The Fleecing of New Jersey . Again
Posted January 11, 2008

The New Year was barely a week old before Governor Corzine introduced his latest plan to fleece New Jersey taxpayers.

On Tuesday afternoon, the governor delivered his annual State of the State address.  Truth be told, it was like watching Jim Brady suddenly become a gun rights activist…while trying to say he has been one all along. 

In his address, Corzine praised New Jersey’s citizens for their “financial responsibility” and bemoaned the state’s government for its lack of the same.  This is despite that fact that this year will mark not his first, not even his second, but Corzine’s third state budget, and in the first two he himself hiked spending by approximately $3 billion per year. 

Nevertheless, now seeking to position himself as the state’s leader in fiscal reform, the governor presented his four-part plan for fixing the New Jersey’s finances:

1. Freeze spending at this year’s current level;
2. Prohibit future spending from exceeding recurring revenue growth;
3. “Capture the value” of New Jersey’s toll roads, and
4. Require that voters approve all future state debt that does not have a dedicated source of revenue to fund it.

If his plan becomes policy, our wallets will get hit yet again.  Under his third point – capturing the value of the state’s toll roads – Corzine aims to hike tolls by 50%, not once, but every four years beginning in 2010 and ending in 2022.  According to the Bergen Record, “The average turnpike driver’s round-trip tab, now $2.40, would grow to $11.60 in 10 years.” In addition, Corzine plans to make a portion of Route 440 in Middlesex County a toll road.

And that’s not even the worst of it.

To manage New Jersey’s toll roads, the governor proposed creating a “public benefit corporation,” or PBC.  Corzine stated that the non-profit PBC “will have its own independent, non-political Board of Directors,” and that “[j]ust like the Turnpike and the Parkway do today … the PBC will borrow funds based on the identified and dedicated revenues of tolls….” 

And by borrow, Corzine means borrow BIG.  Under his plan, the PBC would borrow up to $38 billion to pay off state debt and spend on transportation infrastructure.  That’s right, the governor is proposing a $38 billion state bailout.  That’s equivalent to borrowing New Jersey’s entire state budget for one year!

Corzine was quick to try to clarify, however, that “PBC borrowing isn’t state borrowing,” and “[t]here is no general obligation … on the part of the State of New Jersey for the debt of the PBC.  The bonds issues are not State debt….”

Yet, the cost of them would still fall on the shoulders of New Jersey taxpayers.

Furthermore, in reality, the PBC would not be as “independent” as Corzine would have us believe.  According to the Philadelphia Inquirer, while Corzine “would not … directly name the board of the new nonprofit … he would name an intermediary body that would pick the board members – but from a list drawn up by Corzine.”

This sure sounds like some pretty close state connections to us!

But even if we grant the governor this point, the PBC would still be little more than a new version of highway privatization.  The Courier Post reports that “[e]xperts are calling Gov. Corzine’s plan … a privatization plan with the state’s proposed Public Benefit Corporation taking the place of a private company.”  According to Jon Peters, finance professor at the College of Staten Island, “All he [the governor] did was substitute ‘Public Benefit Corporation’ for ‘private owner.’”

Wall Street attorney and Save Our Assets spokesman Paul Humphreys notes the danger in this. “People in the PBC would now be in charge of how a road tax increases.  That’s wrong,” he says.  “If the Legislature passes taxes we don’t like, we can vote them out.  The PBC is unaccountable.  They are not elected.” 

In his address, Corzine specifically stated, “If there is a better plan – I am open to its consideration – put it on the table.” 

There is a better plan, and it requires significant, across-the board spending cuts.  We recommend that each state department and agency be required to cut its operating budget by 10% this year, and then freeze spending at that level for the next 3 years.  This would, no doubt, put a noticeable dent in the state debt.  This is not impossible, and it’s what New Jerseyans deserve. 

The problem isn’t lack of revenue; the problem is irresponsible spending spanning more than a decade and three gubernatorial administrations.  In his address, Corzine noted, “For over a decade, base revenues have been increasing on average 2-3% a year, but spending has increased 6-7% – leaving us with a compounding deficit which today approaches 3 billion dollars.

Let’s face it: if New Jersey were a company, executives would be slashing spending across the board right now.  New Jersey is in a state of fiscal emergency – literally.  The executive and legislative branches should be tightening their belts, not going out and borrowing $38 billion.  (One thing that was conveniently missing from this borrowing equation is the interest that $38 billion will incur!)

The governor said in his address that for him “the biggest challenge of being a public servant is trying to live up to the standards our people set.”  He has the opportunity to do so now.  We urge him to take it. 

In fact, a good way for the governor to show that he is truly committed to the challenge would be to veto Assembly Bill A-2135, which was passed on the last day of the lame duck session and grants significant pay increases for judicial salaries and prosecutors’ salaries and makes certain changes to other salaries linked to judicial salaries.  Come on, Governor, get real!  How can you talk about saving money and then sign a bill that will cost taxpayers more and more dollars in the upcoming fiscal year?  Veto A-2135 to show you’re actually serious about this!  Frankly, we don’t believe you are.   

Note: Governor Corzine is holding town hall meetings to talk about his toll plan.  Click here for a list of upcoming dates and locations.  Please plan to attend one of the meetings and make your voice heard!

 

Archive