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Nov. 29 (Bloomberg) -- Four snowstorms and a hurricane kept drivers off the New Jersey Turnpike and Garden State Parkway this year and led the toll highways to report revenue through October fell $47.1 million below forecasts.
The results put Turnpike traffic on track to drop for a record four straight years. Fewer people are using the 148-mile (238-kilometer) road as the recession deters travel, said Tom Feeney, a spokesman for the New Jersey Turnpike Authority.
Revenue from the two roads was $943 million in the first 10 months of 2011, about 5 percent less than a target of $990 million, the authority said in a report today. The October snowstorm that blanketed much of the U.S. Northeast cost $1 million in New Jersey toll revenue. Unemployment and high gasoline prices also deterred motorists, the report said.
“The situation is not dire, we have enough money to meet all of our obligations,’ said Transportation Commissioner James Simpson, chairman of the Turnpike Authority’s board, at a meeting in Woodbridge. ‘‘If this carries itself out for the next four or five years it gets to be a lot of money.”
The Turnpike and 173-mile Garden State Parkway are the main north-south routes through New Jersey, the most densely populated U.S. state. Tolls will rise in January by 53 percent on the Turnpike and 50 percent on the Parkway, under a 2008 plan to fund capital improvements and meet debt payments.
The authority projects it has $1.62 for every dollar needed to make payments on its debt even as revenue falls short of projections, according to the report. Operating expenses are nearly 3 percent under targets, and discretionary spending and budgeting will be adjusted as needed, the report said.
Veronique Hakim, executive director of the agency, said she has been able to trim expenses as a weak construction market pushes down capital costs and she reduces staff by 140 positions through attrition by next year.
A taxable New Jersey Turnpike Authority Build America Bond maturing in January 2041 traded to yield about 5.4 percent on Nov. 16, down from 6.5 percent on Jan. 3, according to data compiled by Bloomberg.
Turnpike bonds remain attractive to in-state investors as a way to diversify municipal portfolios, said Daniel Solender, head of municipal bonds at Lord Abbett & Co. in Jersey City. While the toll revenue needs to be watched, the Turnpike benefits from its role as a major regional conduit, he said.
“It’s definitely a negative and it definitely puts pressure on it,” said Solender, whose company has about $14.5 billion under management, including $750 million in New Jersey debt. “It’s such a heavily used road, there is still the ability to raise tolls.”
Fitch Ratings said Nov. 17 the authority may be at risk for a ratings action if its debt-service coverage ratio, the amount of cash available to make interest and principal payments, drops below 1.5 “for a sustained period” because of lower-than- anticipated revenue or higher costs. Fitch rates $8 billion in Turnpike bonds A, its fifth-lowest investment grade, and has a stable outlook on the debt.
Moody’s Investors Service, in a separate report Nov. 17, said the authority’s forecasts for 6 percent average annual growth in revenue were “optimistic” given the state’s sluggish recovery from the recession. Moody’s rates about $8.4 billion in Turnpike bonds A3, the fourth-lowest rating.
Traffic through October was down 1.3 percent from the same period of 2010 on the Turnpike, while the Parkway had a 1.9 percent drop in toll transactions, the report said. Travel on the Parkway increased last year after a decline in 2009, according to authority documents.
An increase in holiday travel in November and December may push revenue closer to targets, Simpson said.
New Jersey’s average price for regular gasoline is $3.20 a gallon, down from $3.32 a month ago and up from $2.87 a year earlier, according to the AAA’s Fuel Gauge Report.
The unemployment rate in the state was 9.1 percent last month, down from 9.2 percent a year earlier and 9.7 percent in October 2009, and up from 6.1 percent in October 2008, according to data from the New Jersey labor department.
--Editors: Stacie Servetah, Ted Bunker
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