Leasing the Toll Roads

First, a nice word or two about the potential for selling/leasing toll roads.

Putting a private entity in charge would, likely, save the state substantially and, if done right, would provide a steady stream of income, greater than that which presently flows. The Turnpike Commission provides an opportunity for political patronage; its unionized workers probably receive more than private sector counterparts would receive, as they can wield political pressure in addition to their tactics at the bargaining table. Fewer State employees is categorically a Good Thing.

Some Dems, like John Wisniewski, wonder why, if the roads can make more profit, that’s not happening. Simple: they’re run by government, which is inherently incapable of doing anything efficiently.

Too, it seems highly unlikely that tolls would spiral out of control. With the exception of the AC Expressway, virtually every route here in NJ can be easily avoided at comparable cost of time. Already, trucks tend to use 80, 78, and 287 to avoid the tolls on 95 and at the bridges/tunnels. If a private sector operator raised tolls too high, people would simply take other routes to avoid them. At present, as a governmental authority, the entity labors under absolutely no incentive to provide a quality product at a reasonable cost. A private operator, wanting to maximize profits, would, by definition, wish to attract as many customers as possible. Boosting tolls unreasonably, thereby chasing people away, would prove an unattractive business plan.

Furthermore, consider that just a few years back, the Democratic candidate for Governor boasted about his plan to completely eliminate tolls on the GSP. Like every other Dem campaign promise, that one evanesced almost before the words were uttered.

All of which having been said, if we assume the continued existence of toll roads rather then their expeditious elimination, the Dems simply cannot be trusted to effect a privatization plan correctly.

First, the very idea of looking for yet another source of revenue betrays the essential bankruptcy of Democratic thought on property tax reform. The problem is NOT want of revenue, but want of fiscal discipline. We spend too much. If the SOLE goal in the property tax discussion were to pare back that levy, while ensuring political accountability (that is, the voters could strike back at the people who imposed high taxes on them, or who spent more (or less) than they, the voters, thought wise), it would be a relatively easy discussion. The flaw in any such discussion rests on the demand from Dem constituencies – urban residents and public employees – that spending not be cut at their expense. If their piece of the boodle is sacrosanct, reform is impossible.

Second, assuming a sale, or a front loaded lease payment, the Dems would certainly blow it. The amount received would, likely, be less than $10 billion, probably about $5 billion, when one considers the bonded indebtedness of the roads which, presumably, would need to be repaid from the proceeds. While that’s a lot of verschnagels, it pales to insignificance against the funds necessary for any serious property tax reform. Besides, if $5 billion fell into the Dems’ hands, they’d instantly want to spend it building even more educational Taj Mahals in urban areas, or handing out pork to their constituencies. They’d probably reserve $1 billion or so for election year rebate checks, hoping to buy a few hundred thousand votes with taxpayers’ money. That’s what they DO.

If the money were in the form of a continuing lease payment, they’d instantly bond against same, again wasting the money.

Hence, while the concept of a private entity administering the toll roads makes sense -- if we decide we want to keep toll roads -- giving the state more money to play with will do precisely squat for property tax reform. That can only be accomplished by cutting spending.