Thursday, February 15, 2007

"Just about any financial adviser will tell you, selling off assets is the first sign of bankruptcy. "

Talk of toll road lease part of Trenton's shell game


By Leonard T Connors Jr., Christopher J. Connors and Brian E Rumpf
Asbury Park Press (New Jersey)
Copyright 2007

The state's sizable debt, an inability to manage its own finances and widespread discontent among taxpayers have created a circus-like atmosphere in Trenton.

Since it's an election year, the legislative leadership is willing to go to extreme measures to convince the general public that something is being done to fix the financial mess we find ourselves in. The most recent, and perhaps most outlandish example of this, is the recently unveiled proposal to lease the New Jersey Turnpike. Since it really doesn't address the root cause of the state's fiscal problems — runaway spending — our delegation opposes any attempt by the Legislature to lease or sell the Turnpike or the Garden State Parkway.

If you ever have been to the circus, you probably remember the huckster who runs the shell game in which unsuspecting contestants must guess what shell hides a pea. Those who've seen this act know that despite all the fancy hand movements and all the talk by the huckster, the game is nothing more than a sham. There is no pea under the shell, and the contestant never had a chance at winning.

This scenario could be used to describe the situation taxpayers have found themselves in with all the proposals to address the property tax crisis thrown at them over the past several months.

It is estimated that leasing the Turnpike to a private company for 75 years would generate between $10 billion and $15 billion. Proponents state they want the money used to pay off some of the state's debt. People should be deeply concerned this will release enough money for the spenders in Trenton to go on a spending free-for-all. You can bet that, if this happens, the special interests will be circling the Statehouse like vultures.

With the way this state spends, the money generated from leasing a state toll road would be gone before you know it, and we'll be right back where we started — deep in the hole. Only we would have leased one of the most vital transportation arteries in the state to a private company, which for all we know, could turn out to be owned and operated by a foreign country.

It is important to look at the proposal to sell the Turnpike for what it is: an admission by the state that it is incapable of operating the roadway, despite not being required to produce a profit. What do you think will happen to the cost of tolls if the state hands over the Turnpike to a company that reports to a board of directors?

In its present form, the bill that would allow for the leasing of the Turnpike stipulates that tolls could increase only with the rate of inflation. But as we have all witnessed over the past several weeks, bills can be gutted in the legislative process, like the comptroller proposal, to better serve the powers that be at the expense of the taxpayer.

Any company that takes over the Turnpike is going to make turning a profit its first priority. It is also possible that keeping the stockholders happy may adversely affect road maintenance or the completion of needed construction projects if these responsibilities end up hurting the bottom line. Other than toll increases, there aren't going to be many avenues to increase profit margins, which ultimately all businesses must do to survive. So can we realistically expect that tolls will not sharply increase on the Turnpike if it becomes a business entity of a major corporation?

Finally, as just about any financial adviser will tell you, selling off assets is the first sign of bankruptcy. Leasing the Turnpike, which is among the most significant assets in the state's possession, would be an unmistakable act of desperation. Even compared to the budget gimmicks conjured up by the McGreevey administration in past years, this would certainly take the prize. It also would be an addition to the state's consistent track record of fiscal mismanagement highlighted by deficit spending and higher taxation.

The "quick fix" offered under this plan will not provide the long-term structural changes needed to overhaul the state's deteriorating financial condition and, therefore, should be dismissed outright. Significant spending reductions and a more fiscally conservative approach to the use of taxpayer dollars are what is needed to put this state on a sound financial footing.

Leonard T. Connors Jr., is a Republican state senator from the 9th District, which includes parts of Ocean, Atlantic and Burlington counties. Christopher J. Connors and Brian E. Rumpf are Republican Assembly members from that district.

© 2007 Asbury Park Press:

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