Toll for State Pensions

At a panel discussion today on “The State of State Pensions” at the Kimmel Center in Philadelphia a bunch of politicians seemed to think this was a good idea:

Take pension money and invest it in local projects that produce a guaranteed return, such as a toll road.

That was one of the ideas suggested by former Maryland Gov. Martin O’Malley to fix the sorry state of public pensions nationally. Those in New Jersey and Pennsylvania were the nation’s worst funded last year.

“There are opportunities we’ve yet to realize, such as having our pension funds invest in local, sustainable projects with a double bottom line,” said O’Malley.

Here’s why a New Jersey politician would favor this route:

New Jersey has put transportation infrastructure projects on hold because the ‘trust’ fund that pays for them has been depleted and apparently the only viable option to restart work (and payments to those campaign donors) is a gas tax. But what if, for example, you were to…

  1. take $50 billion from the pension trust to…
  2. build a toll road (or possibly a trans-Hudson tunnel) which would….
  3. return $100 billion in tolls to cover pensions for a few years?

You would then have….

  1. no need for the extra gas tax,
  2. connected contractors getting their money, and
  3. pensions paid (for a little longer) without raising taxes directly.

Of course living in New Jersey would become $100 billion more expensive even if they don’t deign to call it a tax but it’s not the dumbest idea they ever came up with.

 

15 responses to this post.

  1. Posted by Anonymous on July 27, 2016 at 5:47 am

    So you are saying it is dumb? Probably because that 100 billion will never see its way into the pension fund. That you can be sure of

    Reply

  2. Posted by Anonymous on July 27, 2016 at 8:33 am

    So NJ would now expect those who live out of state, trucking companies who use NJ roads, NJ businesses and contractors with company vehicles and all other out of state entities and individuals to pay into NJ pensions via tolls? How about NJ just gets rid of the corrupt Transportation Authority, that would free up a lot of money for NJ as we already have the highest road and bridge tolls in the country.

    Reply

  3. Posted by dentss dunnigan on July 27, 2016 at 9:31 am

    Actually it’s a great idea …after all the pensions are guaranteed by the taxpayers of the state …so even if it fails the taxpayers will be allowed to pay for it

    Reply

  4. Posted by Anonymous on July 27, 2016 at 9:43 am

    Remember when Corzine wanted to sell the New Jersey Turnpike

    Reply

  5. Posted by George on July 27, 2016 at 10:23 am

    “take $50 billion from the pension trust to…”

    The fund is valued at $70 billion not all liquid assets. So you would have to sell everything that can be sold.

    “return $100 billion in tolls ”
    NJ collect only about 3 billion in tolls a year

    New Jersey pays about 20% of all tolls in U.S.
    http://www.usatoday.com/story/news/nation-now/2015/10/26/new-jersey-tolls-turnpike-costs/74628900/

    An industry in NJ is truck stops, which depend on low fuel costs to out of state trucks going to NY city. Testing with smaller increases would be less risky. Maybe different summer and winter tax rates.

    Why are service stations required to pump your gas?. In the past this might have employed teens and down on their luck adults, but these days they are almost always foreigners.

    Why are police used as flaggers on all roadway projects?

    Official pension amendment website:
    https://votenjpension.org

    Reply

  6. I heard the toll (for cars) on the PA turnpike from one end of PA to the other is 36.00!!! NJ only takes a third of the time to traverse (I think), but I imagine that this is where they are heading.

    Reply

  7. Posted by Anonymous on July 27, 2016 at 1:08 pm

    Anonymous on July 8, 2016 at 12:54 pm
    Let’s merge all the toll roads, already maxed out in debt (especially NJTA) and rename them the PORA (Pension Obligation Road Authority) increase tolls at will and drive if you support the cause or I guess claim to have no other choice?

    Hmm……..

    Reply

  8. Posted by boscoe on July 27, 2016 at 1:40 pm

    I have a feeling your tongue is pretty far in your cheek here. Any acceptable “infrastructure” investments made by public pension funds would have to have a clear track record and demonstrated rate of return to make them acceptable fiscally and ethically. California’s huge public employee pension fund just bought a 10% stake in a private toll road operator in Indiana. That is a toll road that has been in use for some time and has a predictable revenue stream. And it’s not really an infrastructure investment, it’s buying into an operating entity. Are the California public pension funds willing to invest large sums of their workers’ money in the looming fiasco that is the proposed high-speed passenger rail line between LA and San Francisco? Now that is a true infrastructure investment with a near-guaranteed negative rate of return.

    New Jersey already has more roads than it needs, including toll roads. And there is no point in “buying” the NJ Turnpike Authority and assuming all of their existing debt. A trans-Hudson tunnel? With near-certainty of astronomical cost overruns, would this be a prudent investment for a public pension fund with stringent fiduciary responsibilities? Or would it be one step from speculation?

    Perhaps Sweeney is thinking (he’s always thinking) of having the pension funds invest in commercial real estate and construction development. That would help his day-job constituents. How about a new casino in A.C. or the Meadowlands? Who wouldn’t be happy to have their retirement income parked there?

    Reply

  9. Posted by bpaterson on July 27, 2016 at 2:06 pm

    just give the turnpike to the pension fund and them they cant flip it. You’ll see how fast the pensioners will clean out the deadwood and patronage at the turnpike to increase the profits going into the pension fund. This may be an idea!

    Reply

    • Posted by PS Drone on July 27, 2016 at 5:12 pm

      Good idea. Let’s throw in NJ Transit too. Save at least $300MM per year drain on the NJ Treasury. If the pension fund(s) do not want it (because it is a fiscal loser) give it away to any reputable company who would take over its operation.

      Reply

    • Posted by Anonymous on July 27, 2016 at 8:25 pm

      i agree with you!

      Reply

  10. Posted by Anonymous on July 29, 2016 at 1:10 am

    Hmmmmm
    At one point, I considered the securitization of toll receipts to be a possibly smart idea during Corrine’s tenure…now however is suspect the pols are looking for some spare cash lying around and the pensions are nearest the table. Another possible reason is that the tolls aren’t GO debt and as REVENUE debt could be discharged or walked away from….oooops, like the state isn’t indirectly doing that anyway.
    Hold your breath, while PW pensions are a republican dry run at social security. It’s all an immoral practice against a democratic voter base. Who could lose…right? PW pensions are only for a minority right? Keep telling yourself that when the Feds decide to confiscate 30% of your 401ks/IRAs/SEPs To cover their debts they don’t feel like paying.

    Reply

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