New Jersey E-ZPass System A Financial Debacle
By Jennifer Brown, Staff Assistant
E-ZPass currently used in Massachusetts, New York, Delaware, Pennsylvania, Maryland and West Virginia as well as New Jersey - makes traveling easier and quicker because of time saved by not stopping in toll lanes to look for money.
Motorists like it. Danielle Singer uses her E-ZPass to travel from her Westchester, N.Y. home to business meetings in Virginia. "I would say it can save anything from five minutes to 15 minutes," Singer said. "I just scoot through the lane and don't have to wait to pay money."
But Singer's hastier trips are a headache for New Jersey legislators. The Garden State "has gotten a flat tire on the E-ZPass system," said New Jersey Assemblyman John Wisniewski (D-Middlesex), chair of the transportation committee.
New Jersey's trouble with E-ZPass is important because it may cause other states to slow installation of the system or keep people from enrolling in it.
Albert Almasy, director of the New Hampshire Turnpike E-ZPass project, expects the New Hampshire Turnpike to have E-ZPass up and running by 2004.
"I'd be lying if I said we weren't watching what's going on," he told Stateline.org. "We get together several times a month and share war stories."
New Jersey's headaches began in 1998, when the state's Economic Development Authority sold $300 million in bonds to finance installation of the EZPass system. Toll roads that bought the bonds include the New Jersey Turnpike, the Garden State Parkway and the Atlantic City Expressway.
The EDA expected the system to pay for itself through tolls, fines for evading tolls and third-party leases for the E-ZPass system technology, said Caren Franzini, executive director of the EDA.
But far from being a self-financing system, the toll roads face an anticipated debt in excess of $400 million in 2008 when payment on the bonds issued by the EDA is due, according to state officials.
Fines for evading tolls, which were expected to be the primary source of revenue for E-ZPass, have not only not met expectations but actually have contributed to loss of revenue. New Jersey has spent $19 million adjudicating erroneous violation claims -- $6 million more than it has netted from actual violations. The downturn in the telecommunications industry negatively affected revenue expected from fiber-optic capacity that the toll roads planned to sell to private companies.
"When the bonds become due and there's not a bank account of toll violators, someone's going to have to pay those tolls back," said Assemblyman Reed Gusciora (D-Mercer), vice-chair of the transportation committee. "It's going to cost the taxpayers down the line to bail this out."
The transportation committee is holding hearings to determine who is responsible for the debt incurred by the E-ZPass system and what the debt may mean for New Jersey residents. Right now, Wisniewski said he does not know what the ramifications may be for motorists regarding toll increases or construction delays on other toll road projects.
"These bonds are backed by revenues of the toll roads, and the roads will have to decide how to resolve the issue," Franzini said. "Do they not do capital projects? Where do they have to cut expenses? They have those decisions to make."
New Jersey Gov. Jim McGreevey suspended expansion of the state's system to 380 additional lanes until the financing situation is dealt with.
"Not only was it never completed, we're now about $460 million in the hole," Gusciora said. "All that spells a debacle.