As the public waits for New Jersey Gov. Jon Corzine to announce details of his plans for a public benefit corporation, the governor yesterday said state officials are waiting to receive a “firm ruling” on whether Corzine’s asset-monetization plan would allow for tax-exempt financing. The governor will roll out the details of the proposed public benefit corporation at his state of the state speech on Jan. 8, with that plan expected to include the corporation’s ability to sell tax-exempt bonds. Because the governor’s asset-monetization plan, including the possible lease of the New Jersey Turnpike to investors, calls for the involvement of a public benefit corporation to act as an independent authority that could benefit from private dollars, there is still a question whether the corporation will have the power to sell tax-exempt debt. Corzine remains optimistic that the Internal Revenue Service will decide to allow the corporation to issue tax-free debt. “I expect to have enough confidence to make a speech on Jan. 8 with that decision,” he said during his end-of-the year press conference at Drumthwacket, the official residence for New Jersey governors.Corzine explained that the corporation would need to give investors a sense of security in their investment backed by turnpike tolls and that decisions about toll increases are “independent of that kind of inner involvement of the overall political process.”According to the governor, the structure of the corporation needs to “ensure the people who would provide the resources to the public benefit corporation the ability to have cash flow to service the debt and right now the way the [New Jersey] Turnpike Authority works, the marketplace will be very insecure about our ability to make that decision consistently because they’d look at history and see there hasn’t been a hike in tolls since 1989.”The governor said he didn’t think the corporation would have a “hard schedule” for toll increases, but that the organization would have “maximum ability up to a threshold” to implement toll boosts.In addition to securing the entity’s tax-exempt status, Corzine’s plan would decrease the state’s bonded debt by 50% and restrict future lawmakers from fiscal mismanagement, such as borrowing beyond the state’s capacity. The state does need to find ways to address its high debt burden. New Jersey has more than $30 billion of outstanding debt along with a $25 billion unfunded pension liability and a $68.7 billion other post employment benefits liability. Debt service payments account for nearly 7% of the state operating budget and officials expect debt service costs to increase to $3.4 billion from $2.7 billion over the next five years.“I believe that once the public understands that we have $143 billion worth of unfunded liabilities and a lot of obligations to protect the public, to improve their quality of life, to maintain the integrity of our infrastructure in this state, then you have to look at the options we have to provide that opportunity,” Corzine said.Once the governor releases his plan, he anticipates holding public meetings in each of the state’s 21 counties to help educate the public about the proposal, a process that he says he is excited about.Along with asset monetization, the governor pointed out the work that his administration has done in 2007, including providing health care insurance to all New Jersey children, developing a new school funding formula, addressing the state’s high property taxes, abolishing the death penalty, and implementing environment initiatives to help the state reduce carbon dioxide emissions by 20% by 2020.Corzine has also bounced back from a near-fatal car crash in mid-April that left the governor with a broken leg, sternum, collarbone, and 12 broken ribs. Months later, Corzine addressed the reporters with a few smiles and a joke or two. When talking about the degree of secrecy within his administration, the governor pointed to his head and quipped: “You don’t want to get inside here anyways.”Corzine will need that post-recovery energy as he prepares to push his asset monetization through the Legislature.“This is the most joyful year I’ve ever had, except for about 30 minutes of it, and I have a greater sense of enthusiasm, purpose, and good feeling about being alive.”
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