contract incentives built in that impact whether these emerging high performance traffic management strategies are implemented in New Jersey.
It is in the public interest to disclose any proposed future toll rate increase schedules and maximum rate frameworks prior to finalizing the PPP. The public should have sufficient time to analyze and comment on the details of the toll provisions, contract incentives, and performance objectives before they become fact.