11/16/2005Red Ink Mounts for Red Light Camera Vendors
Accuracy problems bring financial trouble to red light and speed camera vendors in the US and Australia.
Red light camera vendor Nestor Inc. has found itself running red ink, according to a quarterly report filed Monday with the Security and Exchange Commission. The company reports it owes creditors $59.1 million.
"We expect to incur continuing losses for the foreseeable future due to significant marketing, product delivery, engineering and general and administrative expenses and those losses could be substantial," the report states. "We will need to generate significantly higher revenue, or reduce costs, to achieve profitability."
Nestor took a serious hit in July when the Virginia legislature determined red light cameras were causing an increase in injury accidents and banned the devices. As a result, Nestor lost lucrative contracts with the cities of Falls Church and Vienna. Days later, four board members stepped down citing "fundamental disagreements" with company management. On August 31, Nestor purchased the assets of the bankrupt Australian camera vendor Transol.
Similar problems are haunting Tenix, another Australian camera vendor. Thousands of bogus tickets from Tenix-operated speed camera have forced Tim Holding, Police Minister for Victoria, to suggest that he may cancel the state's contract with the company. On October 27, forty-one motorists were ticketed for driving 70km/h in an 80km/h zone on Sharps Road at Tullamarine. On July 21, more than 119 were ticketed for driving under the 90km/h speed limit on the Hume Highway. In Tasmania, 3000 individuals were let off the hook because of problems with cameras in Hobart.
Despite financial problems with the vendors, the skyrocketing number of speed camera citations and tax hikes on motorists have created a A$2.1 billion surplus for the Victorian government. The Auditor-General reports the state took in an extra $101 million in motor vehicle taxes over the previous fiscal year and will collect an extra $139 million from the new parking lot tax. An automatic inflation adjustment for the price of traffic citations has also created a steady increase in revenue.