In separate forums last week, New Jersey’s business community and Wall Street bond rating services registered concerns over political proposals to take tolls off of the Garden State Parkway.

In a Bond Buyer article last week, a representative of Moody’s Investors Services noted that any plan to eliminate tolls must be accompanied by steps to shift responsibility for servicing the Parkway’s $622 million debt, most likely to the state. A Standard & Poor representative told the financial newspaper that it would be “pretty irresponsible” for the state to end tolls before retiring outstanding Parkway bonds and that such a move would bring instability to the state’s credit line.

A report last week on Parkway toll removal by the NJ Alliance for Action, a business group, similarly concludes that without defined replacement revenue — like increasing the gas tax — the only acceptable substitute for outstanding Parkway bonds would be state general obligation bonds. The group estimates that the state’s principal and interest costs in taking over the bonds would equal almost $1 billion. The report says the transfer would be expensive and could incite lawsuits by bondholders. Just paying off the Parkway debt’s principal would exact $200-$330 per NJ household. 

“The real cost of building, improving, maintaining, and staffing the Parkway will remain whether its riders pay a toll or not,” said economist Donald Scarry, the report’s author. Scarry also points out toll removal’s only savings — roughly $50 million a year in staffing and administration costs — will be entirely offset by the loss of toll revenue from out-of-state drivers, who make up 20-25% of Parkway users.

Toll Bashing As 2001 Campaign Strategy - February 19, 2001

Fit to Reprint: The No Tolls Pipe Dream - April 30, 2001

Funding Question Tables GSP Non-Stop Tolls - October 27, 2000

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