The New Jersey Turnpike Authority has sufficient funds to meet its obligations to bondholders for the next year even though the agency faces a large 1996 budget deficit, the authority's executive director said yesterday.
The comments by agency executive director Roger Nutt followed last week's announcement that the authority projects a $105 million deficit in its $499 million budget for the 1996 fiscal year, which starts Jan. 1, 1996.
In an interview with The Bond Buyer, Nutt said the authority's fiscal 1995 budget is sound, but that in 1996, the agency will feel the impact of a decision by former Gov. Jim Florio to take $400 million from the turnpike to fill a gap in the state's 1992 budget. Nutt said the effect of that move on the authority's coffers begins in 1996.
On Nov. 29, the authority certified that it can pay maintenance and operating costs as well as debt service and reserve requirements on its bonds through 1995, Nutt said.
Nutt said the authority has no plans to cover the 1996 projected gap with a deficit-financing bond issue. But, he added, the authority will probably raise tolls sometime in 1995 to pay for the 1996 deficit.
"Layoffs will not avoid a deficit," Nutt said. "Are we going to be tight on our budget? Yes. But we cannot solve the deficit problem merely by reduing operating costs."
In the official statement for the turnpike's 1991 refunding of all of its debt, the authority projected a 50% toll increase in 1995, but Nutt said the actual figure is still under discussion.
Nutt said the authority would implement the increase in 1995. "The percentage of the toll increase would be greater the longer we waited," he added.
As of June 30, the Turnpike Authority has $2.8 billion of outstanding debt. Standard & Poor's Corp., Moody's Investors Service, and Fitch Investors Service rate the bonds A.
Market analysts interviewed for this report said the announced toll increase satisfied their concerns about the authority's obligation to bondholders. "I have no concerns about the authority's ability to meet debt service payments when due," said Andrea Bozzo, a senior vice president at Fitch.
In March 1991, the authority raised tolls for a car traveling the full length of the turnpike to $4.60 from $2.70.
The Turnpike Authority's board of commissioners is the only entity authorized to approve an increase in turnpike tolls. The governor, who appoints the authority's six commissioners, has the right to veto the commissioners' action.