NEW JERSEY TURNPIKE AUTHORITY Comprehensive Annual Financial Report for the Year Ended December 31, 2015
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NEW JERSEY TURNPIKE AUTHORITY (A Component Unit of the State of New Jersey) Comprehensive Annual Financial Report For The Year Ended December 31, 2015 (This Page Intentionally Left Blank) NEW JERSEY TURNPIKE AUTHORITY (A Component Unit of the State of New Jersey) Comprehensive Annual Financial Report For The Year Ended December 31, 2015 Prepared by: Finance and Budgets Department Donna Manuelli, Chief Financial Officer Pamela Varga, Deputy Chief Financial Officer Katherine Johnstone, Assistant Director of Finance NEW JERSEY TURNPIKE AUTHORITY (A Component Unit of the State of New Jersey) Comprehensive Annual Financial Report Year ended December 31, 2015 Table of Contents Page Introductory Section (Unaudited) Letter of Transmittal i Vision, Mission Statement and Core Values vi Organizational Chart vii Board of Commissioners and Senior Staff viii–ix Overview of Organization, Background and Functions x–xii $7 billion Capital Improvement Program xiii–xix Report of Management Under Executive Order No. 37 (Corzine, 2006) xx Financial Section Independent Auditors’ Report 1 Management’s Discussion and Analysis (Unaudited) 3 Basic Financial Statements: Statements of Net Position as of December 31, 2015 and 2014 39 Statements of Revenues, Expenses, and Changes in Net Position for the years ended December 31, 2015 and 2014 40 Statements of Cash Flows for the years ended December 31, 2015 and 2014 41 Notes to the Financial Statements 42 Schedules 1 Required Supplementary Information (Unaudited) – Schedule of Funding Progress – Other Postemployment Benefits Plan as of December 31, 2015 91 2 Required Supplementary Information (Unaudited) – Schedule of Proportionate Share, Employer Contributions and Notes as of December 31, 2015 92 NEW JERSEY TURNPIKE AUTHORITY (A Component Unit of the State of New Jersey) Comprehensive Annual Financial Report Year ended December 31, 2015 Table of Contents Page 3 Schedule of Net Position – Reconciliation of Bond Resolution to GAAP as of December 31, 2015 93 4 Schedule of Revenues, Expenses and Changes in Net Position – Reconciliation of Bond Resolution to GAAP as of December 31, 2015 94 5 Schedule of Cash Flows – Reconciliation of Bond Resolution to GAAP as of December 31, 2015 95 6 Schedule of Net Revenue Requirement for the years ended December 31, 2015 and 2014 96 7A Schedule of Investments as of December 31, 2015 97 7B Schedule of Investments as of December 31, 2014 98 8 Schedule of Depositories as of December 31, 2015 and 2014 99 9 Schedule of Cost of Investment in Facilities as of December 31, 2015 100 10A Schedule of Bond Indebtedness as of December 31, 2015 101 10B Schedule of Refunded Bond and Note Indebtedness as of December 31, 2015 and 2014 102 11A Schedule of Toll Revenue (Unaudited) New Jersey Turnpike for the years ended December 31, 2015 and 2014 103 11B Schedule of Toll Revenue (Unaudited) Garden State Parkway for the years ended December 31, 2015 and 2014 104 Statistical Section (Unaudited) Schedule of Net Position (GAAP Basis) – Last Ten Fiscal Years 105 Schedule of Revenues, Expenses and Changes Net Position (GAAP Basis) – Last Ten Fiscal Years 106 Schedule of Capital Assets – Last Ten Fiscal Years 107 Schedule of Toll Transactions by Vehicle Type and Roadway – Last Ten Fiscal Years 108 Schedule of Toll Transactions by Class and Roadway – Last Ten Fiscal Years 109 NEW JERSEY TURNPIKE AUTHORITY (A Component Unit of the State of New Jersey) Comprehensive Annual Financial Report Year ended December 31, 2015 Table of Contents Page Schedule of Toll Transactions by Interchange – New Jersey Turnpike – Last Ten Fiscal Years 110 Schedule of Toll Transactions by Interchange – Garden State Parkway – Last Ten Fiscal Years 111 Schedule of Toll Revenue by Vehicle Type and Roadway – Last Ten Fiscal Years 112 Schedule of Toll Revenue by Class and Roadway – Last Ten Fiscal Years 113 Schedule of Toll Revenue by Interchange – New Jersey Turnpike – Last Ten Fiscal Years 114 Schedule of Toll Revenue by Interchange – Garden State Parkway – Last Ten Fiscal Years 115 Schedule of Toll Rates per Mile by Toll Type and Vehicle Class – New Jersey Turnpike – Last Ten Fiscal Years 116 Schedule of Toll Rates per Mile by Toll Type and Vehicle Class – Garden State Parkway – Last Ten Fiscal Years 117 Schedule of Vehicle Miles Traveled – Last Ten Fiscal Years 118 Schedule of Vehicle Miles Traveled by Vehicle Class – New Jersey Turnpike – Last Ten Fiscal Years 119 Schedule of Traffic Accident Statistics – New Jersey Turnpike – Last Ten Fiscal Years 120 Schedule of Traffic Accident Statistics – Garden State Parkway – Last Ten Fiscal Years 121 Schedule of Average Toll per Transaction – Last Ten Fiscal Years 122 Schedule of Ten Largest Customers – Last Ten Fiscal Years 123 Schedule of Outstanding Debt per Toll Transaction and Lane Mile – Last Ten Fiscal Years 126 Schedule of Net Revenue Requirement – Last Ten Fiscal Years 127 Schedule of Aggregate Debt Service – as of December 31, 2015 128 Schedule of Full Time Employees (Authorized Positions) – Last Ten Fiscal Years 129 Schedule of State Population and Employment – Last Ten Fiscal Years 130 Schedule of Total Personal Income and Per Capita Income – Last Ten Fiscal Years 131 NEW JERSEY TURNPIKE AUTHORITY (A Component Unit of the State of New Jersey) Comprehensive Annual Financial Report Year ended December 31, 2015 Table of Contents Page Schedule of Ten Largest Employers – Last Ten Fiscal Years 132 Schedule of Insurance Coverage – as of December 31, 2015 137 Schedules of Toll Rates – as of December 31, 2015 142 Schedule of Contracts Entered into over $100,000 for the year ended December 31, 2015 164 INTRODUCTORY SECTION (UNAUDITED) (This Page Intentionally Left Blank) Letter of Transmittal New Jersey Turnpike Authority ADMINISTRATION BUILDING - 581 MAIN STREET P.O. BOX 5042 - WOODBRIDGE, NEW JERSEY 07095 TELEPHONE (732) 750-5300 RICHARD T. HAMMER, Chairman CHRIS CHRISTIE RONALD GRAVINO, Vice Chairman GOVERNOR MICHAEL R. DuPONT, Treasurer KIM GUADAGNO RAYMOND M. POCINO, Commissioner LIEUTENANT GOVERNOR ULISES E. DIAZ, Commissioner DANIEL F. BECHT, Commissioner JOHN D. MINELLA, Commissioner JOSEPH W. MROZEK, Executive Director June 28, 2016 Board of Commissioners New Jersey Turnpike Authority 581 Main Street Woodbridge, New Jersey 07095 Commissioners: The New Jersey Turnpike Authority Act of 1948, as amended, restated and supplemented, the Turnpike Revenue Bond Resolution of 1991, as amended, restated and supplemented, as well as Executive Orders 122 (McGreevy, 2004) and 37 (Corzine, 2006), require an annual audit of the New Jersey Turnpike Authority’s (Authority) financial statements by a firm of independent auditors. Executive Order 37 (Corzine, 2006) (EO37) additionally requires the Authority, on an annual basis, to prepare a comprehensive report concerning the Authority’s operations. Under EO37, the comprehensive report shall include, among other things, the Authority’s audited financial statements. Accordingly, the Comprehensive Annual Financial Report (CAFR) of the Authority for the year ended December 31, 2015 is hereby submitted. AUTHORITY’S PROFILE AND OPERATION The Authority owns and operates two well-established major toll roads (the New Jersey Turnpike and the Garden State Parkway) in a densely populated and wealthy region of the Nation. They act as the “supply chain spine” and the “distribution platform” for the entire Northeast region. The Authority has owned and operated the New Jersey Turnpike (the Turnpike) since the time the Turnpike opened for traffic in 1951. The Turnpike consists of a 122-mile mainline and two extensions. The mainline runs from Deepwater, Salem County to Fort Lee, Bargen County. The Garden State Parkway (the Parkway) was owned and operated by the Authority since July 2003, after abolition of the New Jersey Highway Authority. The Parkway is a 173-mile limited access toll road from Cape May, New Jersey to Spring Valley, New York. The Authority is committed to providing safe, reliable and efficient movement of people and goods over the two busiest toll roads in the United States. Website address http://www.state.nj.us/turnpike iiii Letter of Transmittal ECONOMIC CONDITIONS AND OUTLOOK The Turnpike and Parkway are two of New Jersey’s great avenues of commerce. Every day, tens of thousands of commercial and passenger vehicles flow over the roadways, carrying goods between producer and consumer, and carrying commuters between home and work. From the day they opened to traffic, the toll roads have represented a key competitive advantage for New Jersey in the regional, national and global economies. In addition to making New Jersey more competitive and reducing opportunity costs, infrastructure spending also creates and sustains jobs. The President’s Council of Economic Advisors estimated that every $1 billion in spending on transportation infrastructure sustains 13,000 jobs for one year. Those include jobs in engineering and construction directly supported by infrastructure spending, jobs indirectly supported at facilities and companies supplying materials and equipment for the projects being built, and jobs supported in other parts of the economy as a result of the increased income and spending by companies and individuals who benefit from the direct and indirect jobs. The Authority anticipates spending $605.4 million on its $7 Billion Capital Improvement Program in 2016. That level of spending will sustain 7,870 jobs for the year. As per the Bureau of Economic Analysis Report, the State’s Per Capita Personal Income has increased from $48,058 in 2006 to $59,782 in 2015. There is a significant decrease in the State’s unemployment rate from a high of 9.1% in 2009 to 5.6% in 2015. As the local economy continues to grow more residents are being employed. The State’s aggregate resident employment has increased from 4.2 million in 2006 to 4.3 million in 2015. Based on this population growth, the Authority expects increases in the demand for its roadways in the coming years. CAPITAL IMPROVEMENT PROGRAM The Authority is in the midst of a $7 billion ten-year Capital Improvement Program (the CIP) originally approved by the Board of Commissioners in October 2008.