Balancing NJ’s budget:
Psst, wanna buy a toll road?

Steve Landfield's column appears regularly in NJ Jewish News

Just when New Jersey has supposedly settled on a new state slogan, an advisory panel’s six-page transition report to the new governor suggests a new one: “New Jersey: Perilously Close to Ruin.”

Gov. Jon Corzine’s honeymoon is over, as he tackles a nearly $6 billion budget deficit. The simple fact is that despite all the money we are already paying, New Jersey spends more than it takes in — a great deal more. Corzine must deal with it immediately, as the law requires that the governor present a new balanced state budget, which must be approved by July 1.

The final edition of the report to Corzine recommends that he apply the sales tax to more items and that he raise the gasoline tax to avoid financial ruin.

For his part, Corzine has called it an “interim report” and has assured us that “not every line” of any of his transition reports will be followed.

Still, it is a serious situation and one that was recently addressed in this column. It merits our attention yet again.

The governor’s budget advisers had at one point floated the idea of imposing the state’s 6 percent sales tax on clothing purchases. That was met by an immediate outcry, especially from those areas of the state that border New York. New York already charges sales tax on clothing purchases, so New Yorkers come in droves across the Hudson to purchase clothing in New Jersey to avoid the tax. It was an idea that never made it to the final report.

However, recommendations to tax limousines, cable services, and tanning and massage parlors made the final cut. The advisory group referred to them as being among “illogical loopholes and exemptions.” Cable TV, for example, is an easy target. Subscribers who order basic services pay the same state taxes and fees as people ordering premium services. Don’t expect that inequity to last.

In Trenton, the belt-tightening has already begun, starting with the governor’s own staff, which has been reduced. Corzine has instituted a statewide hiring freeze except in a few areas, such as child welfare. The report recommends that he add layoffs and furloughs (also known as more vacation time without pay) into the mix.

Republicans have been yelling that we need to cut waste, fraud, and abuse, but the days when doing that will accomplish anything more than make a dent in the budget shortfall have long passed.

\The report also suggested state taxes on 401(k) plans and sales and use taxes on Internet purchases. Fortunately, the latter would take the intervention of Congress, and that’s not likely to happen.

One of the more creative suggestions, not addressed in the report, is the long-term leasing of New Jersey’s two main toll roads, the Garden State Parkway and the Turnpike. While the idea has not been met with wild enthusiasm and has the ring of a municipal going-out-of-business sale, it actually holds a lot of promise as a way to generate funds to retire transportation debt and reinvigorate the Transportation Trust Fund, which is just about busted. That is the fund dedicated to highway and bridge repairs and construction, so it makes sense.

The caveat is that it must be done right.

Other states have looked into the idea and found merit. For example, The Star-Ledger recently reported that Indiana Gov. Mitch Daniels has taken bids on a 75-year lease of the Indiana Toll Road, a 157-mile highway crossing the state from east to west. The high bidder offered a one-time $3.8 billion payment — not a bad deal for 75 years.

Estimates are that New Jersey’s toll roads might fetch $20 billion. That retires a lot of debt.

Of course, we would prefer to see the toll roads disappear altogether. Short of that, who cares who runs the roads as long as the public is protected from egregious toll hikes, there is some assurance that the tolls will be used to maintain the roads to an established standard, and the lease money is used for transportation debt and projects?

If it works in Indiana, why not New Jersey? Especially if the alternative is another hike in the state gasoline tax. That lasts longer than 75 years.

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