New Jersey Seeks Solutions to Funding Crisis

Mon January 23, 2006 - Northeast Edition
Jennifer Rupp

The transportation fund crisis is not a new issue for New Jersey, though state government has dodged the problem for years.

New Jersey relies on the Transportation Trust Fund (TTF) for road repair and new construction. That fund, however, is nearly bankrupt according to Transportation Commissioner Jack Lettiere.

At the beginning of 2006, New Jersey put a hold on $175 million worth of road and bridge repairs. Lettiere reported that an additional $75 million in repaving jobs and heavy-duty road construction will be delayed indefinitely over the next several weeks.

Lettiere, who retired from office on Jan. 17, stated that things could get worse over the next six weeks as the state tries to procure an extra $405 million to pay bills on projects that are already under construction.

Gov. Jon Corzine, who was sworn into office on Jan. 17, has been working with a transportation committee on possible solutions to the crisis. According to the Newark Star-Ledger, the state needs to come up with the $405 million to prevent the transportation department from going into a “shut down plan,” which would require a freeze on any new highway projects and a reduction in NJ Transit’s train and bus services.

Gov. Corzine faces many challenges in his new position, as the total state debt is now up to $30 billion. In addition to the lack of transportation funding, the state’s pension system also is inadequately funded, and an effort to build more schools has stalled after running through $6 billion, as reported by the Star-Ledger.

One of the more prominent solutions to refurbish the TTF is to raise the state’s gasoline tax. The state currently charges 10.5 cents per gallon in excise tax, one of the lowest in the nation. Former Transportation Commissioner Lou Gambaccini said that though he does not recommend it, a 30 to 40-cent increase in gas tax would be necessary to get things in “reasonable shape.”

In May 2005, the North Jersey Transportation Planning Authority (NJTPA) put out its own report on the transportation funding crisis. The article stated that: “Unless the State TTF is restored with new revenue, the Trust fund will only have enough money to pay off debt. There will be no money beyond 2006 to pay for the state’s transportation needs.”

The TTF dates back approximately 20 years. It is funded principally by a tax on gasoline. Prior to this, the state’s transportation projects were mostly financed by voter-approved bonds. Over the years, capital budgets have increased dramatically, while trust fund revenues were kept relatively flat. The state wound up incurring more debt to fund transportation projects. And now the bill for this debt has come due, consuming all available funding.

The NJTPA believes that without a solution to renew the TTF, the state would lose approximately $1 billion in state money it now has available to invest annually in northern New Jersey’s transportation system. Equally ominous, another $1 billion in annual federal funds could be in jeopardy, given federal requirements for matching funds. While failure to renew the TTF will certainly impact transportation across the entire state, it will particularly impact the northern counties — home to three-quarters of the state’s population and the focal point for the state’s business and industry.

Brian Tobin, executive director of the Association of General Contractors of New Jersey, is particularly concerned for the workforce and workmanship that is affected by the lack of funding.

“When a project is shut down, the workforce is greatly affected. There are also equipment and mobilization costs. It’s better to work straight through on a project than to start, stop and start again. The end product will suffer,” said Tobin. “If action isn’t taken soon, the industry will be seeing a lot of layoffs.”

The challenge of replenishing the TTF is now up to Gov. Corzine and his administration.

Phone calls to his office were not returned.

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