Turnpike Monetization - Ledger - OpEd: Too much missing from plan

Published in the Star-Ledger, Tuesday, July 10, 2007

[OpEd]
Too much missing from monetization plan

BY ABIGAIL CAPLOVITZ FIELD

New Jerseyans are very concerned about plans to "monetize" our toll roads, as reflected in polls, letters to the editor and the anti-privatization resolutions passed by 15 towns and four counties. Two weeks ago, Gov. Jon Corzine tried to reassure everyone by committing to monetization principles. While New Jerseyans can relax a little, the governor didn't go far enough for people to let their guard down.

The good news: The governor's principles mean the Indiana and Chicago debacles won't happen here. With very little public discussion, those places sold their toll roads to profit-driven private operators for far less than they are worth. In contrast, Corzine's principles reject privatization and commit to some public process.

The governor's rejection of privatization is particularly important. Given that our toll roads are the most valuable in the country and our financial situation is among the worst, private investors are eager to buy our roads. With his Wall Street record, one might expect the governor to be unusually receptive to investors' overtures. Against that background, his commitment to public ownership sends a powerful, positive message that will reverberate nationally.

The bad news: The governor's principles are not enough. For New Jerseyans to have confidence in where he's headed, Corzine needs to make the more substantial commitments such as:

Public control, not just public ownership.

Fair value, not just lots of money.

Full transparency and accountability, not just town meet ings.

These additional assurances are critical because history shows the monetization of state assets can deliver less than promised. The last time New Jersey created a public company to monetize a long-term asset was the tobacco settlement securitization. The state received only 44 cents on the dollar and spent the money without solving our financial crisis. Will a public Turnpike deal be a similar financial boondoggle?

The governor's principles don't prohibit it. The closest his announced principles get to promising fair value for our roads is: "New Jersey citizens will retain the benefits from both initial proceeds and ongoing operations." That doesn't ensure that the total payments to the state will be close to the value of our tolls. Another principle suggests there will be protections against wasting the deal proceeds. But without specifics, it's not clear how -- or if -- the protections would work.

Just as the public tobacco settlement "monetization" failed to deliver fair value or long-term financial benefit, the infamous Schools Construction Corp. showed a public corporation can be opaque and unaccountable. A 2005 investigation by the Office of Inspector General found the "SCC suffers from a wide range of internal weaknesses that make the agency vulnerable to mismanage ment, fiscal malfeasance, conflicts of interest and waste, fraud and abuse of taxpayer dollars." To date, the SCC has spent $8.6 billion without getting its job done or being held accountable.

In light of the tobacco settlement monetization and the SCC, Corzine's promise that New Jersey will protect the public by retaining ownership of our roads is insufficient. Public control is what's needed. The public must have input into transportation policy and a way to hold post-monetiza tion decision-makers accountable.

Consider toll policy. The governor's principles declare that toll schedules will be "open, predictable and available to the public." That's important but doesn't indi cate who will make the toll decisions.

Tolls are more than a cost-of-living issue; they affect our quality of life by shaping how many drivers divert to local roads, use E-ZPass, carpool, take mass transit or shift commuting times. Setting toll rates to maximize revenue probably won't maximize our quality of life. So what input will the public have, and who can it hold accountable for final decisions?

Until a deal is finalized, the governor's commitments to public process for pursuing a deal are paramount. His principles promise "substantial, open and public discussion," with meetings in each county. That's better than what transpired in Indiana and the re cently aborted process in Pennsylvania, but it's not enough. Where are the promises to disclose the deal's details before the meetings and to listen to what the public says?

For informed comment, the governor must release the plan's details, including any promises made to investors, well in advance of the town meetings. Disclosure should be complete, in writing and available on the Web.

To ensure the public is heard, the Legislature should hold an up- or-down vote on a proposed deal's final terms, just as Congress ratifies or rejects trade deals the president negotiates. Legislators who must defend their votes will listen closely to the public. Needing legislators' votes, the governor will listen, too.

In short, while the governor's principles are progress, New Jerseyans need much more. Better than Indiana and Chicago isn't the same as good for New Jersey.

Abigail Caplovitz Field is a legislative advocate with the New Jersey Public Interest Research Group. She may be reached at acaplovitz@njpirg.org

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