Does anyone else think this is bizarre?
May 28th 2007 06:01 pm
So the state is in debt and will have increasing problems paying the bills. So what do those financial geniuses in Trenton want to do? They want to borrow more money:
Corzine has been studying how the state can make more money off assets such as toll roads.
The Democratic governor recently said he probably won’t propose leasing state toll roads like the New Jersey Turnpike and Garden State Parkway to private firms as Indiana and Chicago have done and Pennsylvania is considering doing.
He said he will likely call for a new state agency. Sen. Raymond Lesniak said it would estimate how much money in tolls would be collected along the Turnpike and Parkway for the next 30 to 50 years.
It would then raise that amount through investors, Lesniak said, to obtain the money up front, with the idea that the investors would be paid off over a longer period of time with the toll revenue.
They can call it “asset monetization” and say they’re working with “investors”, but they’re using the Turnpike and Parkway as collateral to borrow more money.
Suppose you had trouble paying your mortgage. Would you take out a home equity loan and use the money to pay your mortgage? Only if you were brain dead. But that’s what the scheme involving the Turnpike and Parkway is like.
Does anyone else think this is bizarre? Or should we all just listen to Corzine because he has more money than the rest of us combined so we should trust what he’s doing? Perhaps someone could explain to me how this scheme makes sense.
Lester Wolff responded on 28 May 2007 at 7:11 pm #
How about a bi-partisan proposal to raise the gas tax one-half cent every month for the next two or three years. NJ drivers have raised no objections to paying 10 cents more this week than last week. Gas prices rise at will. In Jannuary we were paying $2.199 per gallon. Today we’re paying $2.969 (a 76 cent [or 35%] increase). How painful would a half-penny be? It needs to be framed as a bi-partisan solution towards fiscal responsibility.
John 76 responded on 28 May 2007 at 8:29 pm #
My first reaction was the same as yours, Bob. But maybe we better wait until the Governor has a chance to explain his plan.
Did you read the comment by Senator Sean Kean at the end of the article to the effect that drivers will oppose it? It occurs to me that the real problem is that Governor Corzine proposed to treat drivers the way the State treats transit riders.
Perhaps when confronted with financial reality New Jersey drivers will be willing to at least seriously consider a reasonal motor fuel tax.
E-44 responded on 29 May 2007 at 8:31 am #
Junk bonds are back, baby! Paging Michael Milken!
Joe Versaggi responded on 29 May 2007 at 9:23 am #
To the extent that the state’s Bond ratings are maintained 1 or 2 steps above junk, the gas tax will not rise. Jersey being one of the highest debt-per-capita states in the union is of no consequence. Bigger threat is FY2009 when the Federal Highway Trust Fund may bankrupt. The transit penny will be the first to feel it.
While the rest of the country has record high gasoline prices, we are still about a quarter dollar below post-Katrina levels for some reason. That draws motorists to fill up here and likely makes New Jersey law-makers proud. They probably think it attracts tourism. But having the highest monthly commutation fares in the country is of no interest to them.
laxpop responded on 29 May 2007 at 1:37 pm #
Here’s the full Associated Press article:
http://www.zwire.com/site/news.cfm?newsid=18396621&BRD=1697&PAG=461&dept_id=44551&rfi=6
Bob Scheurle responded on 31 May 2007 at 7:13 am #
John, it depends on what problem needs to be solved. If the problem is that you don’t have the cash needed for a major project or purchase, then borrowing the money is reasonable. But when you can’t pay your current debts, it’s crazy to borrow more money.
The Turnpike/Parkway plan will obviously require higher tolls. After all, the people loaning the money to the State will want a decent return. It seems to me we’d be better off raising the tolls and keeping all the money for ourselves, instead of giving it away to the investors.
I think this plan is really intended to give a bunch of money to Corzine’s banking friends than to do what’s best for the citizens of New Jersey.