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One piece of the budget puzzle laid out by Gov. Jon Corzine is "asset monetization," or turning state toll roads (among other things) over to private investors, who would manage them under long-term leases.
This weekend, Blue Jersey offers a point-counterpoint exchange on the possibility of monetizing New Jersey's toll roads. Opening up is Peter Samuel, monetization advocate and publisher of TOLLROADSnews, an Internet newsletter based in Maryland.
Blue Jersey blogger Steven Hart will post his counterpoint tomorrow (Sunday). He is the proprietor of a Blue Jersey affiliate blog, The Opinion Mill, and author of "The Last Three Miles: Politics, Murder, and the Construction of America's First Superhighway," to be published in June by The New Press.
Building and running toll roads (and bridges and tunnels) is a quintessential business activity. As a business it involves making an estimate of likely future traffic and revenues, organizing the raising of capital to finance the road, buying land, getting a mix of patient equity capital and loans to finance stuff, getting the facility built quickly and well, marketing the road once it is open, operating it efficiently to keep costs to a minimum, responding to customer needs in order to maximize patronage, responding to competitors by trying to do something different or better, and trying within these business constraints to maximize returns on investment for shareholders. That's the way it should be.
Here in America unfortunately we are saddled with a bastard toll road model, part business, part politics -- really more politics than business, though the proportions vary from state to state.
The business part attempts to be businesslike but its hands are constantly tied by the politics part. The politics part sees the board of directors and top executive positions filled by buddies of the governor of the day, or perhaps the speaker of the legislature. None of these has an ounce of knowledge of roads or the toll business. Often no business at all. They are lawyers or local officials. State toll authorities are afflicted by a constant procession of amateurs - political hacks - moving through positions of control. Don't let's beat around the bush. What did Michael Lapolla know of running a tollroad before he was appointed by Gov. McGreevey. Nothing. He'd never run a business in his life. I'm not picking on him specially. The same for almost all the chief execs of toll authorities - Brimmeier in Pennslvania made his career in Allegheny county government. In Ohio Suhadolink was a lifetime city and state politician. In Massachusetts, Amorello was a pol also. These political hacks, frankly, cast a shadow below them. Who wants to make a career specializing in various aspects of the toll industry - to make a profession of it - when you know the guy at the top is going to be a dumb buddy of the next governor?
Everyone laments patronage at state toll authorities and then fights to keep in place the system that lives off it. With political appointees on the board of directors and in top management positions patronage down through the organization is as inevitable as tigers being predators. Jobs, consulting work, contracts of various kinds, all tend inexorably to be steered not to who can do the job most efficiently but to who is best politically connected. And no sooner do they start to get some experience than the government changes and there's turmoil. A whole new crew gets installed at the top, though here and there holdouts survive, suspect and uncertain. This is no way to run a proverbial lemonade stand, let alone an operation that reaps hundreds of millions in revenue, employs thousands, and sits on concrete, steel and asphalt assets worth billions.
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