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NJ: Raising Tolls & Keeping the Money for the Public - Unlike Privatization Ripoffs

After discussing the possibility of privatizing major state highways last year, New Jersey Governor John Corzine instead made a proposal earlier this month that called for significant increases in tolls that would provide nearly $30 billion to decrease state debt and invest in state transit projects. Unlike rhetorical promises around privatization money in other states, this plan actually laid out how money would get raised. 

Whatever one thinks about raising tolls as public policy, this is at least an honest proposal. The dirty secret of most privatization proposals is that the reason private companies are willing to pay billions to buy or lease highways is that they then have license to raise tolls massively, but that's not how it's sold to the public.  And the worse part of the deception of the public is that most of the toll increases then don't go back to public investments but instead line the pockets of the private investors. As we noted last year, while Indiana Governor Mitch Daniels boasted about getting $3.8 billion for leasing 157 miles of highway in that state, independent analysts estimated that the companies buying the lease will get to raise tolls and reap an additional $11.4 billion-- money the taxpayers could have kept if the state had raised tolls itself and held onto the roads as New Jersey is proposing.

There is no such thing as a free lunch, despite privatization being sold that way. Companies pay lots of money for privatized highways because they then get to raise tolls themselves and keep the profit, rather than reinvesting on behalf of the public. Gov. Corzine is arguing that New Jersey can raise $30 billion by keeping the increased toll money that other states like Indiana are giving away to private companies.   It's not a free lunch, but at least it's not a deceptive rip-off like the highway privatization scams being promoted around the country.

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