Dear Editor: Well, after spending a year developing his so called “workable plan” Governor Jon S. Corzine has decided (after spending approximately $8,000,000. in studies) that what the taxpayers of the state need is another state agency. The new agency the Public Benefit Corporation (PBC) would be charged with paying off the existing debt and issuing new bonds that would be paid back by higher New Jersey Turnpike, Atlantic City Expressway and Garden State Parkway tolls.
The Governor hopes to raise $40 billion with his “fiscal restructuring” plan (formerly his Asset Monetization Plan). He has said he will accept less but one thing is for sure — the motorist will pay more for many years to come.
Once the PBC is created he will then put the whole state for sale by selling naming rights, development rights on state properties and “air rights” to allow building above existing structures. This is truly giving away the store; without any plan to reduce overall spending.
This new debt which will be primarily used for unrelated projects (not the original intent of turnpike, expressway or parkway bonding) is poor public policy. What the Governor is proposing is not good for New Jersey; Senator Leonard Lance has said “What he is doing is borrowing to pay down borrowing and then continuing to borrow.” Not a good idea. The service on the debt he will incur will be over $1 billion annually for at least 50 years.
The Governor said “the state needs dramatic changes in the ways it raises and spends money.” Absolutely correct, the problem is he continues to raise money and fails to dramatically curtail spending. A plan destined for disaster.
In the meantime his Wall Street friends will stand to reap a bonanza with the sale of the new PBC bonds and the residents of New Jersey will be saddled with new and enormous debt that is backed by the State of New Jersey.
It appears that the Governor’s plan will be the largest public bond issue ever. It is interesting to note that recently the Governor said his plan “would be backed by reliable revenue—highway tolls.” He also said, “….a new state agency is needed partly to assure investors they’ll get their money back.” One has to wonder where the Governor has been these last few years when he makes such statements. The Turnpike, Expressway and the Parkway have an excellent record on their bonds. So why does he have such concern for the future with his new PBC bondholders?
The only thing the Governor is doing with his so called plan is exchanging existing Turnpike, Expressway and Parkway bonds for new and massive long term debt. He is creating a new agency where he will be in a position to place more of his political friends; all at the expense of the citizens, taxpayers and users of the toll roads. Prudent fiscal policy would be to reduce the number of state agencies—not creating new ones.
In December 2007 the Governor said “I actually think, from what I understand of the market-place’s evaluation of infrastructure-financed projects, that there is no serious worry or even negative aura surrounding those kinds of debt instruments.” Well, Governor as chairman of Goldman Sachs you must have been in an “ivory tower” insulated from the real world. Transportation bond issues have been part of New Jersey since 1951 with the building of the original turnpike. Bonds have been guaranteed by the Turnpike, Expressway and Parkway and further they have been backed by the strength of the State of New Jersey.
Once the Governor’s “fiscal restructuring” plan is adopted he then will call for a constitutional amendment requiring most borrowing by the state to be approved by the voters. That is like saying “the horse is out of the barn, so now we will close the barn door.”
Incidentally, counties, cities and towns for years have used “anticipation notes” and then bonding on all types of projects such as: airports, roads, schools, utility authorities etc. What makes your idea so unique Governor? All you are doing is refinancing and pushing the hard decisions well into the future.
Governor, you really have given New Jersey only additional debt; you have done nothing to reduce over all current debt, number of employees, wages, pensions and excessive health programs.
To straighten out the terrible debt the state finds itself in refinancing is not the answer. Instead of creating another agency further adding to the bloated woes of the state; you should “begin with little things”—like reducing costs through deeper spending cuts, a hiring freeze and not depleting the Transportation Trust Fund by using it for operational spending instead of construction..
A recent Star Ledger article by Paul Mulshine referred to the classic work “The Confessions” by Saint Augustine bishop of the North African city of Hippo Regius wherein Augustine asks the Lord to “Grant me chastity and continence, but not yet.” That in a nutshell is how Governor Jon Corzine plans to curb Trenton’s lust for borrowing money. But not yet, maybe tomorrow?
Very truly yours,
Louis C. Ripa, J.D., B.S.C.E.
Jupiter, FL and Ocean City, NJ