This gimmick could really take its toll

PACKET EDITORIAL, Jan. 25

By: Packet Editorial
   Just when you thought New Jersey was pretty close to running out of gimmicks to plug billion-dollar holes in its perennially precarious state budgets, here comes another whopper.
   Remember when then-Gov. Jim Florio "sold" a 4.2-mile stretch of I-95 in Bergen County to the New Jersey Turnpike Authority for $400 million? We thought that was about as creative a deal as anyone could come up with for leveraging one of the state’s big transportation "assets" to balance the state budget.
   But that was a dozen years ago, back before New Jersey’s structural budget deficit grew from a nine-digit to a 10-digit number — and before the state Supreme Court ruled that the current, Fiscal Year 2005 budget would be the last that could be balanced with borrowed money.
   Now, faced with a projected $4 billion budget gap heading into FY 2006, acting Gov. Richard Codey is said to be contemplating a proposal that would render that 1992 deal — $400 million for 4.2 miles of interstate highway — a mere nickel-and-dime transaction. The acting governor has asked his treasurer to look into the feasibility of leasing the entire length of the Turnpike to a private company — and using the one-time cash infusion not only to balance the state budget but to fund long-term transportation projects as well.
   Would any private companies be interested in leasing the New Jersey Turnpike? You bet they would. Last year, a Spanish-Australian consortium called Cintra-Macquarie leased the 7.8-mile Chicago Skyway for $1.8 billion. That’s billion — with a b. And that has some New Jersey officials salivating. After all, if a 7.8-mile toll road in Chicago has a value of $1.8 billion, how much must a 148-mile toll road that connects Philadelphia and New York be worth? (On a straight mile-for-mile basis, the figure would come to a little more than $34 billion — or about $6 billion more than New Jersey’s entire state budget this year.)
   And just think — the Turnpike isn’t the only New Jersey roadway that’s in the financial fast lane. There’s also the 177½-mile Garden State Parkway, and the 44-mile Atlantic City Expressway, both run by the same state authority that oversees the Turnpike. If these, too, are leased to private companies — who would take over the operation and maintenance of the roads in exchange for keeping toll revenues — the one-shot cash infusion to the state could be gargantuan.
   The key phrase here, of course, is one-shot. Leasing the Turnpike and/or the Parkway and/or the Expressway would bail the state out of a deep budget hole, to be sure, but it wouldn’t repair the leak. New Jersey’s chronic problem is that the state spends more money each year than it collects in tax revenues, and keeps relying on one-shot gimmicks to make it through each succeeding year. This particular gimmick happens to carry a bigger price tag than most, so it could help the state through several years instead of just one — but it is still just treating the symptom, rather than the underlying fiscal affliction.
   Moreover, if the state does turn one or more of its toll roads over to private enterprise, motorists had better brace themselves for substantial toll increases. That’s what’s happening in Chicago. And when it happens here, we’ll have no one to turn to for relief; the lawmakers who can now use their political power (and budgetary authority) to keep a lid on tolls will have no influence over the entrepreneurs whose billions bought them control over these oh-so-lucrative roadways.
   Because the looming budget gap is so huge this year, acting Gov. Codey and the Legislature may believe they have no choice but to lease out a toll road or two. But before they do, they should consider all the consequences, both short-term and long-term, of such an action. And they should acknowledge, at least to themselves if not the public, that all they’ll be doing is putting off the inevitable day of responsible fiscal reckoning for another governor and another legislature.