NEW JERSEY TURNPIKE AUTHORITY Comprehensive Annual Financial Report for the Years Ended December 31, 2016 and 2015
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NEW JERSEY TURNPIKE AUTHORITY (A Component Unit of the State of New Jersey) Comprehensive Annual Financial Report For the Years Ended December 31, 2016 and 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 Years Ended December 31, 2016 and 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 For the Years Ended December 31, 2016 and 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, 2016 and 2015 41 Statements of Revenues, Expenses, and Changes in Net Position for the years ended December 31, 2016 and 2015 42 Statements of Cash Flows for the years ended December 31, 2016 and 2015 43 Notes to the Financial Statements 44 Schedules 1 Required Supplementary Information (Unaudited) – Schedule of Funding Progress – Other Postemployment Benefits Plan as of December 31, 2016 97 2 Required Supplementary Information (Unaudited) – Schedule of Proportionate Share, Employer Contributions and Notes as of December 31, 2016 98 NEW JERSEY TURNPIKE AUTHORITY (A Component Unit of the State of New Jersey) Comprehensive Annual Financial Report For the Years Ended December 31, 2016 and 2015 Table of Contents Page 3 Schedule of Net Position – Reconciliation of Bond Resolution to GAAP as of December 31, 2016 99 4 Schedule of Revenues, Expenses and Changes in Net Position – Reconciliation of Bond Resolution to GAAP as of December 31, 2016 100 5 Schedule of Cash Flows – Reconciliation of Bond Resolution to GAAP as of December 31, 2016 101 6 Schedule of Net Revenue Requirement for the years ended December 31, 2016 and 2015 102 7A Schedule of Investments as of December 31, 2016 103 7B Schedule of Investments as of December 31, 2015 104 8 Schedule of Depositories as of December 31, 2016 and 2015 105 9 Schedule of Cost of Investment in Facilities as of December 31, 2016 106 10A Schedule of Bond Indebtedness as of December 31, 2016 107 10B Schedule of Bond Indebtedness as of December 31, 2015 108 10C Schedule of Refunded Bond and Note Indebtedness as of December 31, 2016 and 2015 109 11A Schedule of Toll Revenue (Unaudited) New Jersey Turnpike for the years ended December 31, 2016 and 2015 110 11B Schedule of Toll Revenue (Unaudited) Garden State Parkway for the years ended December 31, 2016 and 2015 111 Statistical Section (Unaudited) Financial Trend Information 113 Schedule of Net Position (GAAP Basis) 114 Schedule of Revenues, Expenses and Changes in Net Position (GAAP Basis) 115 Schedule of Capital Assets 116 NEW JERSEY TURNPIKE AUTHORITY (A Component Unit of the State of New Jersey) Comprehensive Annual Financial Report For the Years Ended December 31, 2016 and 2015 Table of Contents Page Revenue Capacity Information 117 Schedule of Toll Transactions by Vehicle Type and Roadway 118 Schedule of Toll Transaction by Class and Roadway 119 Schedule of Toll Transactions by Interchange – New Jersey Turnpike 120 Schedule of Toll Transactions by Interchange – Garden State Parkway 121 Schedule of Toll Revenue by Vehicle Type and Roadway 122 Schedule of Toll Revenue by Class and Roadway 123 Schedule of Toll Revenue by Interchange – New Jersey Turnpike 124 Schedule of Toll Revenue by Interchange – Garden State Parkway 125 Schedule of Toll Rates Per Mile by Toll Type and Vehicle Class – New Jersey Turnpike 126 Schedule of Toll Rates Per Mile by Toll Type and Vehicle Class – Garden State Parkway 127 Schedule of Vehicle Miles Traveled 128 Schedule of Vehicle Miles Traveled by Vehicle Class – New Jersey Turnpike 129 Schedule of Average Toll Per Transaction 130 Schedule of Ten Largest Customers 131 Debt Capacity Information 134 Schedule of Net Revenue Requirement 135 Schedule of Aggregate Debt Service 136 Schedule of Outstanding Debt per Toll Transaction and Lane Mile 137 NEW JERSEY TURNPIKE AUTHORITY (A Component Unit of the State of New Jersey) Comprehensive Annual Financial Report For the Years Ended December 31, 2016 and 2015 Table of Contents Page Demographic and Economic Information 138 Schedule of State Population and Employment 139 Schedule of Total Personal Income and Per Capita Income 140 Schedule of Ten Largest Employers 141 Operating Information 146 Schedule of Full Time Employees (Authorized Positions) 147 Schedule of Insurance Coverage 148 Schedules of Toll Rates 153 Schedule of Traffic Accident Statistics – New Jersey Turnpike 175 Schedule of Traffic Accident Statistics – Garden State Parkway 176 Schedule of Contracts entered into over $100,000 for the year ended December 31, 2016 177 INTRODUCTORY SECTION (UNAUDITED) (This Page Intentionally Left Blank) Letter of Transmittal New Jersey Turnpike Authority 1 TURNPIKE PLAZA - P.O. BOX 5042 - WOODBRIDGE, N.J. 07095 TELEPHONE (732) 750-5300 CHRIS CHRISTIE RICHARD T. HAMMER, Chairman GOVERNOR RONALD GRAVINO, Vice Chairman 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 May 23, 2017 Board of Commissioners New Jersey Turnpike Authority 1 Turnpike Plaza Woodbridge, New Jersey 07095 Commissioners: The New Jersey Turnpike Authority Act of 1948, as amendeed, 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 years ended December 31, 2016 and 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. In 2016, total toll transactions and total passenger car transactions on the New Jersey Turnpike were the highest ever recorded. The 255.5 million total toll transactions and 223.6 million total passenger car transactions exceeded 2006 levels which were the previous highs. In addition, while commercial vehicle Website address http://www.state. nnj.us/turnpike i Letter of Transmittal transactions have not returned to the pre-recession high of 2007, commercial vehicle transactions of 31.9 million returned to 2008 levels. 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 $654.1 million on its $7 Billion Capital Improvement Program in 2017. That level of spending will sustain approximately 8,500 jobs for the year. As per the Bureau of Economic Analysis Report, the State’s Per Capita Personal Income has increased from $50,595 in 2007 to $62,259 in 2016. There is a significant decrease in the State’s unemployment rate from a high of 9.5% in 2010 to 4.7% in 2016. 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 2007 to 4.3 million in 2016. 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.