TRENTON, N.J. – New Jersey might be able to save between $11.6 billion and $23.2 billion were it to lease the New Jersey Turnpike and Garden State Parkway to a private company.
Click here to check out the Reason Foundation’s new report.
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Back in the spring, the Turnpike Authority approved a plan to increase tolls on the Garden State Parkway by 27% and New Jersey Turnpike by 36%.
The Foundation believes its findings could assist with state’s transportation costs without further burdening taxpayers and tollpayers.
“New Jersey toll-payers were recently hit with a large, unexpected toll rate hike,” said Robert Poole who authored the study. “Today, most toll road leases limit annual toll rate increases to the rate of inflation, so drivers would be protected. The lease agreement would ensure meaningful state oversight of the toll rates and key performance indicators for the Turnpike and Parkway, while providing greater accountability and transparency for the public and toll-payers.”
“As an investor-financed business, a toll road company would likely speed up modernization efforts on the Turnpike and allow the state to fund other infrastructure projects,” added Poole. “The state could ensure there are significant penalties for failing to meet performance metrics and that the lease could be terminated if the company continued not measuring up to expectations.”
The proposal isn’t unusual.
Both the Chicago Skyway and Indiana Toll Road are leased as are toll roads in Australia, France, Italy, Portugal, and Spain.
“States like New Jersey need to examine if they are maximizing the value of their existing toll roads. Based on the valuations of overseas toll roads in recent transactions, we found New Jersey would have significant net proceeds after paying off outstanding tax-exempt toll road bonds as required by U.S. tax law,” Poole said. “Despite the pandemic and recession, car usage is nearly back to normal levels in some areas and there continues to be great interest in long-term investing in U.S. toll roads. With today’s low interest rates, these types of acquisitions are still attractive to global toll road companies, infrastructure investment funds and pension funds.”
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