TRENTON – A national survey last week that ranked the business-friendly nature of states drew criticism from the Christie administration.
In that CNBC survey, New Jersey finished a dismal 41st out of 50 states. Much of that ranking stemmed from the way it performed on infrastructure, in which it finished 41st. Last year, New Jersey ranked 23rd in that category.
Lt. Gov. Kim Guadagno quickly dismissed the survey because its compilers would not share their methodology, but it helped shine a light on one of the most pressing problems the most densely populated state faces: improving its roads.
Much of the reason for the state’s poor showing revolved around not enough money being dedicated toward capital transportation projects that could ease congestion and shorten travel times.
Groups that closely study this area have been highly critical, particularly about the treatment of the Transportation Trust Fund, which has been subject to numerous diversions since its creation in 1984. The TTF is funded through gas, petroleum and sales taxes. Together, they produce some $895 million a year in revenues.
Several transportation advocates and some lawmakers, such as Assemblyman John Wisniewski, (D-19), Sayreville, have called for raising the state’s gas tax, which has been 10.5 cents since 1988. Gov. Chris Christie, however, opposes any hike. Unlike many other taxes in New Jersey, the state’s gas tax is one of the lowest in the country.
According to Martin Robins, director emeritus of the Alan Voorhees Transportation Center at Rutgers University, the TTF for the most part was self-sustaining, being able to fund big projects, such as the light-rail River Line and the Secaucus Transfer station.
However, the appetite grew enormously through the years and the number of big projects funded by it started to dwindle.
“They’ve gone on a slippery slope since then,” he said. “There were increasing amounts of bonding going on.”
The Office of Legislative Services wrote in a recent paper that the spending binge got so great that annual TTF revenues now go to pay old bills. And new projects would have to be bonded out.
“The increases in appropriations have not kept pace with the increases in capital spending, and the state faced steadily increasing annual debt services obligations, forcing the capital program to rely on bond financing for current year capital needs, rather than on pay-as-you-go (non bonded) funding,” the OLS reported.
When the Christie Administration announced its transportation capital plan in 2011, it called for approximately $1.8 billion in “pay as you go” cash contributions growing from a nominal amount under the former plan to over $600 million by the end of the five-year term.
However, in year two (2012) the “PAYGO” plan was scuttled, with the administration electing to put into the general fund the $260 million it initially planned to put into the TTF.
Treasurer Andrew Sidamon-Eristoff has said the move did not constitute borrowing, but rather it represented just a scale-back of the commitment to fund transportation projects without bonding. He admitted any future project would be reliant on bond authorizations.
Both houses of the Legislature passed respective bills (A3205 and S2020) during their final sessions of the fiscal year that would enable the state to borrow more money for transportation projects.
Wisniewski, who chairs the Assembly Transportation Committee and sponsored the bill, said while it wasn’t something he was happy to do, it was nonetheless necessary.
“Our economy, our way of life, is deeply dependant on transportation,” he said in a June 25 floor speech.”Our infrastructure is terribly overtaxed.
“We have no choice…If we don’t move forward, our economy is going to suffer.”
More of the same
Robins described Christie’s transportation capital plan from last year, in which a PAYGO payment was made, as “rickety,” because he said it relied on funds initially set aside for the now-canceled Access to the Region’s Core (ARC) Tunnel project. Similar moves were made with money from the Port Authority and Turnpike Authority.
“These are gimmicks,” he said. “They are one-shots.”
Still, the state has no plans to give up transportation maintenance, as the FY2013 budget indicates.
DOT Commissioner Jim Simpson testified before the budget committees earlier this year.
He said the capital program for fiscal year 2013 is “every bit as robust as last year’s and again focuses primarily on safety and state of good repair.”
The DOT transportation capital plan calls for $685 million for state and local bridge repairs and $311 million for pavement rehabilitation projects.
All this is done, he said, without raising taxes on residents.
Funding problem remains
A recent report by the Council of New Jersey Grantmakers claimed that the state’s poor fiscal decisions and management have led to an underfunding in this area.
“In short, we have a structural problem: Current services can’t be funded by the existing revenue and the project gap continues to accelerate at all levels of government,” the report said. “We also face the inability to invest in essential areas for economic growth and vital infrastructure.”
As long as the bond payments still remain, the current level of PAYGO for TTF will continue to be used to pay back the bonds, as the OLS said in its report.
Robins, the Rutgers transportation expert, remembers serving on a blue ribbon panel regarding transportation during the McGreevey Administration. They recommended increasing the gas tax by 12.5 cents in order for the TTF to have a steady stream of revenue to pay bills and take on new projects.
The plan was supported by the governor at the time, but it was soon shelved because an election was coming up, Robins explained.