Democrats say the $1.25 billion intended for the ARC tunnel should be rolled back because the project was canceled by Gov. Christie
The Office of Legislative Services has determined that toll hikes scheduled for 2012 can in fact be rolled back.TRENTON — If toll hikes slated for next January are rolled back, the potential consequences for the state could include a federal investigation, a lowered bond rating, or a number of lawsuits, according to a memo issued by the New Jersey Turnpike Authority’s bond counsel.
The nine-page memo written by Wilentz, Goldman and Spitzer lays out a bleak picture for the state if Democrats’ proposal to roll back $1.25 billion in toll hikes, originally intended for a mass tunnel project under the Hudson River, is signed into law.
Democrats say the $1.25 billion intended for the tunnel should be rolled back because the project was canceled by Gov. Chris Christie in October. Christie wants the revenue instead to beef up the state’s Transportation Trust Fund, which pays for road and rail projects.
While the measure is unlikely to become law because it faces a Christie veto, the issue has prompted a partisan back-and-forth between Senate Democrats and the Christie administration.
Michael Drewniak, a spokesman for the governor, today said the Democrats’ plan is "foolhardy at a minimum," and Senate President Stephen Sweeney, the co-sponsor of the legislation, and other Democrats are "truly uninformed about the consequences."
"This is not political, and it should never have been made political," he said. "It’s the finance world where promises to bond holders that are made are done so based on predictable, planned revenue sources."
A spokesman for Sweeney dismissed the report as scare tactics.
"It is amazing how hard this administration will turn to any and everyone they can find to continue their bait-and-switch on New Jersey drivers," said spokesman Chris Donnelly. "It is one more example of their ‘Hey, look over there’ tactics of ignoring the facts."
The memo to the Turnpike Authority was prompted by an Office of Legislative Services report released earlier in the week, which said the projected revenue from the toll hikes has not been allocated yet and can legally be rolled back.
The memo warns that among the potential ramifications are litigation brought against the Turnpike Authority or state by bond owners.
The Turnpike Authority may not be able to issue enough bonds to entirely fund its $7 billion Capital Improvement Project, and the ratings on the Turnpike Authority bonds would likely be lowered. The U.S. Securities and Exchanges Commission could investigate or bring litigation against the Turnpike Authority based upon financial projections that included the revenue from the hikes, the memo says.
"Any such downgrading of the Bonds will increase the costs of the Authority’s future borrowings and impair the Authority’s ability to borrow needed capital funds," it reads.