A new report from the Regional Plan Association, written in cooperation with Tri-State Transportation Campaign and NJ Future, makes it clear that New Jersey’s ability to expand and maintain its transportation network is at risk. “Spiral of Debt: The Unsustainable Structure of New Jersey’s Transportation Trust Fund,” shows how the state Transportation Trust Fund, which was created in 1984 as a pay-as-you-go funding source for transportation investment, is now overburdened with debt and will go bankrupt by mid-2011. If this happens, NJDOT and NJ Transit will lose their primary source of funds for construction projects, a significant source of operating funds, and up to $1.6 billion a year in federal matching funds, crippling the state’s ability to provide even basic maintenance and repair and severely damaging New Jersey’s economic competitiveness.
Revenue for the Fund comes from dedicated portions of the gas tax, petroleum gross receipts tax, and sales tax, and amounts to nearly $900 million annually. While the Trust Fund was envisioned as a pay-as-you-go funding stream, over the past two decades, it increasingly became a vehicle for short-term and long-term debt (MTR previously recapped much of this history). In 2006, then-Gov. Corzine continued this trend by refinancing the Fund’s debt and stretching payment on existing bonds out over additional decades. Debt payments have soared over the Trust Fund’s history, and by 2011 all of the revenue dedicated to the Fund will go towards debt:
Clearly, the state cannot afford to take out more unfunded debt, and cannot afford to do nothing. The report recommends that New Jersey:
- Transition to more pay-as-you-go financing and stop the practice of paying for maintenance with debt;
- Look to creatively reduce costs by internal restructurings and reprioritizing funding on certain projects;
- Share the burden of raising new funds among all those who benefit from healthy transportation systems, including drivers, riders, businesses and polluters; and
- Constitutionally dedicate any new monies to the Trust Fund and rely less on appropriations in state funding.
The full report explains where the Trust Fund’s revenue comes from, what the Fund pays for, the history of its debt, and ways that other states have cut costs and raised transportation revenue. It is available here.