New Jersey Republican lawmakers yesterday announced that they believe Gov. Jon Corzine's $38 billion debt restructuring proposal to be unconstitutional and have asked the Office of Legislative Services to evaluate the constitutionality of the plan.
The minority leaders in the Senate and the General Assembly said the new public benefit corporation that Corzine would create to oversee the state's toll roads, implement toll hikes, and collect toll revenues would act more like a franchise than a government entity, raising the question of whether the entity's structure complies with the state constitution.
The governor's initiative would rename the New Jersey Turnpike Authority as the New Jersey Capital Solutions Corp., which would enter into a long-term lease agreement with the yet-to-be-formed public benefit corporation. The draft bill states that the PBC "will be a separate and independent legal entity from both the state of New Jersey and the New Jersey Capital Solutions Corporation."
Senate Republican leader Thomas Kean said the PBC's structure is too independent and removed from the political process.
"The state constitution has been on record since the 1880s to prevent exclusive franchises of the very nature that the governor is talking about," Kean said. "Now the governor is saying that the only way his whole proposal works is by granting exclusive franchise to a private entity."
In Article IV, section 7, paragraph 9, of New Jersey's constitution, it states that "the Legislature shall not pass any private, special, or local laws ... granting to any corporation, association, or individual any exclusive privilege, immunity, or franchise whatever."
Corzine's debt-restructuring plan calls for a 50% increase in tolls that will secure up to $38 billion of debt. Bond proceeds would then pay down half of the state's $32 billion of outstanding debt and fund transportation infrastructure for 75 years. q