CORZINE WILL CAMPAIGN FOR ASSET MONETIZATION”

A reticent Midwesterner by background and a numbers-crunching, bottom line financial manager by profession, Governor Jon Corzine is neither a boastful nor a confrontational guy. But when he signed the 2008 state budget into law on Thursday,heenthusiastically explainedthe several positive features of the new spending plan. However, he deviated from the usual election year scriptof talking solely about accomplishments and reminded New Jerseyans about the serious fiscal challenges that the state will face next year and beyond unless some bold decisions are made.

Rather than simply issue warnings or quibble with his critics, Corzine made it clear that he and his staff are moving forward on developing a plan that will enable state governmentto meetexisting obligations and pursue other praiseworthy policies. As the Governor explained at the budgeting signing, the details of that plan is still to be fleshed out. But it will entail the monetization of assets.

If you believe last week's STAR LEDGER article – the paper stands by the story -, the Governor did not want to talk about asset monetization until after the November 6th midterm. That's because legislators in his ownparty seeking reelectiondid not want to deal with the controversial and largely misunderstood concept on the campaign trail. After all, opinion polls show that a majority of New Jerseyans do not want to the state to sell or lease the toll roads to a private company no matter how much money such a plan wouldbring to the treasury.But delaying discussionuntil after the electionwould looklike the Democrats wanted to hide somethinganddeny citizens the opportunity to learn where candidates stand onthe issue.

To make matters worse, the day after the legislature passed the budget Republicanlawmakers complained that it contained language that enabled the Governor to move forward on an asset monetization plan.Corzine insisted that the new budget simply authorizes spending on further study of the concept of asset monetization, not on the implementation of any plan. Nonetheless, sensing that they found a pretty good campaign issue,Republicans leaders warned thatthe Democrats may be up to some political shenanigans that undermine the policy-making process and avoid the responsiveness and accountability to the public that campaigns and elections provide.

What might those Democrats be up to? Republicans think that the Administration willdevelop, or perhaps already has,a full blown plan and spring it on the public in the lame duck session or in the new session if the Democrats retain their majorities in the legislature.That planmaywell entailselling orleasing toll roads to foreign investors ortoa consortium of the Governor's old Wall Street buddies. Tomake sucha deal profitable, the new owners or lessees will probably have to jack up toll pricesand cut operating costs by deferring maintenance.Yes, state government may get a bigcash windfall but citizens, especially commuters who regularly travel the New Jersey Turnpike, Garden State Parkway, and Atlantic City Expressway, could get stuck with higher tolls and bumpier rides.

Not many New Jerseyans would claim to be experts in high finance. But,in a state where lawmakers from both partieshave made a habit of balancing budgets through creative financing, it shouldn't bea surprise that most folks here regard asset monetization as just another fiscal gimmick.And if it is anything likechannelingmoney from the unemployment trust fund,revaluing the public worker pension fund, or borrowing money to pay for government operating costs,asset monetizationwon't solve the state's fiscal problems.

With such perceptions, concerns, and yes, confusions about asset monetization out there, imagine being a Democratic legislator running for reelection this fall.No wonder that a good number of Democratic incumbents and challengers have issued statements that they will not support the sale or lease of toll roads to private firms, foreign or domestic.This in the wake of the Republican's condemnation of any such ideas and their criticism of the new budget as containing unsustainable property tax relief and setting the state up for a big financial crisis next year.

Is this important stuff or just theobligatory attacks the minority party makes on those in control, especially in an election year? Well, Governor Corzine thinks they are importantenoughfor him to address directly and to changehis timetable on explainingand justifying asset monetization to the public. After listingwhat the new state budget accomplishes, most notably the large property tax rebates, increased aid tonon-Abbott school districts and to municipalities, and new initiatives to fight autism and cancer, Corzine candidly explained the challenges the state still faces. These include closing a $2.5 billion deficit in next year's budget,paying more into the public worker pension and health care funds, funding new school construction in Abbott districts,keeping up with theever-increasing cost of health care, and paying more for debt service.

How can the state do all this? Not simply through budget cuts,said Corzine, because the state's financial obligations are too bigand efficiencies are already being pursued. How about taxhikes? Republicans, Democrats, and the public don'twant them. What then?Corzinestrongly stated that criticizing asset monetization beforefully exploring theidea isunfair and deflects attention from dealing with the veryissuesthe Republicanssay they are worried about. Yes, the Governor does bear some responsibility for the situation he find himself in. His passivity created an opening for the Republican to define asset monetization on their own terms and caused some of his fellow Democrats to distance themselves from the idea.

Corzine tried to take corrective action at the budget signing by doing the unconventional.He stated that to deal with itsobligations andto improve the quality of life, state government needs new resources and the political courage to make the necessaryinvestments. He said, "My administration is working on a proposal that will allow the state to continue to own and operate our toll roads while giving us some of the same financial advantages other states achieved through privatization."And, he proceeded to lay out eight core principles on asset monetization that his administration will adhere to in its study and final recommendations.

These eight principals address the concernsdiscussed above and more. No roads would be sold or leased to profit-making firms. Safety, maintenance and operating standards will be improved, Capital projects will be funded.Tollsschedules will be"open, predictable, and available to the public" but will no doubt increase. And, before anyplan and deal are finalized there will be broad public discussion. The Governorsaid that he would visit all twenty-one counties for town meetings on the topic.

On these terms, the budget signing took on the form of another budget address, or at least a big addendum to the new spending plan. And, despite the fact thatthe Governor is not on the ballot this fall, he kicked off a campaign of his own that entails explaining and selling an asset monetization plan to a skeptical public. Will Corzine's campaign provide political cover for legislative candidates who would much rather talk about the propertytax relief in the new budget and are concerned about a public backlash over asset monetization?One suspects that most incumbents know how to take care of themselves. The real question this summer and fall iswhether theGovernor has theability to persuade the public to support what he believes the state needsto improve its fiscal condition and make progress onotherpraiseworthy policy goals. If he doesn't, his next two years in office may be not only unpleasant but hislast.

David P. Rebovich, Ph.D., is Managing Director of the Rider University Institute for New Jersey Politics (www.rider.edu/institute). He also writes a regular column, "On Politics," for NEW JERSEY LAWYER and monthly reports on New Jersey for CAMPAIGNS AND ELECTIONS Magazine.

CORZINE WILL CAMPAIGN FOR ASSET MONETIZATION”