No laughing matter

No laughing matter

The New Jersey Turnpike has been the butt of countless jokes. Bordered for much of its length by refineries, warehouses and swamps, the busy expressway offers little in the way of scenic vistas, except to Gov. Jon Corzine.

When Corzine looks at the turnpike, he sees money - big money. He's proposing to create a nonprofit corporation to issue $38 million in bonds that would provide the state with a needed cash infusion and be repaid through sharply increased tolls on the turnpike and other highways during the next 75 years.

Several other states are discussing or trying monetization of toll roads, but none on the scale of what's proposed in New Jersey. The Garden State plan could be a bellwether for toll-road monetization nationally.

Why the sudden interest in highway monetization? Several reasons. First, as Willie Sutton said in a different context, that's where the money is. Toll roads produce a steady stream of revenue to back revenue bonds.

Second, government budgets are tapped out. In New Jersey, years of fiscal mismanagement under Corzine's predecessors, Republican Christine Whitman and Democrat James McGreevey, have caused the state deficit to double in 10 years, despite the nation's highest property taxes. Corzine would use toll-road monetization to repair and rebuild transportation infrastructure and to halve the state's $32 billion debt.

Third, there's a huge backlog of infrastructure needs that governments, because of Reason No. 2 or a mere lack of political will, have not met. This failure to provide for a basic public need - an efficient transportation network - has left an opening that private-sector investors are eager to fill. It's the reverse of what happened in the 1930s, when the government stepped in with the Tennessee Valley Authority and public co-ops to provide electricity to rural areas that investor-owned utilities had shunned.

Corzine, a former co-chairman of Goldman Sachs, plans to campaign hard for his monetization plan. He'll face legitimate questions: Does the deal make financial sense? (If the state wants to use its highways as a cash cow, couldn't it just raise tolls on its own?) Will the plan really provide more infrastructure funding? (Or will it merely replace existing spending that will be diverted to other uses?) Will steep toll increases push traffic onto already crowded local roads? (And will bond covenants' no-compete clauses prevent expansion of those alternative routes?)

Then there's the matter of the proposed toll increases. Truckers already pay $17.40 for a round trip each time they haul a container to and from Port Newark and the import distribution centers clustered around Turnpike Exit 8-A. Starting in 2010, Corzine's plan would allow tolls to double every four years, plus an allowance for inflation. Pretty soon, that becomes serious money.