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How Far Will Governor Christie Go in Privatizing New Jersey?

Tuesday, November 02, 2010 - 07:33 PM

New Jersey Turnpike Shield(Matt Dellinger, Transportation Nation) – When New Jersey Governor Chris Christie killed the ARC rail tunnel project (again) last Wednesday, he took the time to knock down some of the possibilities for cost savings that Secretary of Transportation Ray LaHood had offered

in an attempt to save the largest public works project in America. One of these options was to use a public-private partnership, or P3.  “There was some interest in the ARC project from some private facilities,” Christie said. “But remember this, none of that will address the cost or the technical risk in the project. None of it will absorb additional costs from the tax payers because in the end, New Jerseyans are going to be responsible in some fashion to pay for the costs of it. In essence, it’s the difference between public financing and private financing. It’s really the only difference.”

But Christie's dismissal of the specific privatization scheme suggested for the tunnel does not indicate a distaste for P3s in general. Christie’s Transportation Commissioner, James Simpson, announced the day before the ARC press conference that the state would be soliciting bids in December to privatize the work of collecting tolls on the New Jersey Turnpike.  Taking toll collection out of government (and union) hands could save up to $43 million a year, or so suggested a report (pdf) delivered in May by the New Jersey Privatization Task Force, which Governor Christie himself created by executive order in March.

The New Jersey Privatization Task Force put forth a number of privatization opportunities from across virtually every department of state government.

Possibilities in the realm of transportation, their report says, include Turnpike and Interstate rest areas, emergency service patrol, bus routes, and NJ Transit parking facilities, which offer an attractive income stream and the chance of lucrative transit-oriented development: “NJ Transit should receive an up‐front payment should it enter into an agreement with a private firm to operate NJ Transit parking facilities,” the report declares, “as well as develop abutting and other land owned by the agency.”

It remains to be seen how many of task force’s specific recommendations Governor Christie will pursue, or whether he will encourage New Jersey to institutionalize the penchant for privatization by creating a permanent, centralized entity to continually evaluate new possibilities (including those proposed by banks and contractors), as the report suggests. But any movement in that direction is sure to resurrect at least some of the ire that state voters directed at the last Governor, Jon Corzine, when he suggested “monetizing” the Turnpike—raising tolls, pegging them to inflation, and issuing bonds against those higher revenues.

Already the notion of hiring a corporation to collect Turnpike tolls has ruffled feathers. Charles Wowkanech, President of the New Jersey State AFL-CIO, immediately issued a press release (pdf) Tuesday, warning, “Logic dictates that before we move ahead with taking bids to privatize the work of toll collectors, a system needs to be in place to ensure transparency, oversight, efficiency and significant savings to taxpayers. Short of these requirements, all that is occurring is a deal that puts 700 people on the unemployment line and misrepresents the possible benefit to taxpayers.”

Wowkanech was no doubt troubled by the privatization task force’s observation that the Turnpike Authority “is paying between 40 percent and 50 percent more per hour per employee than a private vendor might charge.” And no doubt he was unamused later on Tuesday when the Turnpike Authority board voted to take away free EZ-Pass accounts from toll road employees.

In any case, between the task force report and the overt encouragement from Secretary LaHood and the USDOT, privatization is in the air. And if the Republicans win one or both houses of Congress on Tuesday (in large part because of their budget-cutting stance), the trend may become inexorable. Someone should warn Matt Taibbi.

Matt Dellinger is the author of the book Interstate 69: The Unfinished History of the Last Great American Highway. You can follow him on Twitter.

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