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Deficit drives N.J. to consider selling roads

Proceeds would go to trust fund

TRENTON, N.J. -- New Jersey, the state with the most highways per square mile, may sell the best-known of them all -- the 148-mile New Jersey Turnpike.

Acting Governor Richard Codey last month ordered a study on how to replenish the cash-strapped Transportation Trust Fund, the state's biggest source of highway construction and mass transit financing. One option is selling the New Jersey Turnpike Authority, owner of the turnpike and the Garden State Parkway.

US Senator Jon Corzine, a Democrat who is the front-runner in the governor's race that will be decided in November, has supported Codey's decision to consider selling or leasing the toll roads instead of increasing a fuel tax with gasoline prices near a record.

''People are looking seriously at selling the turnpike because gasoline prices are making a large gasoline tax increase politically more difficult," said Damien Newton, New Jersey coordinator for the Tri-State Transportation Campaign, which advocates for regional transportation improvements.

Codey first proposed a toll road sale in January after reading that Chicago received $1.83 billion from investors who leased the right to run the city's 7.8-mile Skyway bridge for 99 years, members of his administration said.

New Jersey faced a $4 billion budget deficit at the time, and selling the roads would have raised cash to balance the budget. Lawmakers cut tax rebates instead. The state now must find at least $800 million in annual revenue by July 1 to pay for transportation projects.

The turnpike and 173-mile parkway produce $716 million in tolls each year, Philip Villaluz, a Merrill Lynch & Co. analyst, said in a July report. Villaluz estimated the state may make $22.5 billion from selling the authority. The state Office of Legislative Services said the profit would be as little as $3.4 billion after the authority's debt is paid.

Any proposals on how to raise money to replenish the trust fund will likely be made after the Nov. 8 election, said John Wisniewski, chairman of the Assembly Transportation Committee. Corzine is running against Republican Douglas Forrester and all 80 Assembly seats are up for election.

Forrester has called a turnpike sale ''crazy," saying Democrats who control the Legislature would squander any profit. He said the state should dedicate more fuel taxes to the transportation trust and take revenue from other programs.

If the state doesn't replenish the fund, it will lose the ability to sell bonds backed by its revenue, and also would lose federal aid that matches what the state spends, Wisniewski said. The trust, created in 1984, was intended to be a steady revenue source for highway and mass-transit projects.

The fund's debt has surged to more than $7 billion as the state borrowed to pay for capital projects and to plug budget deficits. By July 1, all of the revenue for the trust will have to be used for debt service.

Without new funding, the state won't have money for new projects, said Thomas Dallessio, president of the Regional Plan Association, which monitors transportation policies in New York and New Jersey. ''We're going to have a transportation meltdown on July 1 if no one acts," he said.

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