With Financial Tactic, Corzine Would Keep Turnpike Public, Toll Increases and All

Who knew that the New Jersey Turnpike, the state’s congested artery that commuters love to hate, was so beloved?

In the months since Gov. Jon S. Corzine began exploring ways to capitalize on the state’s assets and pay off billions of dollars in debt, a coalition of legislators, environmentalists and drivers have come out against any plan that would include leasing the Turnpike and the Garden State Parkway to private investors.

Long before Mr. Corzine could unveil a proposal, these opponents warned that private investors would increase tolls to unreasonable levels, let the roads fall into disrepair and stymie any efforts by the state to expand its highways.

Yet Mr. Corzine, a shrewd former investment banker, appears to have found a more palatable solution that lets the state raise billions of dollars while keeping the highways in public hands. At a news conference last week, Mr. Corzine said he and State Treasurer Bradley I. Abelow were considering “an entirely different kind of proposal” that involved creating a public benefit corporation.

One option is for the New Jersey Turnpike Authority to raise tolls and divert only the increased revenue to a newly formed public corporation, which would then issue bonds backed by that money. The amount of the bonds would be based on the value of the toll increases.

Drivers would still face toll increases, never a favorite with voters. (The Parkway fee at each tollbooth last went up in 1989, to 35 cents from 25 cents; in 2003, the Turnpike tolls went up as much as 17 percent.) But since the public corporation may be able to issue bonds tax-free, Mr. Corzine theoretically could raise about 50 percent more than private investors. The governor could then use the money to retire some of the approximately $30 billion in state debt, bolster the depleted Transportation Trust Fund or finance other projects.

“There’s no running away from it; the state has a serious debt burden,” said State Senator Raymond J. Lesniak, a Democrat from Union County, who supports the governor’s efforts. “It’s hoped that riders will understand that small toll increases will pay off with fiscal stability.”

Mr. Lesniak said that over time a public benefit corporation could raise as much as $15 billion; he said that was about what the state would receive if private investors leased the toll roads. He added that tolls could rise with the cost of living, making them predictable and incremental.

For now, the recommendation is still being adjusted by a working group appointed by the governor. And such a change would require legislative approval, and that is not likely until after November, when the entire Legislature is up for re-election.

"Even though we’ve spent a lot of time on it, we’re not naïve to think the public, the Legislature, the Turnpike Authority, the truckers are going to leap up and say, ‘Aha, this is what we’ve been waiting for,’ ” said one administration official who insisted on anonymity because the discussions were continuing. “We’re trying to optimize around a certain number of objectives, and it will touch off a debate."

Tom Vincz, a spokesman for the state treasurer’s office, said, “We’re coming close to the finish line.”

That has not stopped people from choosing sides. Some in the investment community applaud the governor for being honest enough to ask the public to contribute by paying higher tolls. They also appreciate that he has listened to the public — which in several polls has rejected the idea of leasing the toll roads — and has found a way to keep them under state control.

They added that by considering a public benefit corporation, Mr. Corzine, a former co-chairman of Goldman Sachs, and Mr. Abelow, who was a colleague at the investment house, might have dealt a blow to those advocating the leasing of toll roads to private investors, as Indiana and Chicago have done in recent years and Pennsylvania is considering.

“This will cool enthusiasm for private lease deals,” said one financial industry adviser who instead on anonymity because he has to maintain neutrality. “The fact that Corzine and Abelow came around to this will carry a lot of weight in the industry.”

Still, there are plenty of skeptics who are concerned that the toll increases will not be dedicated to improving the state’s roads and rails.

“People will vote for self-taxation when they know it will go for light rail or bridges,” said Jon Orcutt, executive director of the Tri-State Transportation Campaign, a commuter advocacy group. “But they are wary of it going out into the ozone.”

As the Senate minority leader, Leonard Lance, a Republican from Hunterdon County, put it: “This is a proposal that has to be explained in great detail to the Legislature. Other than paying down state debt, I believe we need voter approval for projects associated with the money raised.”

There are others who say that little would change because the new corporation would do what the Turnpike Authority is already able to do: issue bonds backed by revenue from tolls.

“Unless I’m missing anything, the only thing that is different here is optics,” said John Foote, a senior fellow at the Kennedy School of Government at Harvard University, who focuses on transportation policies.

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