The cat’s out of the bag
Now that the rest of the asset monetization cat is out of the bag, it’s up to the Legislature to decide what to do with it. Will it take the feline home, give it a saucer of warm milk and a fresh litter box, or will it stuff it in a sack and drop it off the Outerbridge Crossing?
After talking about it for months without any details, the Governor finally dropped on the Legislature his plan to create a corporation to assume financial control of the state’s three toll roads, float some $40 billion in bonds tommy hilfiger , impose a toll on a stretch of Route 440 in Middlesex County, and raise tolls by 50 per cent every four years between 2010 and 2022 to pay off the debt.
In return, Corzine wants to use the money to cut the state’s record debt in half and replenish the Transportation Trust Fund to guarantee bridge and road construction and repair for years into the future.
The alternative, he told the Legislature, is to raise taxes by $5 billion or cut a like amount from the budget. In language reminiscent of several of his predecessors, he told legislators if you don’t like my idea, tell me yours.
Taxes aren’t going to be increased; the budget won’t be cut in any significant way, and there will be a distinct lack of viable alternatives. At this early stage, it looks like the Governor has the upper hand.
He’ll do it the way these sorts of things usually get done by laying out choices so politically distasteful that his idea looks brilliant by comparison. It gives cover to nervous legislators by allowing them to justify a favorable vote to their constituents by proudly boasting they stood resolute in refusing to raise taxes or cut the amount of state aid coming into their towns and school districts. The goal is to reduce the political risk as much as possible and that’s precisely what the Governor’s proposal offers them.
The Governor made it clear that doing nothing is neither an option nor a strategy, even though many legislators would prefer that. After all, standing pat doesn’t just reduce the political risk, it eliminates it.
The debate will dominate the 2008 legislative session and, whatever the outcome, will impact the 2009 election heavier than any other issue.
Corzine has staked his political future on the monetization idea and, like it or not, the Democrat Assembly members who will share the ballot with him next year have theirs staked on it as well.
The Governor’s task is to convince his party’s legislative majorities that if they support the mon tommy hilfiger etization idea, they won’t be “Florioed”; that is, they won’t meet the fate of those Democrats who were routed and driven from power in 1991 after supporting the former Governor’s $3 billion worth of tax increases the previous year.
He’ll have considerable help from organized labor which views the Transportation Trust Fund as the greatest single job provider ever devised. The billions Corzine wants to allocate to the Fund represents enough bulldozers, cranes, road graders and dump trucks to keep unemployment in the construction trades to historic lows. Labor can expected to be among the chief lobbyists for the Governor’s plan.
Additionally, Corzine has fiscal reality on his side in this debate. The state is mired in a crushing debt which chews up some $3 billion a year to service and it’s not going away anytime soon. In fact, it could grow worse.
To be sure, those who demand budget cuts and imposition of greater fiscal restraint than state government is accustomed to have valid points to make. Their argument, however well crafted and supported, is unlikely to prevail.
That the state has lived beyond its means and on borrowed money for years is indisputable. The difference now is that the tommy hilfiger time has arrived to repay the money lending piper who has called the fiscal tune in this state for decades.
So, the fate tommy hilfiger of the cat that’s been let loose in the legislative chambers hangs in the balance a warm spot in the legislative kitchen or a cold demise in New Jersey’s coastal waters. Right now, my money’s on the kitchen.