Not just one
N.J. road to riches from assets
The state is also weighing the lottery and
Reaction is mixed.
By Jennifer Moroz, Philadelphia Inquirer Trenton Bureau
The New Jersey Turnpike gets all the attention.
But the state is weighing whether to cash in
other assets, too.
Depending on the results of a study commissioned
by Gov. Corzine, New Jersey officials could decide to lease the
Garden State Parkway or Atlantic City Expressway to a private
operator that would collect tolls.
They are also contemplating handing lottery
operations - and revenue - to the private sector under a similar
deal. Development rights at NJ Transit stations could be up for
And that's just the A List.
For years, public officials have experimented
with privatization to deliver services more cheaply and
efficiently. But around the country, cash-strapped governments
increasingly are looking to deals with the private sector to
make big money, fast, to fund major infrastructure projects or
pay down debt without raising taxes.
Corzine, a former Wall Street executive, calls it
"asset monetization." Others call it asset leveraging.
Jerold Kayden, who has researched public-private
partnerships, calls it "a ferocious search for money in a
"At a time when the demands on government are
high, there is an attempt to create as much revenue as possible
from anything that exists," said Kayden, a professor of urban
planning and design at Harvard University. "You're willing to
mortgage just about anything."
Toll-road deals, which have already generated
billions of dollars for governments in the United States, have
emerged as "one of the biggest opportunities," said Geoffrey
Segal, who tracks privatization as director of government reform
for the Reason Foundation, a libertarian-leaning think tank in
But, he added, "the sky's the limit if you're
Politicians, it seems, are getting more and more
Tiny Clark, Texas, "sold" its name in 2005 in
return for free satellite service for its 125 residents. The
town now goes by DISH.
Following in the footsteps of officials in Canada
and Australia, Chicago and Indiana struck toll-road deals in
which a private consortium paid $1.8 billion for the 7.8-mile
Chicago Skyway and $3.8 billion for the 157-mile
Road to take over operations and toll collections for decades to
come. Pennsylvania has solicited bids for a similar deal for the
Pennsylvania Turnpike, while Chicago is considering privatizing
Midway Airport. And taking a page from officials in Europe,
Indiana and Illinois are weighing leasing their lotteries
In New Jersey, Corzine has asked UBS Investment
Bank to review all of the state's assets to determine which
could make for viable, lucrative private-sector deals.
A preliminary study listed the three toll roads,
building rights at transit stops, and the lottery as having the
greatest potential in the near term. It concluded that officials
also should continue to study privatization of Atlantic City
International Airport and the sale of naming rights to state
facilities, among several other items.
State Treasurer Brad Abelow said officials were
looking everywhere to find new sources of revenue to help the
state overcome years of borrowing and financial mismanagement.
New Jersey carries $29.7 billion in debt, and this year is
paying $2.5 billion - 8 percent of state spending - on that
"We started this because we have huge capital
needs as a state, and we really are constrained in our budget by
our level of indebtedness," Abelow said.
By making a major dent in the state's debt,
officials could free up billions of dollars to fund long-term
capital projects, even much-needed property-tax relief, Corzine
But critics say the type of deals New Jersey is
weighing may come at too great a cost.
Talk of leasing the turnpike has prompted a lot
of concern. Experts on such transactions say the state could get
more than $20 billion for the turnpike and parkway, which are
operated jointly and bring in more than $700 million in tolls a
year. But critics worry that a private operator would increase
tolls and allow maintenance to slip, and in a Quinnipiac
University poll, 53 percent of 1,310 New Jersey voters
questioned Jan. 16-22 said they opposed such a lease deal. The
margin of error was plus or minus 3 percentage points.
Privatizing lottery operations, which generate a
profit of more than $850 million, has not received much
attention in New Jersey. But it has in the Midwest.
Govs. Rod Blagojevich of Illinois and Mitch
Daniels of Indiana are trying to sell lawmakers and the public
on the idea as a way to fund expensive education initiatives.
Blagojevich figures that the state could get
between $10 billion and $15 billion for a long-term private
lease of its lottery, which last year showed a $670.5 million
In Indiana, Daniels is hoping to get $1 billion
upfront and at least $200 million a year to lease the lottery,
which last year brought in $218 million.
Experts on such private-public deals say proceeds
should go toward long-term financial goals such as paying down
debt or investing in infrastructure.
Corzine has vowed to do just that, saying "under
no circumstances will asset-monetization proceeds be used as a
one-time budget fix to cover routine operating expenses."
Getting ahead of criticism, the governor promised
to defend the public's interest. He said any deal should allow
the state to retain a say over its assets and regulate service
standards, and should contain safeguard against outrageous fee
Selling naming rights to public facilities would
likely be among the simplest transactions the state is
considering. But that idea, too, has a lot of detractors.
Gary Ruskin, who cofounded the Oregon-based
Commercial Alert with civic crusader Ralph Nader, is one of the
Naming public assets after companies, he argues,
flies in the face of the American tradition of naming them after
historical and civic figures. It also represents a government's
"explicit endorsement of a company and its product," he said.
On Auction Block?
Gov. Corzine has asked for a review of all state
assets to determine which ones officials might lease, sell, or
otherwise cash in on through deals with the private sector. A
preliminary study by UBS Investment Bank identified this short
list of assets worthy of further consideration.
Considered most viable for a deal in the near
Could produce successful deals in the longer term
after more study.
Naming rights to public facilities
City International Airport
rights on existing and future roadways
Bank Arts Center