Corzine: Use Tolls to Slash Debt

Honestly... (4.00 / 3)

If he provides some guarantee that the money actually will ALL go to pay down debt, and maybe the some the savings from the reduced interest payments can be used to pay down additional principle, I'd be behind him. But those guaranttees better be iron clad with the threat of hanging behind them.

"Where ever you go, there you are." - Buckaroo Bonzai

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by: William Weber (WjcW) @ Thu Nov 15, 2007 at 19:56:47 PM UTC

I'm sorry, I just don't believe a word of it (0.00 / 0)

Maybe when we see more details.  But one way we owe $16 billion + tax-free bond interest, and the other way we owe someone tolls on a Turnpike that they expect to make $16 billion plus more than you can get on tax-free bonds. 

Corzine should just raise tolls and dedicate the money to paying off debt over the next 6 years.  That eliminates the middle men (Wall Street, stockholders) who also have to paid off.

This is just a shell game to allow more spending today.

Frank LoBiondo Record and Jon Runyan Watch

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by: Hopeful @ Thu Nov 15, 2007 at 21:07:51 PM UTC

Re: (0.00 / 0)

I thought the same thing, but in order to pay off the debt in 6 years, tolls would probably have to be raised by a lot. The difference is this way, the pain is spread out over 50+? years with a less drastic toll hike, while the debt is paid down today. It is a shell game, but it's also trading future revenue for the ability to solve this today.

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by: Juan Melli @ Thu Nov 15, 2007 at 22:24:41 PM UTC

[ Parent ]

what's the difference? (0.00 / 0)

Between paying interest for 30 years or increased tolls for 30 years? I just don't see what Corzine is up to, unless he is looking to spend the money in the short term. 

I do wonder though, if the financial meltdown on Wall Street makes this kind of plan more or less possible.  Will banks want to finance a deal like this? 

Well, we'll see what he is proposing, I hope.

 

Frank LoBiondo Record and Jon Runyan Watch

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by: Hopeful @ Fri Nov 16, 2007 at 04:20:58 AM UTC

[ Parent ]

okay, it's just a change of debt (0.00 / 0)

http://www.state.nj....

There will be no sale of any roads, period.  And there will be no lease to any private bidder or foreign owner. All safety, security and maintenance standards for the roads will be set and monitored by the State. And I will make good on my commitment to hold town hall meetings in every county to explain the plan directly to our citizens. Today I am announcing three additional principles that the plan will achieve.

First, it will result in a reduction of the state's bonded debt by at least 50 percent.Imagine as a homeowner how much better off you could be if your monthly mortgage payment were cut in half.

Second, it will provide permanent funding for the state's Transportation Trust Fund. Imagine at the state and local level, we will be able to rebuild the transportation network, reduce congestion and unlock economic development opportunities all across our state.

And third, the plan will establish new limits on state borrowing.

So it is changing "bonded debt" into some other kind of debt. 

Frank LoBiondo Record and Jon Runyan Watch

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by: Hopeful @ Fri Nov 16, 2007 at 04:34:43 AM UTC

[ Parent ]

debt is debt (0.00 / 0)

The "benefit" of the home equity loan to pay off your credit cards is that your interest goes way down.  The downside is that you have now put up your house as collateral.  You are then able to spend the money you would have spent paying credit card interest on other things.  If all that is going to happen is that instead of sales tax revenue going for debt service, it is going to be higher tolls, that is going to be a difficult sell to the average New Jerseyan.

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by: Creed Pogue @ Fri Nov 16, 2007 at 05:11:19 AM UTC

[ Parent ]

Hard to believe (0.00 / 0)

I will give him the opportunity to sell me on his idea.

But this better be good...........

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by: firstamend07 @ Thu Nov 15, 2007 at 22:02:36 PM UTC

It IS A Shell Game (4.00 / 2)

If the question is paying off debt, how can taking on more debt help?

If the question is what is the best way to increase revenues to pay off our debt, would anyone answer "tolls"???  I will concede that maybe the Turnpike would make some sense because supposedly one-third of the traffic is out of state, but still....  I would think that tolls are an even more regressive tax than the sales tax.

Finally, no one in their right mind would trust any of the four caucuses in the Legislature to keep their hands off the money.  No one would trust that even IF the current Legislature and Governor made the commitment not to incur new debt once this is paid off, that a future Governor and Legislature wouldn't.  Otherwise, we are in the same boat as someone who gets a home equity loan to pay off their credit cards and then runs the credit cards up again.

We need to pass a constitutional amendment that no new debt to be paid out of general revenues (anything other than a dedicated tax) can be done without voter approval, period.

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by: Creed Pogue @ Thu Nov 15, 2007 at 22:47:16 PM UTC

PAYGO? nt (0.00 / 0)

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by: Juan Melli @ Thu Nov 15, 2007 at 23:22:47 PM UTC

[ Parent ]

only way (0.00 / 0)

At least from now forward.

The only way to reduce the debt is to not take on new debt unless we are also going to designate an income source. 

One of the big problems with "asset monetization" is that the revenue stream to be "monetized" is already being used for current maintenance and debt service.

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by: Creed Pogue @ Fri Nov 16, 2007 at 00:55:18 AM UTC

[ Parent ]

this should go to the voters (0.00 / 0)

And because I don't trust the Governor to make the right decisions. This is his expertise. This is why the Goldman guys are working under the Dome.

It should go to the voters so they can put their mouths where they money is. Do they want to fix the structural deficiencies in the budget or do they want to make major changes? Do they want to just look at their piece of the pie or what is good for the state as a whole? There is no easy answer.

Everyone belly aches about how the state is in such a mess but when tough decisions have to be made, like consolidation, shared services, home rule, etc., no one wants to swallow the pill.

However, based on the recent ballot questions, maybe New Jerseyans are ready to make the tough positions.

As an aside, one way to maybe make this more palatable but perhaps less effective, would be to give a tax credit to residents to off set the increase in tolls. Perhaps somehow it would be automatically calculated based on a combination of factors such as income and amount of money spent annually on tolls. And, no, one wouldn't need to save all the toll receipts. EZ-Pass would automatically calculate this as some sort of tax form to submit on the tax return. Based on one's income, a certain tax credit could be given.

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by: Anzana @ Fri Nov 16, 2007 at 05:22:22 AM UTC

Borrowing from Peter to pay Paul (0.00 / 0)

Isn't this just taking on new debt to pay old debt?  The way it wouldn't be if the toll "asset" was sold.  Which is what Corzine really wants to do.  That is PRIVATIZATION, not "monetization."  The only other way is if there is a big toll hike.

Either way, it's a lousy plan.  And bad politically for state Democrats.

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by: 12mileseastofTrenton @ Fri Nov 16, 2007 at 14:19:38 PM UTC

"Not even planning on running again in 2009" (0.00 / 0)

I sure hope you're right.

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by: 12mileseastofTrenton @ Fri Nov 16, 2007 at 14:20:29 PM UTC

Off topic... (4.00 / 1)

I'm tilted against the 'monetization', only because I think Creed demonstrated it will be near impossible to have the revenue dedicated 'iron clad' and that future administrations may borrow us right back to this point, but I still have a slightly open mind.
But what I will say about this is that is a welcome change for the gov. actually believing in his policy and threatening to lose his job to do what he feels is right. If he could get some of this monetization mojo behind the other things we need, I'd be a big fan.

"Where ever you go, there you are." - Buckaroo Bonzai

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by: William Weber (WjcW) @ Fri Nov 16, 2007 at 14:39:55 PM UTC