E-ZPass financing woes could mean higher tolls
Tuesday, May 14,
By TOM HESTER Jr.
TRENTON - As lawmakers warned E-ZPass debt
could bring higher tolls and delayed construction, officials from the agency that authorized $300 million
in bonds to finance the electronic toll system said they did not study whether
the deficit-ridden project's financing was sound.
state Economic Development Authority executive director, told the Assembly
Transportation Committee yesterday the authority depended on financial reports
from the state Transportation and Treasury departments.
The state planned
to rely heavily on $25 fines from toll cheats to pay its E-ZPass debt, but it
has cost $19.2 million to collect $13.3 million in fines and a comprehensive
fine collecting system never has been implemented.
E-ZPass reportedly is facing a $469 million deficit by
2008, when the bonds sold to pay for construction are due.
weren't asked what we think about it," Franzini said. "We were asked to issue
Franzini said the bonds do not require the bridge and highway
agencies to raise tolls should E-ZPass fail to earn enough revenue, but
Assemblyman John Wisniewski, D-Sayreville, the committee chairman, said failing
to pay the debt is not an option.
"The toll roads certainly won't
default," said Wisniewski. "Tolls may go up, projects may not get done and
that's not what anyone bargained for."
E-ZPass, which uses transponders
on vehicle windshields to collect tolls from either credit cards or prepaid
accounts, has been troubled by money and equipment problems in New Jersey since
it was implemented four years ago.
Besides using toll violation fines to
pay the debt, the state planned to raise $190 million by leasing the system's
fiber-optic lines, but that plan was hurt by a telecommunications industry
slump, state officials said.
Gov. James E. McGreevey suspended expanding
E-ZPass, which was installed in 360 lanes on New Jersey toll roads and bridges.
It was to be installed in about 380 additional lanes.
The committee is
holding hearings to try to determine what caused the problems and who is
It previously heard testimony from Edward Gross, the former
New Jersey Turnpike executive director. Gross defended the E-ZPass financing and
said it always has been understood - despite Whitman administration claims in
1998 that E-ZPass would cost taxpayers nothing - that the bridge and road
agencies would be responsible for paying the debt should revenue fall
Franzini said the E-ZPass bonds were purchased by a group called
Newcourt Capital, which then sold them to various financial
Wisniewski said his staff has been unable to find Newcourt
and asked whether it might have been created by MFS Network Technologies, which
was awarded the contract to install E-ZPass.
Franzini and Lawrence G.
Cier, EDA investment banking director, said they knew of no
Assemblyman Diane Stender, D-Fanwood, suggested Newcourt be
called to testify and questioned why the bond deal was completed
Franzini said the deal was closed privately because it was so
"That was probably a very good way to escape scrutiny," Stender
Assemblyman Alex DeCroce, R-Morris Plains, said the E-ZPass debt
will not be due for several years and defended the system, charging Stender with
being on a "witch hunt" after she suggested E-ZPass was not
"Right now, everything is working well," DeCroce
Wisniewski did not agree.
"The problem here is an accident
already has happened," he said.
Responded DeCroce, "Well, it hasn't
Wisniewski, though, said the state will owe money
"That money has to come from somewhere and if it's not from a
toll increase, it's going to be from a reallocation of resources," he
Assemblyman Francis Bodine, R-Moorestown, said a toll increase
would effect only people who use the toll roads and bridges, including motorists
Assemblyman Reed Gusciora, D-Princeton Borough, said
many of those people are state taxpayers.