After a year of speculation, New Jersey residents finally got to hear details of Governor Corzine’s “asset monetization” plan during his State of the State address yesterday afternoon.

Briefly, Corzine proposes to establish a nonprofit Public Benefit Corporation (PBC) to collect tolls and manage and maintain the toll roads. The PBC will issue its own bonds (expected to be $40 billion worth) and will pay the state for the right to collect tolls. The debt incurred by the PBC would be paid down with toll revenue. Immediately, the PBC bonds would be used to pay down half of the state’s accumulated $32 billion in debt. That would cut the annual deficit by about $1 billion. Corzine’s plan dedicates the remaining bond revenue to pay for 75 years of multi-modal transportation improvements, with any additional revenue also slated for transportation projects. Corzine pledged significant toll hikes – 50% every four years, and adjusted for the cost of living in between – on the Turnpike, the Parkway and the Atlantic City Expressway, with new tolls on portions of Route 440.

Aside from the enormous scale of the plan and the creation of a new entity to take responsibility for the debt, the proposal sounds a lot like previous plans to issue bonds on the promise of future toll hikes, as detailed in our special series on New Jersey’s transportation financing woes. Unless the toll hikes materialize, the state could incur even greater debt.

Certainly a new stream of transportation revenue is necessary. The state has no transportation funding starting in 2011. As Corzine noted, the Parkway hasn’t had a toll hike since 1989. (It’s worth noting, however, that the first toll hike won’t go into effect until after Corzine is up for reelection in 2009, assuming he runs again.) Unfortunately, an increase in another source of transportation revenue, the state’s gas tax, was not part of the Governor’s plan. But at least the Governor is attempting to find a solution to state’s chronic transportation funding problems.

However, the plan raises several red flags. First, the Campaign worries that the creation of a PBC with “the right to operate, maintain, [and] expand the roads…” would give the entity unprecedented authority to embark on new roadway projects without being subject to legal requirements for environmental review and public involvement. While it might be easier to raise tolls through the politically-shielded PBC, it seems a bad idea to leave the public out of a decision-making process with potentially huge quality of life impacts for the state’s residents.

There is also the issue of whether toll revenue from a few roadways should be used to pay for general state debt reduction. While Corzine has promised that he will fully fund the Transportation Trust Fund for a generation, transportation capital coffers are already raided annually to pay for transit operations and other operating costs. Unless Corzine and the legislature can find a sustainable long-term source of operating funds, this pattern will surely be repeated.

Finally, and most importantly, several of the transportation projects Corzine identified in his State of the State address would mark a big step backward for a state that has been nationally recognized as a leader in smart growth and forward-thinking transportation policy. Governor Corzine repeatedly mentioned the proposed Turnpike and Parkway widenings, justifying their need only with the statement that they “have been promised.” He also called for expanding the Atlantic City Expressway to support planned development in that area of the state. The Campaign has written extensively about the dubious Turnpike and Parkway widening proposals. Our review of Turnpike Authority documents has revealed that portions of the newly widened Parkway will be filled with traffic within years of the project’s completion, while the Turnpike widening project in and of itself will induce huge increases in traffic. Corzine’s State of the State was the first we’ve heard of plans to widen the Atlantic City Expressway and provides more evidence that New Jersey’s transportation policy may be backsliding.

Corzine also listed several transit capital projects that would be funded by the replenished Transportation Trust Fund, including the ARC Tunnel, light rail in Gloucester County, and extending Hudson-Bergen Light Rail service, in some form, to the Northern Branch in Bergen County. However, no new operational funding will be available through his plan to run this expanded service.

It’s clear that Corzine’s plan will be a “hard sell,” as Senate President Richard Codey told the Star-Ledger yesterday. Republicans were less gracious, with State Committee Chairman Tom Wilson calling the plan the “mother of all fiscal gimmicks.” The Campaign admires the Governor’s boldness in proposing a plan with the potential to provide a long-term, stable source of funding for the state’s nearly bankrupt Transportation Trust Fund. But legislators and the public need to take a very hard look at the plan before buying into the promise of a quick-fix for the state’s fiscal woes.