New Jersey officials estimate that Gov. Jon Corzine’s proposal to raise New Jersey Turnpike tolls by 50% could spark traffic diversion of roughly 10%, yet ratings analysts say the transportation system can absorb that drop off.

The governor proposes increasing tolls to back a potential $32.6 billion to $37.6 billion bond transaction to help New Jersey pay down $17.45 billion to $22.45 billion of state-backed debt and another $5.7 billion of New Jersey Turnpike Authority and South Jersey Transportation Authority bonds. The massive sale, which officials would sell in increments, could enter the market this year as the administration plans to issue the debt six to nine months if and when Corzine’s debt restructuring plan passes the Legislature.

Critics of the toll increases say the large fare hikes will prompt motorists to use non-tolled secondary roads and the state’s transportation commissioner, Kris Kolluri, said at a press briefing on Tuesday that officials anticipate roughly 10% of current traffic will opt to use free roadways instead of paying the additional costs.

This could affect how much future revenue the toll roads would actually generate as the number of vehicles on the toll roads would decrease, according to Dick Larkin, a municipal bond analyst at J.B. Hanauer & Co.

“There’ll be more revenue stream, but the revenue stream might not be what people think it’s going to be because the toll increase will reduce the amount of drivers that use it,” Larkin said.

Yet ratings analysts say New Jersey’s transportation system can take on the potential drop in customer numbers. Cherian George, managing director at Fitch Ratings, said U.S. toll roads have an established base of traffic that allows for traffic diversion and New Jersey’s toll roads, in particular, are a gateway for drivers needing access to other regions in the U.S.

“[This] means that they have the ability to generate revenues far in excess of the needs for the operations and maintenance and reinvestment in the road itself, which means that they can, in fact, cost subsidize other investments,” George said. “The [Turnpike] has tremendous economic strength, given that it’s an important connection in the northeast to the south and the west and, as a result, the ability to raise tolls, the ability to support a higher toll rate without loosing significant amounts of traffic exists.”

During a morning talk show yesterday on New Jersey 101.5 FM, Corzine said motorists may choose secondary roads initially, but believes transportation infrastructure improvements will offer better service and lure that 10% drop off back to the toll roads.

“First of all, I think that there will be diversion in the first instances. But, I think if we maintain and widen the Turnpike like we promised but didn’t bother to put together a financing plan, or the [Garden State] Parkway, which we promised, but we haven’t put together a financing plan, you’ll end up seeing that the convenience of driving on those roads will be high enough that people will want to do it,” Corzine said.

While the financial implications of the traffic diversion remain to be seen, critics of the plan say it does not include how the state will address the additional traffic congestion, pot holes, and strain on secondary roads, according to Assemblyman and chair of the General Assembly Transportation and Public Works Committee, John Wisniewski, D-Middlesex.

“And now what will happen is that 80,000 pound trucks will now be going on those roads and they will be causing more wear and tear on those roads, which will increase our costs there, increase our traffic there.”

Corzine’s proposal calls for a maximum 50% toll hike on the Turnpike in 2010, 2014, 2018, and in 2022, with that percentage compounding over time. Turnpike fares would also adjust based on changes to the consumer price index from 2010 and beyond. The proposal also includes fare increases on the Parkway and the Atlantic City Expressway, and implementing new tolls on Route 440, which connects Staten Island, New York, to the Turnpike and the Parkway.

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