CORZINE AND THE WORST CASE SCENARIO

Three lists are growing these days in New Jersey, and none of them makes Governor Jon Corzine happy. More legislators, including some of the Governor’s fellow Democrats, are stating their opposition to asset monetization as a financial technique to borrow more money for the state. More unions and advocacy groups are voicing their concerns that asset monetization will mean higher tolls, fewer public sector jobs and a poorer climate for business as well as jeopardize the maintenance of the state’s super-highways. And, more editorial writers are calling on Corzine to reveal the details of his asset monetization plan so that it can publicly debated.

New Jersey’s Republicans agree with those editors and then some. GOP leaders have made a formal request through the Open Public Records Act for the release of a report on asset monetization contracted by the Governor’s Office at taxpayers’ expense and now in Corzine’s possession. Republicans are also arguing that our representative system of government is being undermined if the Governor intentionally delays discussing his ideas on the subject until after the November 6th legislative midterms. They claim that citizens should hear his proposal, and candidates for state senate and assembly should explain their positions on that proposal so that voters can make a reasoned judgment about whom they want to support on Election Day.

That certainly sounds like good government. But to the Governor’s Office, releasing an asset monetization plan before Election Day would be political suicide. A good number of Democratic legislators agree and have pressured Corzine to hold off revealing any details of what he would like to do. These Democrats apparently fear that voters would react to any asset monetization plan that enatiled big toll hikes similar to how people did to the tax hikes enacted by the Democratic-controlled legislature when Jim Florio was governor.

Such fears are unfounded and underestimate the willingness of New Jerseyans to respond to pragmatic arguments honestly made. It’s grandiose promises that people know cannot be fulfilled that upset them more. But not as much as when they think their leaders are intentionally pulling the wool over the collective public’s eyes.

In politics, that’s called a conspiracy, and New Jersey’s Republicans think one is afoot in the State House. GOP lawmakers reject the Governor’s claim that he does not have a plan and assert that after the election – in the lame duck session or in the new legislative session – a full-blown plan will miraculously appear. There will then be the perfunctory talk about the state’s ongoing fiscal problems, the need to deal with these problems, and the desirability of freeing up more funds so that the state can pursue some other desirable policy objectives.

Hey, wait a minute! That sure sounds familiar, and it should! Corzine said exactly that in his Budget Address back on February 22nd. Then the Governor seemed open to the possibility of selling or leasing the state’s toll roads to the highest bidder, even if they were from foreign lands. After a strong public backlash against the idea of selling or leasing the Turnpike, Parkway or Atlantic City Expressway, and defections by Democratic legislators, Corzine issued his eight “core principles of asset monetization.”

Among these core principles are the promise not to sell a toll road or lease one to a foreign entity. Thus, New Jerseyans will retain ownership over these key assets. In addition, the Governor pledged that in any monetization plan there will be sufficient money for road maintenance and upgrades and to assure public safety. The contracts of current toll road employees will be honored. And, the uses of the remaining proceeds – e.g., paying down the state debt, funding new state programs – will be identified “up front” by government officials before any borrowing occurs.

What about the tolls themselves, which will have to be increased to entice investors and enable the state to borrow money using the revenue from one or more toll roads as assets? The Governor said that the “toll schedule will be predictable,” which isn’t saying much. Corzine also promised to hold town meetings on asset monetization in all twenty-one counties in the state.

Well, the Governor has conducted some of those town meetings, but he has a way to go to reach twenty-one. In the meantime, Corzine has touted the idea of a public benefits corporation to oversee the monetization of the tolls roads and to pay back any money that is borrowed. Combined with his eight core principles, this is pretty close to a complete plan to discuss with citizens and other lawmakers. That’s what makes the Governor’s denial that there is a plan so strange.

The consequences of this political strategy do not seem to serve the Governor’s short or long term goals. Without aggressively marketing a plan, or even its “core principles,” the Administration is allowing “asset monetization” to be defined by its critics. Many Republicans and even some Democrats, along with unions and advocacy groups, are still fighting against the possible sale or lease of the toll roads to private companies, even though the Governor has gone on record that these are no longer options. Nonetheless, from all accounts Republicans’ plan to make the worst case scenario for asset monetization a centerpiece of their legislative campaigns and run ads warning voters about how the Democrats plan to sell off key assets to fund more wasteful spending. And, some Democrats will babble about how they don’t support selling the toll roads or having tolls hiked on under circumstances.

If the Governor allows all this to go unchallenged through Election Day, there is no reason to expect that more New Jereyans will view asset monetization favorably. Some polls do show that many residents support toll hikes over tax increases, suggesting that peoplecan be educated on this issue. If the Governor and his staff do indeed believe that asset monetization is the best option state government has to address its fiscal problems, they need to make that argument and make it now. There is, after all, something worse than political suicide. It’s a slow, painful and embarrassing political death brought on by an unwillingness to be candid in a political environment in which citizens demand straight talk from their leaders.

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 is a member of the editorial advisory board of CAMPAIGNS AND ELECTIONS Magazine.
CORZINE AND THE WORST CASE SCENARIO