New Jersey Governor Jon Corzine announced yesterday a plan to raise money in New Jersey to issue bonds in a public benefits corporation that will manage the toll roads. The bonds will be paid back through a series of toll increases. Starting in 2010 and every four years until 2022, toll prices on the New Jersey Turnpike, Garden State Parkway, and Atlantic City Expressway will increase by a factor of 50% plus inflation. Route 440 will also become a toll highway for a stretch.
Right now, I pay a total of $0.90 in toll charge for my daily commute. I can’t find any data on historic toll rates, but it’s my understanding that toll increases have lagged far behind the governmentally-reported inflation numbers (for what they are worth). A 50% increase in 2010, assuming I work and live in the same locations, would bring my daily fee to $1.35 or about an additional $115 per year in today’s dollars over this year’s toll expenditure. All things considered, that’s not too steep of an increase in dollars.
In 2014, the toll rate for the same round-trip commute will be about $2.00 or about a $275 increase in today’s dollars. Now it’s starting to sound a bit hairy. In 2018, the price would increase to $3.00 in today’s dollars and in 2022, a daily commute between the two interchanges I now use will be $4.50 in today’s dollars.
Today, if you pay cash rather than use E-Zpass and commute from the southernmost exit to the northernmost (and back), you would be spending a total of $12.90 each day. In 2022, a round trip tour of the full span of the New Jersey Turnpike will cost $65 in today’s dollars. But by then, you may be able to buy only one gallon of gasoline for $65.
The state intends to raise money quickly through the bonds issued in this new corporation, but that’s not the only piece. Corzine mentioned in his State of the State address a four-point plan for fixing the state’s budget:
* Freeze spending by the government.
* Limit future spending to only what can be provided by revenue.
* Monetize the toll highways.
* Require voter authorization before borrowing more money.
This plan was devised as an alternative to raising state income tax, sales tax, or gasoline tax. Will it work? Most people I’ve talked to so far don’t think this plan is too sound. The future toll hikes inequitably burden commuters and shore-vacationers, which includes out-of-state visitors. Some other options for balancing the budget while avoiding unpopular taxation are for the government to cut spending and/or consolidate school districts. (It has actually been shown that district consolidation in practice increases expenses despite theories about economy of scale. I would support whichever option improves the quality of education for the most amount of students.)
Corzine challenged critics to present their own plan. Now it’s your chance to be Governor of New Jersey — everyone’s dream job. What would you do? Some details would be helpful; “cut spending” is not a complete suggestion.
Corzine unveils plan for state finances [The Star-Ledger]
Updated February 10, 2011 and originally published January 9, 2008.