TESTIMONY OF THE
AMERICAN PUBLIC TRANSPORTATION ASSOCIATION
BEFORE THE
SUBCOMMITTEE ON DOMESTIC AND INTERNATIONAL MONETARY POLICY,
TRADE AND
TECHNOLOGY OF THE
HOUSE COMMITTEE ON FINANCIAL SERVICES
ON DOLLAR COIN LEGISLATION
*******
April 28, 2004
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SUBMITTED BY
American Public Transportation Association
1666 K Street, N.W.
Washington, DC 20006
(202) 496-4800
APTA is a nonprofit international association of over
1,500 public and private member organizations including transit systems and
commuter rail operators; planning, design, construction and finance firms;
product and service providers; academic institutions; transit associations
and state departments of transportation. APTA members serve the public interest
by providing safe, efficient and economical transit services and products.
Over ninety percent of persons using public transportation in the United States
and Canada are served by APTA members.
INTRODUCTION
Mr. Chairman and members of the subcommittee, on behalf of
the American Public Transportation Association (APTA), thank you for this
opportunity to testify on the Presidential $1 Coin Act of 2004 (H.R. 3916),
which would provide for the issuance of new one dollar coins and other purposes.
My name is Chung Chung Tam. I am Chairman of APTA’s Revenue Management Committee,
and I also Chair APTA’s Financial Management Committee - Universal Transit
Fare Card Standards Program. I am a Revenue Systems Engineer with the Chicago
Transit Authority. Transit systems have been long-time supporters of efforts
to increase the use of dollar coins, and they strongly support the efforts
of this Committee in that regard. The use of dollar coins clearly reduces
costs for operators of public transit systems.
ABOUT APTA
APTA’s 1,500 public and private member organizations serve
the public by providing safe, efficient, and economical public transportation
service, and by working to ensure that those services and products support
national economic, energy, environmental, and community goals.
APTA member organizations include public transit systems
and commuter railroads; design, construction and finance firms; product and
service providers; academic institutions; and state associations and departments
of transportation. More than ninety percent of the people who use public transportation
in the United States and Canada are served by APTA transit system members.
PUBLIC TRANSPORTATION SUPPORTS USE OF DOLLAR
COIN
Mr. Chairman, in the face of budget constraints at the local,
state and federal levels, the nation’s transit systems are operating in the
most cost-effective ways they can. In the past, APTA was pleased to be a member
of the Dollar Coin Coalition that advocated broader use of the dollar coin.
Our members have backed up their rhetoric with action: most transit systems
around the country accept the dollar coin. In that regard, a September 2002
GAO report on the "New Dollar Coin" includes an appendix showing
that nineteen of the top twenty transit systems in the country accept the
dollar coin.
Our transit system members do so for practical reasons. The
dollar coin is very cost effective in transit operations. Transit systems,
especially those in major metropolitan areas, are some of the largest processors
of one dollar bills in the country. On an annual basis they can collect and
process million of pieces of currency. One transit system has quantified the
cost of processing dollar bills. They determined that the cost to process
one thousand dollars worth of one dollar bills is approximately $10.11. The
cost to process the same amount in dollar coins is $1.22.
The difference is that handling paper currency is much more
labor intensive. Coin processing is more efficient due to the use of technology
and the availability of counting machines. In addition, the processing of
coins by fareboxes and vending machines is faster than bill processing. Since
the Federal Reserve requires that paper currency be "faced" when
stacked, meaning that all dollar bills must be stacked with the portrait of
George Washington facing the same direction, transit agencies
must stack and face all bills by hand. In addition, more agencies are procuring
fareboxes which can validate currency and coins. This validation may increase
boarding time on buses due to bill condition, bill rejections and bill jams,
which could require scheduling more buses and increased operating costs. The
expense of theft deterrent equipment and associated resources also result
in increased costs. If transit agencies were able to realize the costs savings
associated with the use of dollar coins, they would be able to use those resources
to keep fares stable and promote the increased use of public transportation.
BARRIERS TO USE OF DOLLAR COIN
Mr. Chairman, we are thus very supportive of efforts to increase
the use of the dollar coin. But there clearly are barriers to widespread usage
of the dollar coin, and the GAO report I cited earlier identifies a key one.
The report states as follows: "The most substantial barrier is the current
widespread use of the dollar bill in everyday transactions and public resistance
to begin using the dollar coin." The report goes on to say that: "until
individuals can see that … the government intends to replace the dollar bill
with the dollar coin, they will be unlikely to use the coin in everyday transactions."
Therefore Mr. Chairman, while we support this and other efforts to increase
the usage of the dollar coin, APTA would also support efforts to phase out
the use of one dollar bills as part of an effort to implement the exclusive
use of one dollar coins in this country.
Having said that, we are supportive of efforts such as the
Presidential $1 Dollar Coin Act of 2004 (H.R. 3916) which we trust would increase
the public’s acceptance of dollar coins in general and thus increase the use
of the dollar coins to pay for transit fares.
ADDITIONAL SAVINGS
In addition to the savings realized by public transit agencies
and other businesses that deal in small denominations, there would be significant
savings to the nation if the one dollar bill were replaced with the one dollar
coin. Both the Federal Reserve and the GAO have projected savings of $456
million annually, on average over 30 years, in addition to the savings for
public transportation systems, if the dollar bill were replaced with the dollar
coin.
CONCLUSION
Mr. Chairman, we appreciate and thank you for your efforts
to increase the use of one dollar coins and to promote the public’s acceptance
of dollar coins in every day use. Clearly the counting and handling of paper
currency is much greater than the cost of counting and handling coins. Just
as clearly, increased use of dollar coins in public transportation systems
would reduce operating costs at those systems and permit more of transit’s
limited resources to go to improving transit service.
We believe that this legislation, which is modeled on the
minting and introduction of the successful "50-State Quarter Program,"
has a good chance of increasing the use of dollar coins. We agree that minting
coins that identify Presidents, and their terms of service, would increase
awareness of our Presidential history and increase the popularity of the new
coins. We appreciate the thoughtfulness with which you have developed this
legislation and its objectives. We look forward to working with you and the
members of this Committee in advancing this legislation that could be very
cost-effective for the nation’s transit systems.
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