NJ Business Matters: The Blog of the CIANJ

Road To Ruin

Add the Wall Street Journal to the list of those opposed to Governor Corzine's toll road proposal. The Journal's Saturday editorial repeated the themes that have become prevalent here at NJ Business Matters,

Essentially, the state would be issuing new debt to pay down old debt. There would be an obligation to pay off bondholders and pay a dividend to the state. Mr. Corzine is betting that this bond authority can be made independent enough from Trenton's politicians to guarantee a regular revenue stream that couldn't be spent on the usual political payoffs. But the pols have a way of getting their clutches on such pools of surplus cash (think Social Security)...

As the Governor fine tunes his budget and state government braces for cuts that taxpayers and business owners have been demanding, the Journal levels with us and acknowledges that controlling New Jersey's spending is the only way to work ourselves out of this debt. In the last 20 years state revenues have grown at a rate of about 3% annually. Spending has grown by 7%, and NJ has made up the difference with some tax increases, but mainly with borrowing. Hence, state debt has increased by nearly $30 billion since 1990.

Excessive spending created the situation and reduced spending is the clearest way out of it. As the editorial closes,

Mr. Corzine's toll-hike plan is well meaning but unlikely to work and is already encountering bipartisan opposition. If it fails, he ought to consider the only real solution, which would be a state constitutional tax and spend limitation. He'd be a hero to taxpayers, and it might even save the state from bankruptcy.

That would be a step toward truly saving our state.

800% Toll Increase Doesn't Have 21 Votes

Only a few days before his budget address, Governor Corzine and a key legislator are both acknowledging that they do not have the votes necessary to enact the Governor's toll road proposal.

"I'm not conceding that it's dead. On the other hand, I'm a realist. I don't have 21 and 41 votes for this," Corzine said, referring to the minimum votes he needs to push his proposal through the state Senate and Assembly.

Sen. Raymond Lesniak (D-Union) flatly said Corzine's complex plan to use huge toll increases to sharply reduce state debt and pay for road projects is on the scrap heap.

"It's dead as we know it," Lesniak said. "That doesn't mean it couldn't come back in a revised, trimmed-down version."

That's welcome news to the state's businesses and taxpayers. Perhaps the Administration is correct and our fiscal problems cannot be solved by cuts alone. However, before the nation's most overburdened taxpayers can be asked to pay more, the government must do all it can to reduce the size of government (not just the rate of growth). We are hopeful that the Governor's budget will reflect that objective.

Two's Company; 73 Percent Is A Crowd

In case you hadn't heard - CIANJ recently announced its opposition to Governor Corzine's proposed fiscal restructuring plan. As you already know, the plan would involve turning operational control of NJ's toll roads over to a Public Benefit Corporation, which would send up to $38 billion to the state through bonds. The PBC's bonds would be repaid through 800% toll increases phased in through 2022 and then automatic toll increases to account for inflation through 2085.

A Quinnipiac poll released this morning shows we are not the only ones opposed. In fact, 73% of New Jersey residents polled expressed opposition.

Among the demographics in opposition are:

Democrats, Republicans, Independents, Men, Women, Those that live in urban areas, suburbs, near Philadelphia and at the Jersey Shore

The full poll is available by clicking here.

On To The Budget Cuts

The Governor's budget address is one week from today, and the word splashed across Jersey's leading papers is "cuts". The Administration and members of the legislature are quickly turning their (and attempting to shift our) attention away from the 800% toll increase plan and toward the alternative budget cuts.

The Governor is promising the cuts will be painful, and could include reduced hours at MVC, closing or reducing services at state parks, cuts to higher education, charity care and aid to towns. Remember that the size of NJ's government has doubled in 10 years and that since 2002 government has added 55,000 taxpayer-supported employees. Not all of those work in our state parks.

Meanwhile, we applaud Senate Budget Committee Chairwoman Buono, who believes the legislature should revisit some of the ideas proposed and later rejected during the special session on property tax reform. 

One of the ideas floated about was to rescind a pension boost passed in the hours before the 2001 legislature broke to campaign for re-election. The old pension formula divided the number of years worked (n) by 60 times the average of the three highest years of pay. In 2001 the legislature changed the number 60 to the number 55, which yielded a 9% pension boost to all state workers and retirees.

Rescinding that change, and eliminating pension benefits to part-time workers are two viable alternatives that should be considered by the legislature. Public employee unions maintain that such changes belong at the bargaining table. Remember that the increase came via legislation, why shouldn't the re-adjustment?

The good news for New Jersey's overburdened taxpayers is that reducing the size of government - not the rate of growth, but the size - is something Trenton is seriously discussing for the first time in recent memory. It is long overdue, but the public dialogue is now on the correct topic. Achieving a policy solution that both protects taxpayers and stabilizes the budget is the next, still harder challenge.

Taking Its Toll On NJ's Largest Employer

The warehouse and distribution industry is New Jersey's largest single employer, and today's New York Times demonstrates how the proposed 800% toll increases will undermine it and drive prices higher for consumers across the state.

New Jersey already ranks among the costliest places to live and do business. It should be self-evident that if you are a company that exists to ship products, the toll increases hit you disproportionately hard.

Simply put, the turnpike would go from being one of New Jersey’s great bargains to one of its biggest burdens, and in turn could spell trouble for companies that in the last few decades opened the vast warehouses lining the highway near exits 7A and 8A. Companies, including Johnson & Johnson and Mercedes-Benz, have leased millions of square feet of space there because of its easy access to the ports and to their customers.

Joseph S. Taylor, chief executive of the Matrix Development Group — which builds and leases warehouses and is partly responsible for the quadrupling of commercial space near Exit 8A — has had a front-row seat to the migration.

As it is now, Mr. Taylor said that about a quarter of the companies that consider leasing space from Matrix end up in Pennsylvania, up from 5 percent a decade ago.

Advocates of the Governor's plan point out that New Jersey has lower toll rates than the national average. That's not true for trucks, for whom the Turnpike toll of 22 cents per mile is already the national average. For the moment, we'll do what the plan advocates do and put that fact aside.

Currently, a car pays 5.5 cents for each mile they drive on the Turnpike, compared to a national toll road average of 9 cents. However, by 2022 the NJ number would jump all the way to 44 cents per mile (and $1.76 for trucks), far exceeding the national average. The national average will likely increase with inflation, but does anyone think the national average will go up 500% by 2022?

The Times points out that it is not the toll increases alone that are driving business away from the state, but an overall cost of doing business that is becoming prohibitive. Shouldn't government be doing all it can to reduce that burden, rather than increase it?

Here Some Debt, There Some Debt, Everywhere...

On Sunday, CIANJ President John Galandak appeared on My 9's (WWOR) New Jersey Now public affairs program to discuss the Governor's toll road proposal. He rightfully stressed that the Governor's plan does not reduce state debt. Rather, it moves $16 billion in debt away from the General Fund and puts the burden on the toll roads/PBC. If you live in the state, you still pay the debt. Many of the benefits derived from out-of-staters using the roads are lost to interest payments, reserves, fees etc.

So now that $16 billion in "state debt" would be lifted from the General Fund, where might that money go? Naturally, $13 billion would come in the form of new debt.

The transportation program Corzine has touted as a key benefit of his proposal would require $11 billion of new state borrowing by 2021, according to Treasury Department spokesman Tom Vincz. That amount includes $4 billion of debt already approved for transportation projects and scheduled to come on the books regardless of Corzine's plan.

On top of that, Corzine is planning to borrow $2.5 billion to pay for court-mandated school construction in city schools. That means more than $13 billion in debt tacked back onto the ledger within 14 years of the sharp debt reduction Corzine has proposed.

Peter Humphreys, a securization expert who is opposed to the program, states the obvious,

"It doesn't really work if you pay down $15 billion (of overall debt) and then borrow $12 billion of it back. You're not paying half the debt."

Thank you, Peter. Paying old debt with new debt and then going to the taxpayers asking for an 800% toll increase is the wrong direction for a state government that has expanded vastly in the past ten years. In that time, the size of government has doubled. It is time to reduce the size of government - not just the rate of expansion, but the size. Call your legislators and urge them to express their opposition to the plan.

The Difference Between 3% and 3.75%

In case you noticed a lack of updates, your friendly blogger was away on vacation for part of last week and Monday, and NJ Business Matters is a one-man band. Well rested, sun burnt and 10 pounds heavier, we returned to this little doozy in today's Courier-Post.

The 800% toll increase you have heard about in Governor Corzine's fiscal restructuring plan makes one critical assumption - that inflation will rise at a CPI rate of 3% per year. This introduces one of the fundamental problems of a 75-year monetization plan: how do you forecast capital markets, inflation and transportation usage for the next 75 years?

While the introduced bill caps inflation adjustments at 5% per year, the difference could significantly impact the average toll road user. As the Post points out,

(O)ver the last 75 years, the inflation rate as measured by the Consumer Price Index has averaged 3.74 percent, and the maximum inflation allowed under the bill is 5 percent.

While that may seem like a small matter, the difference could add up.

A commuter who pays $1.21 to travel on the Turnpike twice a day for 250 days this year would pay $600 more in 2022 under the historical inflation average than under Corzine's estimate.

And with constant 5 percent inflation, the same commuter's annual tolls would be almost $1,800 more than Corzine's estimate in 2022.

By the end of the 75-year contract, a single one-way $1.21 toll on the Turnpike would cost almost $104 using the historical inflation rate, $44 more than under Corzine's 3 percent assumption.

Over a year of commuting, that would be a difference of $22,125.

All this for what proponents acknowledge could be accomplished through other means, including a 15% budget cut. 

Toll Road Plan Costs You Before It Really Costs You

A hat tip to the good people at In The Lobby for all the work they've done in exposing some of the consequences should the toll road boondoggle become public policy. Today they note that the program will cost New Jerseyans an extra $4 billion because toll increases will not begin until 2010.

Aside from being phased in over time, the toll increases do not go into effect immediately. The Governor contends that is to allow residents and businesses time to adjust to the massive increases. Coincidentally, it is also the year after the next election. Just sayin.

That actually makes the deal more costly. NJ will get its money and spend it almost immediately after the concession agreement is signed, but will not begin making payments until later the interest begins to build. The net cost to you right off the bat: $4 billion. If we can find $4 billion to avoid making payments on the largest financing deal in American history, why can't we find it to take a bite out of the debt?

Click here to see the entire entry.

Video Killed the Radio Star

This Sunday, CIANJ President John Galandak will appear on My 9's New Jersey Now public affairs show. The boss will discuss the Governor's asset monetization scheme and the impact it will have on New Jersey's businesses and taxpayers.

The show airs at 12:00 p.m. on Sunday. If possible, we'll embed the video here next week.

Spending Freeze Hits Resistance

Attached to Governor Corzine's proposal to bond 75 years worth of toll revenues to pay down debt and fund infrastructure is a promise to freeze spending during the current budget cycle. In our press statement opposing the monetization of the toll roads, we also noted that CIANJ supports the spending freeze.

Which is why we were disappointed to read Senate President Codey's statements that a spending freeze may not be possible - or even wise - while asking taxpayers to send more of their money to Trenton. Today's Asbury Park Press notes,

"You cannot plead poverty, raise $40 billion, and then say you've got to cut the budget," Codey said.

"Are you going to cut aid to colleges and raise tuitions?" Codey said. "Are you going to cut aid to hospitals and see more hospitals close and more people laid off from work? Are you going to cut aid to towns and see more in property taxes because the towns didn't get as much as they though they'd get? I think that's a very hard to sell as well. . . . There are no good choices here."

It's always the children and the hospitals.

The reality is New Jersey's budget has doubled in ten years. Its population has not doubled, nor has its people's income. Meanwhile, we are in an economic cycle of slow growth, an expected population decline, and some are forecasting higher unemployment in the immediate future.

Given that, isn't it time we lessened the burden on taxpayers to allow them to keep more of the money they worked for, rather than increasing tolls 800% or making Trenton's expansion permanent?

CIANJ Opposes Governor Corzine’s Fiscal Restructuring Plan

After analyzing and discussing Governor Corzine's fiscal restructuring plan, CIANJ today announced it opposed ceding control of the toll roads to a PBC, issuing further debt and increasing tolls eight-fold over the next fifteen years. New Jersey's budget has increased substantially in the past ten years, and we are in an economic cycle of slow growth. To ensure that spending continues by bonding 75 years worth of toll revenues, and to place irreversible toll increases over that same time, would be devastating to the state's taxpayers. CIANJ's statement is available below.

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CIANJ Opposes Governor Corzine’s Fiscal Restructuring Plan

Business group raises concerns about additional borrowing, increased tolls and the inability of Trenton to control spending

The Commerce and Industry Association of New Jersey (CIANJ) today announced its opposition to Governor Corzine’s fiscal restructuring plan. The group pledged it will work to protect business and taxpayer interests from the proposal to accelerate borrowing and increase tolls 800% in the next fifteen years.

CIANJ based its opposition on the impact the toll increases will have on the cost of doing business in New Jersey, the continued borrowing of state government, the loss of state control of a critical function of government, and the availability of other options – such as spending cuts – that would allow the legislature to correct the problems it created.

“The Governor’s plan to repay old debt by issuing new debt and then increase tolls to fund the expansion would be devastating to the state’s taxpayers,” said CIANJ President John Galandak. “New Jersey’s budget has doubled in the past ten years, and it is time for Trenton to make serious budget cuts rather than develop a fiscal scheme to ensure spending continues.”

The Association also announced its support for other aspects of the Governor’s proposal, such as a spending freeze and a Constitutional Amendment to end the budget maneuvers that have allowed for unchecked borrowing in the past. However, ceding control of New Jersey’s toll roads should not be a prerequisite for these reforms. In fact, reducing the burden on NJ’s taxpayers would help the state grow itself out of the most recent budget crisis.

“Living and doing business in New Jersey is already one of the most expensive propositions in the country. We recognize the budget faces serious strains, but those strains have been caused by spending and not inadequate revenue. Before New Jersey’s corporate and individual taxpayers can be asked to further fund the system, Trenton must reduce the amount of taxpayer money it spends.” Galandak concluded.

Gov. Seeks To Borrow Another $2.5 Billion For School Construction

Quick, you're a homeowner and you are under the burden of such crushing credit card debt that you plan to sell the family car, what do you do? Most of us would start by cutting up their credit cards. If you're the State of New Jersey...

In a last-minute bid to head off Supreme Court action, the Corzine administration announced yesterday it would ask lawmakers for at least another $2.5 billion to restart the troubled school-construction program in the state's poorest districts.

The plan to borrow another massive infusion of cash follows controversy about how the initial $6 billion was spent and comes just weeks after Corzine lectured lawmakers in his State of the State address on New Jersey's burgeoning debt.

All two of you regular blog readers know that on January 8 the Governor said our state was in such poor fiscal shape that we must exchange toll revenue for the next 75 years for upfront cash. Then, to be sure that investors who give us that cash are paid back, we must increase tolls 800% on New Jerseyans.

Remember that the first $6 billion spent by the School Construction Corporation (a government entity)failed to build half of the schools it was assigned to and that they spent an average of 45% more on school construction than the going rate. Now taxpayers are supposed to shrug this off and give a new government entity $2.5 billion because,

"We knew this was looming, and, frankly, if the governor didn't do something, the court would," Senate President Richard Codey said.

Checks. Balances. Scapegoats. 

The Gov. Comes to Bergen County

As many of you know, the Governor is in the midst of touring each county to discuss his asset monetization program. The Record has placed video of the Bergen County stop on a continuious loop.

To hear the Governor's case as to why state roads should be turned over to an independent PBC, and why a 22.9 mile drive on the Turnpike will eventually cost $12.50 (each way), see the video below.

Question and Answer

During his State of the State Address at which the governor unveiled his asset monetization debt reduction plan, he challenged opponents to propose better alternatives. Yesterday, Star-Ledger columnist Paul Mulshine tried to do just that. Mulshine sketches out a program that reduces old debt without acquiring new debt and jettisons the business as usual model that has taken hold in Trenton. Click here to read his entire column, and here's a little teaser,

[T]he so-called "structural deficit" in the state budget. And that brings up a question: Why am I even discussing this in a column about toll roads? It's those pigs again. If they could only keep their snouts out of the Trenton trough, there would be no deficit. But the pols have awarded themselves and their employees retirement packages far more generous than in private industry. The rising cost of these benefits creates a recurring deficit of $2.5 billion to $3 billion a year.

You know, benefits such as free health insurance for life and defined benefits packages that the private sector has found to be unsustainable. The state has found them to be unsustainable as well, but they just haven't done anything about it because taxpayers have been there to foot the bill.

Which is why so many New Jerseyans have concerns over the monetization plan. Under Governor McGreevey a huge settlement received by the state via tobacco settlements was squandered in two years when it was originally slated as 25 year payout. Under Governor Whitman, the state borrowed money without voter approval in clear violation of at least the spirit of the state's constitution.

If those mistakes have been made in the past, why should voters trust future governors and legislatures to not make them in the future? Only this time we'd have to dig ourselves out with much less revenue as the tolls would have been bonded for twenty years. Trenton is out of "trust me's"

Watch Out for Flying Pigs

Jersey papers are abuzz this morning after more details of the Governor Corzine's asset monetization plan were unveiled during yesterday's State of the State Address. Here's the abridged version of what has been unveiled so far:

1. The state would form a "public benefit corporation" (PBC), which would have the bonding ability of a private sector company but the tax exempt status of a non-profit of government entity.
2. That PBC would take control of the Turnpike, Parkway and Atlantic City Expressway plus make Route 440 a toll road. The PBC would then borrow up to $40 billion, and use that money to pay down the state debt and fund road improvements.
3. The PBC's new $40 billion debt would be paid through toll increases, whereby tolls would increase 50% plus the rate of inflation every four years starting in 2010.

We know you've heard this before, but attached to this would be tax freezes and budget cuts to help ensure the spending spree which created the old debt wouldn't thwart efforts to pay down the new debt.

Here's the instant-analysis from your trusty blogger.

• There are benefits to financing road improvements under such a scheme. For example, the price of asphalt is increasing rapidly. Paying for it at today's prices rather than tomorrow's could save the taxpayers money.
• We are heartened to see promises of budget cuts and tax freezes, but we've seen this movie before.
• The toll increases are steep, and barriers to the free flow of people and goods throughout the state is of great concern.
• The plan uses new debt to pay down old debt.
• The government spent its way into a massive financial hole. Now they're asking taxpayers (many of whom resisted the initial funding) to bail them out.

There are obviously numerous questions which need to be answered - starting with who would appoint the governing board of the PBC.

Both you regular blog readers know that CIANJ's position on asset monetization for more than a year has been that such a plan does not inherently fly in the face of free enterprise principles and could benefit the taxpayers. Unfortunately, what we got yesterday was less than what we hoped for.

The Governor plans to visit all 21 counties and speak to citizens promoting his agenda.   

Moving From Tax and Spend Policies

As this legislative session winds to a close, policymakers increase their focus on the 2008-'09 budget, which is facing a structural deficit of about $3 billion - the nation's third highest burden.

Tom Hester does a nice job of breaking down the Governor's avenues for addressing that deficit. Governor Corzine promises spending cuts are in order and will neither rule out nor promise a tax increase. And of course, there is the issue of asset monetization.

He hasn't said how much tolls may increase, though at least a 45 percent increase is necessary to widen the Turnpike and fix bridges on it and the Parkway.

Corzine wants to use money from the deal to pay at least half of the $32 billion in state debt and provide money for transportation needs.

The notion of 'selling' state assets in return for immediate funds is not fundamentally opposed to taxpayer interests, especially if it results in paying down the debt in today's dollars rather than tomorrow's. However, attached to it must be a guarantee that monies received will actually be spent for that purpose and some sort of mechanism must be developed to ensure toll rates are predictable and do not become overbearing.

Governor Corzine is scheduled to introduce his formal plan January 8th. 

The Truth Is Out There

Nearly 10 months ago Governor Corzine first floated the idea of "asset monetization" - leasing the state's toll roads and other assets (such as the lottery) for immediate cash to help pay down the state's $32 billion debt. Today in Atlantic City, the Governor will revive the issue and insist it will be used to pay down half of NJ's $3,317 per capita debt. If such a plan were enacted, it would immediately free $2.8 billion in next year's budget which is presently spent on debt service (aka interest payments). Regular blog readers already know that the state expects a $3 billion budget shorfall this year.

CIANJ, as far back as budget testimony offered in April, has urged legislators to remain open to the concept. We reminded the legislature that government shedding unnessecary assets does not necessarily fly in the face of free enterprise principles. While specifics of the plan are of utmost importance, using monetization as a tool to relieve debt should not be immediately dismissed.

Today's Star-Ledger reports the Governor will not lay out many specifics this afternoon in Atlantic City, but rather use the opportunity to remind legislators that they will be forced to make difficult decisions when addressing the budget, and not to shy away from those that don't poll well.

State Borrows Another $1.25 Billion

From NJ.com:

Even as Gov. Jon Corzine works on a secret plan to pay down New Jersey's long-term debt, the bill continued to grow this morning, as a state transportation panel approved borrowing up to $1.25 billion to pay for highway and mass transit projects for another year.

The new loan, to replenish the state's Transportation Trust Fund, is the second of five annual installments of debt Corzine and lawmakers authorized when they restructured the trust fund last year.

Issuing Debt to Pay for Relief Which Was Funded By A Tax Increase

New Jersey is considering taking out a short-term loan to cover $2 billion in costs as the state awaits expected "revenues" (aka taxpayer money) to come into Trenton. Today's Record reports the loan coincides with the $2.5 billion property tax rebate plan. Senator Lance aptly notes the program is not sustainable following this year,

The fact that the state is borrowing money upfront to cover the costs of the property tax rebates is further evidence that the program is not sustainable, said Senate Minority Leader Leonard Lance.

"I think it's an indication of a much more serious matter next year, when we will not be able to pay for the program because we don't have enough revenue," said Lance, a Hunterdon County Republican.

This year's rebates will be paid for with revenues from last year's 1-cent sales tax hike.

However, a new source of funding has yet to be determined for next year, if the rebates are to be repeated.

Next year the state expects to start off the budget season with a $2.5 billion structural deficit.

We've added a lot of readers since the days of the special session on property tax reform, so here are some of our thoughts on the program:

• Businesses pay the nation's highest property taxes twice - once by virtue of paying about one-third of the state's overall property tax package and then again through higher wages needed to attract and retain talent seeking a high quality of life. Despite paying one-third of property taxes collected, it is seldom noted businesses are ineligible for the program.
• Any degree of property tax relief is appreciated, but short-term relief is no substitute for the long-term reform measures needed.

Of course, all this heightens the need for a new school funding formula and to reduce spending. Before plans such as asset monetization can be considered, spending patterns must be altered. If you're going to sell off the family car to pay off your credit card, you'd better cut up the card. That has yet to happen.

The Road Less Traveled

The state's debt is the topic du` jour and while our first two posts focused on how government managed to amass such a burden (here's a hint: they were too generous with taxpayer money), the Star-Ledger depicts part of a potential solution - the privatization of toll roads. The paper offers a profile of New Jersey's only privately operated toll road and the benefit it has provided Atlantic County the past 75 years.

At a time when Gov. Jon Corzine is figuring out ways to cash in on state assets such as the New Jersey Turnpike, Roger Hansen, the route's owner, believes the governor should let private firms run New Jersey's toll roads.

"I personally think private industry can do a better job than government," said Hansen, a longtime Atlantic County developer. "We have a tremendous amount of patronage in all the toll roads in New Jersey. I know you could run it much more efficiently if you run it as a for-profit entity, and I think it could be just as safe."

The toll road is a throwback to an era when entrepreneurs, not governments, routinely ran roads, bridges and railroads.

Hansen said early in Atlantic City's history, developers eager to populate the shore ushered tourists to beachfront guest houses on private railroads. Built by Norwegian immigrant Ole Hansen, Roger's grandfather, the Margate bridge opened in 1932 and has been privately run since. The Hansens and another local family, the Capaldis, bought the route in 1964.

The Department of Transportation estimates the bridge handles more than 11,000 cars daily and even provides discounts for elderly and low-income drivers. It is regularly maintained and never suffered a major mechanical failure - while still turning a profit and charging $1 per trip. The private sector providing a quality service at low cost - who'd have guessed it.

Click here for the Ledger's full story. 

$180,400,000.00 - And That's Before Noon

The Indiana Department of Transportation has launched a web page demonstrating how much the state has earned in interest following the privatization of the Indiana Toll Road last year.

The monetization plan (still under wraps) conceived by Governor Corzine is headed down a different track. For example, his core principles would preclude any foreign held or for-profit entity from controlling the road. It is also unlikely the state could invest as much quickly given its fiscal constraints. Still, Indiana took its money and placed it immediately in interest bearing accounts, and in the time it took to write this piece, the state earned $1,500. With figures such as that, monetization might be a plan  worth exploration.

An Idea Whose Time Has Not Yet Come

The Star-Ledger is reporting that political considerations will put any plans to sell or lease rights to state assets on hold until after the November elections.

Gov. Jon Corzine's grand plan to solve the state's lingering financial crisis by selling the Turnpike and other toll roads to a public corporation has been put on hold until after the November election.

Corzine is concerned that introducing a controversial and complicated "asset monetization" plan in the weeks before a legislative election might foul the political waters for Democratic candidates and jeopardize passage of the plan by the Legislature, administration officials said.

Both you regular blog readers already know the CIANJ position on asset monetization: It is an avenue that is worth examining as it can benefit the state's taxpayers, including the over-taxed business community. However, if an individual were to sell an asset to help pay off a credit card, they'd better cut up the card. New Jersey's situation is different than Illinois and Virginia's were when they first signed public-private partnership legislation. Before details of a monetization plan can be discussed, the state must ensure its spending patterns are significantly altered.

The Feds on Monetization

Today's Star-Ledger features more coverage on the possible "monetization" of the Turnpike as a method to alleviate taxpayers of the overwhelming debt our state faces. House Transportation and Infrastructure Committee Chairman Jim Oberstar (D-MN) has warned all 50 state governors against using certain privatization practices that could jeopardize the public good. Doing so could result in a forfeiture of federal funds. The Governor insists that his yet-to-be-announced plan does not include anything Chairman Oberstar warned against.

It's worth restating the CIANJ position on the sale/lease of state assets: It is an avenue that is worth examining as it can benefit the state's taxpayers, including the over-taxed business community. However, if an individual were to sell an asset to help pay off a credit card, they'd better cut up the card. New Jersey's situation is different than Illinois and Virginia's were when they first signed public-private partnership legislation. Before details of a monetization plan can be discussed, the state must ensure its spending patterns are significantly altered.