New Jersey Gov. Jon Corzine announced yesterday that the long-term lease or sale of the state’s toll roads to a private company is off the bargaining table. In a statement, the governor listed his core principles for asset monetization with the removal of private companies from the state’s potential monetization of its toll roads, including the New Jersey Turnpike.“New Jersey’s roadways will not be sold and they will not be leased to a for-profit or foreign operator.”Corzine also continued his long-held assertion that any future asset monetization proceeds will only go towards paying down the state’s more than $30 billion of outstanding debt and capital investments.Corzine’s announcement came on the same day that Texas officials decided to finance a $5 billion state toll road through its North Texas Tollway Authority as opposed to previous plans for private developer Cintra/JPMorgan to finance the project.New Jersey’s move away from concession agreements eliminates private corporations like Macquarie Infrastructure Group of Australia and Cintra Concesiones de Infraestructuras de Transporte SA of Spain from entering into a sale or concession agreement with the state. Both companies joined together to oversee operations and maintenance of the Indiana Toll Road and the Chicago Skyway. Indiana gained $3.8 billion from its 75-year lease agreement and Chicago snagged $1.8 billion from its 99-year lease.Even as he removed those types of asset monetization contracts from the P3 debate, Corzine stressed the need for the state to generate revenue to support transportation infrastructure, open space programs, school construction, and other necessary projects. The governor did not lay out his plan in detail, but advocated the state’s need to monetize its roadways.
“We’re working on a proposal where the public will continue to own and operate our toll roads that will give us some of the financial benefits that other states have achieved through privatization. We’re not going to privatize,” Corzine said yesterday in a speech where he signed the fiscal 2008 budget.“To that end, we’re developing a new vehicle — completely out-of-the-box scenario — to give the benefits of monetization, without the costs and compromises that other states have done on private lease or sale. I’m announcing today, and you’ll see it in the budget, eight principles to which this administration is firmly committed as we work toward such a plan.”One criticism that lawmakers have raised is that the state does not have the willpower to separate future asset monetization proceeds from the general fund, an issue the governor addressed in his list of core guidelines. Under Corzine’s plan, the administration will identify P3 proceeds up front with the pubic and-or the Legislature approving safeguards against diversions for other uses.Other core provisions call for New Jersey citizens to retain ownership of ongoing operations and “initial proceeds,” with safety and maintenance standards adhering to current or improved levels. The state will meet long-term capital needs to enhance roads and relieve congestion, and toll schedules “will be open, predictable, and available to the public,” according to Corzine’s list of core principles.As with the governor’s previous speeches on asset monetization, he did not release a detailed plan on how the state would proceed with its roadways. Many lawmakers believe that state residents need to know the governor’s monetization strategy when they go to the voting polls to elect their state legislators in November, according to Senate Minority Leader Leonard Lance, R-Warren and Hunterdon.“I believe we need to know the details of the governor’s plan as soon as possible and certainly this ought to be a major discussion in the autumn campaign for legislative seats across New Jersey,” Lance said.In addition to his monetization announcements, Corzine signed into law the state’s $3.47 billion fiscal 2008 budget after eliminating roughly $10 million in line-item vetoes on last-minute additions. Included in the budget is a paragraph allowing the state to use additional unspecified funds in its evaluation of state assets for monetization.“There are appropriated such sums as may be necessary for legal and engineering fees, financial advisers, and other consultants and services associated with, as well as any other costs determined necessary in preparation for, the monetization, or lease of public assets, subject to the approval of the Director of the Division of Budget and Accounting,” according to the budget.To date, New Jersey has paid $4.5 million for costs associated with analyzing different monetization options, according to state Treasury spokesman Mark Perkiss. Last year, the state hired UBS Securities LLC for $165,000 to help compile an asset monetization study.
