Corzine to campaign throughout state for monetization of New Jersey Turnpike

Governor Jon Corzine will tour the state speaking in all 21 counties over the next few weeks on behalf of his proposal to monetize the New Jersey Turnpike. The first of what are being called "Governor Corzine's Financial Restructuring and Debt Reduction Town Hall Meetings" is set for Jan 12 in Livingston in Essex Co, with others following at two or three days intervals in Hackensack Bergen Co, Randolph in Morris Co, and Middle Twp in Cape May.

Jan 8 in a State of the State speech to the legislature Corzine is expected to announce details of his monetization proposal. In general terms this is expected to provide for heavy new borrowing by the New Jersey Turnpike based on contracted toll increases similar to those in private sector toll concessions. The proceeds of the borrowing will be used to pay down state debt.

The announcement of the meetings is made on the Governor's website -

http://www.state.nj.us/townhallmeetings/index.html

People wanting to attend have to register, or RSVP.

The plan will follow what Corzine has described as eight Core Principles released June 28 last year which ruled out the initially proposed privatization or longterm lease/concession:

Governor Jon Corzine’s Core Principles on Asset Monetization

"In countless ways, New Jersey is the best state in America. But we need to invest in our future if we’re going to stay on top. As a result of decisions made across administrations and across party lines over the past 20 years, New Jersey has amassed over $30 billion in debt and staggering unfunded pension and healthcare liabilities.

"I have a vision for a brighter New Jersey, but today we cannot afford the investments to make that vision a reality. I fundamentally believe we need new resources and renewed political courage to make those investments.

"My administration has been developing a new vehicle to achieve that goal.

"Any asset monetization proposal put forth by my administration will adhere to the following core principles:

1. New Jersey’s roadways will not be sold; and they will not be leased to a for-profit or foreign operator.

2. Allowable uses of proceeds (reducing State debt and capital investments) will be identified upfront and subject to public and/or legislative approval with safeguards against diversions for other uses.

3. New Jersey citizens will retain ownership and the benefits from both initial proceeds and ongoing operations.

4. Safety, maintenance and operating standards will be provided at current or improved levels.

5. Sufficient funding to meet the long-term capital needs required to improve our roadways and reduce congestion will be provided.

6. Terms and conditions of employment for current employees and contractors will remain unchanged with prevailing wage and competitive contracting procedures retained.

7. Toll schedules will be open, predictable and available to the public.

8. There will be a substantial, open and public discussion in advance of any transaction. I will hold 21 town hall meetings in 21 counties.”

BACKGROUND: The New Jersey Turnpike Authority operates the New Jersey Turnpike and the Garden State Parkway which together make up one of the largest tollroad systems in the US. (Illinois Tollway is larger in transaction numbers but smaller in revenues)

Both the Turnpike and the Parkway span the state from the New York state line in the north to the Delaware River in the south. In their northern portions both carry mainly commuter traffic. The Turnpike, a heavy trucking route is mostly an interstate route in its southern half with links to Pennsylvania and to Maryland and the Washington DCmetro area via Delaware, while the southern portion of the Parkway is the spinal highway of the Jersey shore providing connections to the shore communities including Atlantic City.

Total revenue in 2006 was $850m comprising tolls of $737m, electronic tolls penalty revenues of $48m, concessions $32m, arts center profits $4m. Operating costs were $457m for EBIDTA of $280m. Debt service was $288m and there was no depreciation in the 2006 accounts, so the Turnpike Authority operates at a loss. Tolls are among the lowest in the country and the world, successive turnpike and parkway boards having allowed revenues to be eroded by inflation.

Turnpike Authority debt is put at $9b, but it is not clear there is any provision there for future pension or health liabilities.

Substantial toll increases are certain to be an integral part of any monetization plan.

Toll transactions in 2006 were 681m or 1.86m/day. Transactions numbers have declined because of conversion of the Parkway to one-way open road tolls at several of the major toll plazas.

The Turnpike is 238km (148 miles) long with 29 interchanges and operates a trip based or ticket based toll system. It ranges between 4 lanes in a 2/2 format and 14 lanes in a 3/4/4/3 format.

A substantial extension of the 3/3/3/3 lane format is under way in central Jersey.

The Parkway is 277km (172 miles) long and operates a point toll system with mainline barrrier plazas and some ramp plazas. It suffers toll leakage from untolled segments and one-way tolling. It ranges in width from just 2 lanes at the far southern end to 15 lanes width over the Driscoll Bridge. It is organized into single roadways (carriageways), dual roadways, triple and dual-dual or 4 roadways.

The Parkway is being dualized and upgraded with grade separations to expressway standard in its far southern end at Cape May and third laning and interchange modernization is underway further north on the Jersey Shore.

TOLLROADSnews 2008-01-01