Just like last year, and the year before that, New Jersey is using fiscal gimmicks to meet the state’s funding obligations to transportation. As reported in NJSpotlight, not only will the state not meet its planned pay-as-you-go financing (or “PAYGO”) two years in a row but it kicks the task of finding a sustainable, long-term revenue source to pay for transportation down the road again. This year’s planned $375 million in PAYGO is being replaced with a one-time shot of $250 million from higher than expected proceeds for previous years’ transportation bond sales and some crafty capital project planning.
State Treasurer Andrew Sidamon-Eristoff explained that the $250 million is available because the State was “able to offer attractive interest rates on [its] previous bond sales.” But these “attractive interest rates” Sidamon-Eristoff speaks of come at a price: more debt resulting from higher interest payments on bonds over the next 31 years.
Where and how New Jersey makes up the remaining $125 million for its transportation capital program has yet to be determined. While details have not yet been released, it appears that the plan, according to Treasury Department spokesman William Quinn, will prioritize transportation projects that are eligible for a higher percentage of federal funding for this fiscal year, suggesting that the state does not intend to use its own dollars to invest in transportation infrastructure. The NJDOT Capital Program update, due to be released in the coming weeks, will provide a clearer picture of how the state intends to fund its transportation program.
The most recent move continues a trend that began last year. To make up for last year’s use of PAYGO funds to plug the general fund deficit, Governor Christie authorized the state to issue $1.247 billion in new debt to fund FY2013 Capital Program, adding to New Jersey’s already large debt load.
The only year in which the Governor utilized PAYGO for its intended purpose, to help fund the NJDOT Capital Program (and not the general fund), was the program’s first year (FY2012). With two years remaining in the existing capital program and no additional revenue identified, a better funding plan must be developed. Funding from unexpected and unplanned sources, as in higher than anticipated bond proceeds, should be used to advance additional projects; not just fill a budget hole. The massive existing infrastructure needs of the state require advanced planning that are hampered by haphazard, one-shot funding sources. And these do not even include the planning preparation needed to address transportation impacts from climate change.
If no new transportation funding sources are identified, the issuance of more debt — or worse – cuts to the capital program will become the norm.
The good news is that Sidamon-Eristoff was satisfied that there would be no need to increase Transportation Trust Fund borrowing above the planned $850 million level of Christie’s 5-Year Plan. But then again, it was Sidamon-Eristoff who stated last year that the pillaging of PAYGO was a one-year initiative.