What does President Bush in Saudi Arabia have to do with New Jersey Governor Corzine campaigning to raise highway tolls? And why should we care, especially if we never take the Jersey turnpike anyway?
It's pretty simple: driving costs in the United States will be increasing dramatically in the future. And that will impact where people will want to work and live.
Part of the President's Middle East mission was to jawbone the Saudi royals to keep oil prices from rising too high too fast, because high energy bills in the US are not only inflationary they also hit consumers and help push the country into recession. The President argues if you crater our economy we cannot buy as much oil from you and your revenues will go down. But places like China and India escalate demand. Unless a global recession occurs, the Saudis have plenty of customers. And that will keep gasoline (and heating oil) prices headed up.
Gov. Corzine, meanwhile, faces a yawning $32 billion state budget deficit and aging highway system in a totally car dependant state. New Jersey has low gas taxes and the Federal government has been cutting road funding for years--the Federal Highway Trust Fund goes insolvent next year, because Congress has refused to raise the federal fuel tax since 1993. Adjusted for inflation, the federal gas tax is half its 1960 level. As part of the "no new taxes" mantra, the Federal government also has pushed more of the burden on maintaining interstates onto the states. So the governor proposes increasing tolls by five times current tolls over the next 15 years. Obviously, drivers (everybody in the state) are up in arms, but Jersey voters have also rebelled at some of the highest local property taxes in the nation. And they don't want the state gas tax raised either, especially when gas pump prices are up over $1 a gallon since last year. But the state has to pay its bills and fix its roads.
Corzine won't get his gigantic toll increase, but he'll get part. And don't be surprised if the state gas tax goes up to make up part of the difference.
And as for you in other states, New Jersey's problem is also your problem. Your roads are aging too and congestion just keeps getting worse. Bills are coming due and infrastructure needs require big bucks. Tolls and congestion pricing schemes are coming to roads near you. The Federal gas tax will get hiked too to preserve the Trust Fund, and pump prices will just keep increasing. And if terrorists hit Saudi oil fields all bets are off.
There will be no more free ride. Living out in the burbs, needing three cars to get the family around, may not pencil out the way it once did.
© Miller Ryan LLC 2008
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Jonathan D. Miller
A marketing communication strategist who turned to real estate analysis, Jonathan D. Miller is a foremost interpreter of 21st citistate futures – cities and suburbs alike – seen through the lens of lifestyles and market realities. For more than 20 years (1992-2013), Miller authored Emerging Trends in Real Estate, the leading commercial real estate industry outlook report, published annually by PricewaterhouseCoopers and the Urban Land Institute (ULI). He has lectures frequently on trends in real estate, including the future of America's major 24-hour urban centers and sprawling suburbs. He also has been author of ULI’s annual forecasts on infrastructure and its What’s Next? series of forecasts. On a weekly basis, he writes the Trendczar blog for GlobeStreet.com, the real estate news website. Outside his published forecasting work, Miller is a prominent communications/institutional investor-marketing strategist and partner in Miller Ryan LLC, helping corporate clients develop and execute branding and communications programs. He led the re-branding of GMAC Commercial Mortgage to Capmark Financial Group Inc. and he was part of the management team that helped build Equitable Real Estate Investment Management, Inc. (subsequently Lend Lease Real Estate Investments, Inc.) into the leading real estate advisor to pension funds and other real institutional investors. He joined the Equitable Life Assurance Society of the U.S. in 1981, moving to Equitable Real Estate in 1984 as head of Corporate/Marketing Communications. In the 1980's he managed relations for several of the country's most prominent real estate developments including New York's Trump Tower and the Equitable Center. Earlier in his career, Miller was a reporter for Gannett Newspapers. He is a member of the Citistates Group and a board member of NYC Outward Bound Schools and the Center for Employment Opportunities.
