The road to a mortgaged future
The Philadelphia Inquirer
Pennsylvania Commentary
April 24, 2007
The
April 12 article, "N.J. treasurer: Don't fix pension by leasing
assets," did a good job of discussing the shortfalls of the state
pension fund, but it contained two misconceptions about toll-road
privatization.
The
article stated that " 'monetizing' assets means squeezing latent income
from them by selling or leasing them." The Inquirer's readers may
imagine that this process harnesses additional value or productivity
from the roads themselves. That is not the case.
"Monetization"
simply means to borrow against a future source of revenue. Instead of
receiving toll money at a later date, the government would receive cash
up front today. Thus, monetization only "extracts latent income" the
way individuals do when they take out a payday loan or a second
mortgage.
The
article also quoted an analogy by State Sen. Steven Sweeney (D.,
Gloucester), comparing toll privatization to a family's having to sell
its Shore house in order to keep its main home. A more apt analogy
would be a family selling its bathrooms and kitchen.
New
Jersey's Turnpike and Parkway are not luxuries. They are the backbones
of our transportation infrastructure, and how they are managed has
profound ramifications for the way New Jerseyans live. In the coming
months, residents of New Jersey and Pennsylvania must think clearly
about potential road deals.
Abigail Caplovitz Field
Legislative Advocate
New Jersey Public Interest
Research Group
Trenton
