Corzine says details on "leveraging" NJ turnpike to come Jan 8 - corporatization?
Posted Fri, 2007-11-16 09:28
New Jersey Governor Jon Corzine has said in speeches the past few days that he is determined to move debt off the state books and to "leverage" the financial potential of the state Turnpike and the Atlantic City Expressway, and that he'll announce details of his scheme Jan 8 in his State of the State speech. Corzine said the state's bond debt of $32b must be cut in half. The solution he said is "leveraging the untapped value in the state's tollroads."
But Corzine ruled out transferring Turnpike debt to investors via sale or a longterm concession lease. Speaking at the New Jersey League of Municipalities in Atlantic City yesterday the governor said: "There will be no sale of roads - period. And there
will be no lease to private bidders or foreign owners."
Corporatization - Lesniak II
This doesn't seem to rule out corporatization of the Turnpike Authority under which it would be set up as a publicly traded company able to sell some of its stock to the public but in which the state continued to have control by retaining the majority of its shares. Most French tollroads were set up this way for many years and the Italian Autostrade - but of course more recently governments in both those countries decided to dispose of their shares and they are now entirely investor-owned. Japan reconstituted its four US style public toll authorities into seven commercial corporations though the government retains control and ownership.
A close ally of Corzine in the state senate Raymond Lesniak actually introduced a bill S1777 into the New Jersey legislature March 2006 to provide for sale of up to 49% of the stock of a Turnpike corporation to investors. see http://www.tollroadsnews.com/node/1475
Lesniak says he pulled the bill at the Governor's behest because the Governor wanted to explore a sale/concession. Now that the Governor has rejected sale/concession maybe he's planning to revive Lesniak S1777 and corporatization?
Unless some investor equity capital is raised at the Turnpike, Corzine would not be reducing state debt one cent - he'd just be moving the debt from one set of state accounts to another (the Turnpike's).
Doing a PA44 or NTTA121?
For most of this year it has seemed Corzine is talking about doing a PA44, or an NTTA121. The PA44 law in Pennsylvania has the state Turnpike issuing billions of new debt on the security of tolls on I-80, a 25% increase in mainline tolls and guaranteed annual increases, plus pledge of motor license fees. NTTA, a regional but state constituted toll agency in Dallas is going into hock $3.3b on the basis of TxDOT-NTTA concession on tolling SH121. They could claim to be "leveraging the untapped value" in the state's roads to use the phrase of Gov Corzine.
Tax ruling sought?
The New Jersey Governor says the delay in announcing details is because he is still waiting on "crucial information" from the federal government.
The USDOT hasn't heard from Corzine. They have no say in how the Turnpike is disposed of because there's no federal money in it (unlike PA/I-80) and it's already a tollroad (again unlike PA/I-80) so there's no issue of any US Secretary of Transportation permits.
The NJ Governor appears to be waiting on some kind of ruling on US taxation. The rules on simple state toll authorities are quite clear. They don't pay any taxes.
He must have in mind some radical change in how the Turnpike (and Expressway) are constituted to require a difficult federal tax decision.
Would a New Jersey Turnpike Corporation, majority owned and fully controlled by the state, have to pay corporate income tax? And would its bonds be tax free?
That might be the issue. But Corzine won't say.
"It's time for we elected officials to stop being afraid and cautious and do something bold to right the ship," Corzine told the mayors and other local government officials in AC.
Indeed, but what is Corzine-bold? We are just left to speculate. As we have been for, what, two years. Good thing none of this is urgent.
TOLLROADSnews 2007-11-16
New Jersey Governor Jon Corzine has said in speeches the past few days that he is determined to move debt off the state books and to "leverage" the financial potential of the state Turnpike and the Atlantic City Expressway, and that he'll announce details of his scheme Jan 8 in his State of the State speech. Corzine said the state's bond debt of $32b must be cut in half. The solution he said is "leveraging the untapped value in the state's tollroads."But Corzine ruled out transferring Turnpike debt to investors via sale or a longterm concession lease. Speaking at the New Jersey League of Municipalities in Atlantic City yesterday the governor said: "There will be no sale of roads - period. And there
will be no lease to private bidders or foreign owners."Corporatization - Lesniak II
This doesn't seem to rule out corporatization of the Turnpike Authority under which it would be set up as a publicly traded company able to sell some of its stock to the public but in which the state continued to have control by retaining the majority of its shares. Most French tollroads were set up this way for many years and the Italian Autostrade - but of course more recently governments in both those countries decided to dispose of their shares and they are now entirely investor-owned. Japan reconstituted its four US style public toll authorities into seven commercial corporations though the government retains control and ownership.
A close ally of Corzine in the state senate Raymond Lesniak actually introduced a bill S1777 into the New Jersey legislature March 2006 to provide for sale of up to 49% of the stock of a Turnpike corporation to investors. see http://www.tollroadsnews.com/node/1475
Lesniak says he pulled the bill at the Governor's behest because the Governor wanted to explore a sale/concession. Now that the Governor has rejected sale/concession maybe he's planning to revive Lesniak S1777 and corporatization?
Unless some investor equity capital is raised at the Turnpike, Corzine would not be reducing state debt one cent - he'd just be moving the debt from one set of state accounts to another (the Turnpike's).
Doing a PA44 or NTTA121?
For most of this year it has seemed Corzine is talking about doing a PA44, or an NTTA121. The PA44 law in Pennsylvania has the state Turnpike issuing billions of new debt on the security of tolls on I-80, a 25% increase in mainline tolls and guaranteed annual increases, plus pledge of motor license fees. NTTA, a regional but state constituted toll agency in Dallas is going into hock $3.3b on the basis of TxDOT-NTTA concession on tolling SH121. They could claim to be "leveraging the untapped value" in the state's roads to use the phrase of Gov Corzine.
Tax ruling sought?
The New Jersey Governor says the delay in announcing details is because he is still waiting on "crucial information" from the federal government.
The USDOT hasn't heard from Corzine. They have no say in how the Turnpike is disposed of because there's no federal money in it (unlike PA/I-80) and it's already a tollroad (again unlike PA/I-80) so there's no issue of any US Secretary of Transportation permits.The NJ Governor appears to be waiting on some kind of ruling on US taxation. The rules on simple state toll authorities are quite clear. They don't pay any taxes.
He must have in mind some radical change in how the Turnpike (and Expressway) are constituted to require a difficult federal tax decision.
Would a New Jersey Turnpike Corporation, majority owned and fully controlled by the state, have to pay corporate income tax? And would its bonds be tax free?
That might be the issue. But Corzine won't say.
"It's time for we elected officials to stop being afraid and cautious and do something bold to right the ship," Corzine told the mayors and other local government officials in AC.
Indeed, but what is Corzine-bold? We are just left to speculate. As we have been for, what, two years. Good thing none of this is urgent.
TOLLROADSnews 2007-11-16