Save Our Turnpike News

Deals elsewhere show the pitfalls. The most obvious one—going to the very heart of these deals—is the risk of getting ripped off. Chicago gave up 99 years of toll revenues in exchange for a lump sum payment by private investors. Those investors will make back their money in less than 20 years, giving them four generations worth of toll revenue for pure profit. Indianans were similarly short changed; the best analysis shows they received about $8 billion—billion with a b—too little for their road. In Texas, lawmakers walked away from a private deal that was much more favorable to them than Indiana and Chicago’s when they realized that their public authority could nonetheless give them $2 billion more than the private offer.

New Jersey can’t afford to be shortchanged by billions of dollars. That’s why we’ve included this “fair value” principle.

Another major risk in these deals, one with much more profound implications for the day to day lives of New Jerseyans, is the potential loss of public control over transportation policy and road maintenance and safety standards. Right now, the State—through the Department of Transportation, the Turnpike Authority, the South Jersey Authority and New Jersey Transit, controls transportation policy in the state. What exits are built where, which roads are widened, how roads should be maintained, how much tolls should be, and how mass transit integrates with the road ways—all these questions are addressed with a single mindset: what is best for New Jersey as a whole? And they are answered with a decision making process relatively accessible and accountable to the public.

All that changes if a private company controls the toll roads. A private company wants one thing—to maximize profit—and it has little regard for the external consequences of its profit-focused policies, that is, the collateral damage to New Jerseyans and our quality of life.

Two quick examples. In Indiana, shortly after taking over, the private operator installed barriers in the median turnarounds to prevent drivers from evading tolls. Unfortunately for the public, the police, fire and ambulance drivers needing to use those turnarounds were blocked too. After an outcry, the operator said it would make the barriers passable to first responders.

A more profound example of the tension between the profit motive and the public interest is in toll policy. Private deals give the operator the right to regular maximum toll hikes; over several years, the allowed maximum exceeds what the market will profitably bear, meaning that the operator has complete discretion to set toll policy. Toll policy shapes who uses a road, and when. That’s the principle underlying congestion pricing, and California’s “Lexus lanes.” Given control of toll policy, a private operator might find it most profitable to set the toll to a level of high traffic diversion, so that the roads suffer far less wear and tear, and make up in the toll hike what it loses in volume. Such a policy would have devastating consequences for New Jerseyans’ quality of life, given that they would lose more time to traffic, breathe more air pollution, and experience more stress than they would if toll policy were set with a perspective that included caring about the impacts of traffic diversion to local roads.

For these reasons and others there’s no time to illustrate now, we’ve make retaining public control over transportation policy and road standards our number one principle.

For the remaining four, I’ll be briefer, they’re nearly self-explanatory. Principle 3, No deal longer than 30 years, is a risk minimization strategy for the first two. There’s no magic in the number 30. But if you’re trying to figure out a good price, and you want to limit the consequences of giving up control of your roads, the best way to do it is with a short deal. Unfortunately, there’s no sign the current thinking is short term; Senator Lesniak’s bill, the only authorization bill out there, allows deals 75 years long.

Principle 4, state of the art safety and maintenance standards, recognizes that our Turnpike and Parkway have long been models for the nation and are among the safety roads in the country. Indiana’s deal would force the state to pay a hefty premium to have state of the art safety and maintenance standards. A similar provision can’t happen here.

Principle 5 insists that New Jerseyans have a role to play in determining the fate of our roads, both in formulating the deal and in holding people accountable for the deal. Both of those roles can be fulfilled only if the process is transparent, and if the legislature votes on a final deal’s terms.

Principle 6 gets at the ignoble budget-gimmick history I mentioned before. Tolls are transportation dollars, and money that replaces them must be sure to provide for transportation needs. Beyond that, solving the structural deficit by paying down debt—solving the problem that prompted monetization consideration in the first place—is the right idea. Then and only then should money be spent on other capital projects.

Thank you, and I’m happy to take any questions.