Strapped for cash, the state of New Jersey may be looking to leasing off its most valuable assets, state toll roads, to fill in looming budget gaps and reduce the overhead costs highways such as the New Jersey Turnpike and the Garden State Parkway impose upon the state.
Both highways were constructed in the years following World War II to accommodate the vast shift of population from the cities to the suburbs south and west of urban Hudson County. The concept was taken from the late 19th and early 20th Century concept fee-for-use private roads that cris-crossed the muddy Meadowlands and other areas of the state. Rather than impose increased taxes for their construction and maintenance, legislators set up a fee that guarantee the repair and maintenance of these two critical highways.
In the late 1990s and during the first few years of this century, Governors Donald DiFrancesco and Jim McGreevey began to reduce the number of tolls on the Parkway and instituted a revised Easy Pass toll system to help deal with the congestion, with the expectation that tolls would eventually be reduced more or eliminated.
But the new proposal could have just the opposite effect, said lawmakers opposed to the plan.
The exchange for taking over the Turnpike and Parkway, private investors would get to collect the tolls and would receive equally lucrative tax benefits.
Following the example of other states, New Jersey State Senator Ray Lesniak authored legislation that would lease two of the state’s most traveled highways to private investors for 75 years.
In arguing for the plan, Lesniak said the lease agreement could generate for the state as much as $15 billion allowing the state to pay some of its $50 billion debt and to invest funds in schools.
While state officials claim the deal would not jeopardize safety or reduce services that are currently provided such in upkeep, snow removal and patrol by the state police, and that the Turnpike Authority would see be able to oversee the operations, Assemblyman Louis Manzo (D-31st Dist.) is not convinced and has become a vocal critic of the plan.
Tolls would rise, Manzo said, because the fees would not be regulated by the state, but would be tied to the consumer price index for cars and other indexes tied to commercial vehicle sales.
Lesniak’s proposal would protect toll road workers up to six years or for two collective bargaining cycles.
This sparked an immediate reaction from the New Jersey Turnpike Employees’ Union, who said such a deal would have “a profound and debilitating impact” on the workers and their families. “It was always well known that many of our members hailed from Hudson County,” said Frank Forat, assistant to the President of the Union. “Many additional former Hudson County residents living in other counties also work for the Turnpike Authority.”
Manzo said a third of the workers for the Turnpike live in Bayonne and Jersey City.
“This is a bad deal,” he said.
Assemblyman John Wisniewski, who is chairs the Transportation and Public Works Committee, said over the long run the state could end up losing money since the benefit of the lease would be a one-shot deal, while revenues from the tolls was relatively consistent.
In response to the Lesniak proposal, Manzo has submitted legislation that would prohibit the New Jersey Turnpike Authority from entering into any agreement with a private entity for the comprehensive or overall operation and management of highway projects.
Manzo said his legislation would not affect programs like EZ Pass or operations regarding the Garden State Arts Center.
“It appears that some of my colleagues are intent on selling the Turnpike. Clearly, this is an impractical solution in addressing the State’s fiscal woes,” Manzo said. “This bill will take the ‘for sale’ sign off of the Turnpike. With regard to these quick fix gimmicks, it’s time to stop applying band aids when we need major surgery. Selling or transferring State assets such as the lottery or land to the pension fund for management is a more practical solution to New Jersey’s fiscal plight. The profits or value of the assets can be substituted for the annual State payment owed to the fund. This would be a massive savings for the taxpayer. “Millions of dollars in profits that could be made by nontransparent handlers in the sale of such assets, in an already ethically challenged climate, could provide for a pay-for-play smorgasbord.”