ShapTalk: Guest Commentary
By Michael M. Shapiro
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Recently, Gov. Jon Corzine proposed selling or leasing key assets of the
State including the New Jersey Turnpike. The governor believes the sale
or lease of such assets will provide billions in revenue that can be
used for a variety of fiscally responsible measures including paying
down the state’s debt. However, given the proclivity of politicians in
New Jersey to spend every penny they can, it is doubtful that the
governor’s plans for the money would be championed by members of the
state legislature. In addition, the sale or lease of state assets may
have negative consequences for New Jersey residents, including but not
limited to, higher fees for use of those assets, improper maintenance
and delayed repairs to maximize profits, and inappropriate or
incompetent management of those assets.
In Indiana and Illinois, tolls have skyrocketed and roads have fallen into disrepair since being acquired by private investors. While the government’s ownership of these assets can have similar negative consequences, residents have numerous vehicles to address their concerns. When a company owns the assets, there is little that residents can do to combat higher fees and improper management.
The one-time injection of cash from such a sale or lease may be offset by long-term disadvantages. Such a sale or lease will forfeit annual revenues for many years for the state, leaving it in perilous shape should future needs arise that require additional government spending. For example, a 9/11-type attack in New Jersey in the future could financially cripple the state, especially if the revenue earned by the state from the sale or lease of state assets has already been spent.
Other options are available and should also be considered. For example, securitizing toll revenue would create additional income without handing control of state assets over to private interests. Securitization enables the government to receive a large influx of money up front. In exchange, for a period of time, investors receive revenue from the entity that controls the state asset. Under this scenario, investors could pay New Jersey money up front and then receive revenue from the Turnpike Authority for a period of five or ten years. Still other options include a comprehensive state audit to uncover waste, fraud and abuse or revamping New Jersey’s healthcare and/or pension system.
Before anyone considers the sale or lease of our state’s most precious assets there needs to be a thorough investigation, weighing all advantages, disadvantages, and costs of doing so. The results of the investigation must also be made available to the public so all of our state’s residents who would be affected by the lease or sale can read for themselves the pros and cons of such a possibility and comment accordingly. In addition, should a sale or lease of state assets be undertaken, our elected officials should put protections in place to ensure that our residents do not suffer the negative consequences that have resulted in Indiana and Illinois.
Michael M. Shapiro is an attorney who resides in New Providence. An archive of his columns can be found at ShapTalk.com.
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