As we’ve written about extensively, New Jersey’s Transportation Trust Fund is soon expected to collapse after decades of irresponsible borrowing and bonding. The first article in our series, A Pattern of Failure, detailed the inability of the New Jersey Turnpike Authority and state legislators to raise tolls on the Garden State Parkway and NJ Turnpike according to bond agreements.

This lack of fiscal fortitude has unfortunately not been limited to NJTA. Instead of paying for infrastructure by raising tolls and taxes, Governor Corzine and NJDOT Commissioner Kolluri are advocating an “asset monetization” plan to pull the state out of this looming fiscal disaster. The plan is expected to be revealed on January 8^th.

The Campaign has long argued that the more sustainable solution to New Jersey’s Transportation Trust Fund woes is to raise the gasoline tax to an appropriate level (see MTR #556, 490, 472, etc). New Jersey’s gasoline tax, at 10.5 cents per gallon (14.5 cents if you add in the petroleum products gross receipts tax) ranks third lowest in the country, with only Alaska (8 cents) and Georgia (7.5 cents) boasting a lower rate. Last raised in 1988, the 10.5 cents gasoline tax is worth about 6 cents today when adjusted for inflation.

Only Alaska, Georgia and Virginia have been more reluctant to raise the gas tax in the last 20 years. Nineteen states have somehow mustered the political courage to raise gasoline taxes in the last 5 years. Yet, with the notable exception of Assemblyman Wisniewski, New Jersey’s elected leaders have been too scared of perceived political suicide to consider a gas tax hike.

Established by constitutional amendment in 1984 and initially intended only to pay for transportation improvement projects, The Transportation Trust Fund received most of its income from 2 cents of the then 8-cent-per-gallon gasoline tax. The 1984 amendment explicitly stated that the money was to be used only to plan, acquire, build, and repair the transportation system, and expressly forbade the Legislature “to borrow, appropriate, or use these amounts for any other purpose, under any pretense whatsoever.”

This worked well in the beginning and was bolstered by a 2.5-cent gas tax increase in 1988. However, even the best-laid plans of mice and men go oft astray, and the 1990s brought recession and the inevitable schemes to balance the overburdened budget. Beginning in 1991, lawmakers allowed the state to charge engineering and other salary costs in the Department of Transportation to the trust fund. They also began diverting TTF dollars into NJ Transit in an effort to head off fare hikes. NJ Transit still has to steal from its capital fund to pay for operations every year (see MTR #s 549, 482, 481).

Since that time, few politicians have attempted to raise the gasoline tax. From 1990 to late 1991, former Assembly Transportation Committee Chair George Spadoro lobbied for his plan to raise the gas tax by 3 cents a year for four years, while reducing NJ Transit fares 10% a year in that same period. Regrettably, spiraling gas prices due to the first Iraq war, Governor Florio’s unwieldy tax package, and talk of a federal plan to increase the gas tax doomed any increase.

In 1995, voters approved a constitutional amendment raising the dedicated portion of the gas tax to 9 cents per gallon. While this seems like a step in the right direction, it gave the appearance that more funding was going to transportation infrastructure, when much of it was actually diverted to salaries and other non-capital expenses. In effect, it appeared to the public that the TTF was now receiving sufficient funds to cover its budget – a second increase would give the impression (perhaps rightly so) that taxpayer dollars were being horribly mismanaged, thus rendering a real increase politically invalid. This misappropriation of TTF dollars has hurt the credibility of the fund as well as the lawmakers charged with replenishing it.

The issue laid dormant until 1998, when Governor Whitman tried to tack on an additional 7 cents. Her proposal would have dedicated 5 cents to the TTF, and used the remaining 2 cents for open space preservation. Democratic legislators opposing an unrelated proposition stymied the proposal.

In 2002, then-Commissioner of Transportation Jamie Fox said an increase was on the table, only to be shot down hours later by Governor McGreevey, who stated that “A gas tax wouldn’t even begin to solve the problem.” Ironically, the blue ribbon panel he convened in 2003 to address the transportation funding deficit suggested just that – adding 12.5 cents a gallon, and mandating that further increases be indexed to inflation.

Alas, the Blue Ribbon Commission’s recommendations went unheeded with a vote of no confidence from Governor McGreevey. Instead of facing the problem head-on, the administration chose to let New Jersey’s infrastructure slip further into debt.

Sadly, when presented with another chance to redeem the TTF in 2005 – the last time the TTF was set to go bankrupt – Governor Corzine opted for the quick fix. No new tolls, no new taxes, billions in new debt – all so the TTF could have a few more years of borrowed time (see MTR # 521).

Fast forward two years and it’s more of the same. NJDOT Commissioner Kolluri seems bent on scaring voters and politicians away from a gas tax and toward Corzine’s monetization plan. Kolluri has repeatedly told the media that to raise the same revenue as is expected from monetization, New Jersey would need to raise the gasoline tax by 44 cents – an obviously intimidating number for voters and politicians.

In short, although increasing the gas tax may not be politically popular, it is necessary. Whether or not Corzine’s asset monetization plan is implemented, NJ needs a constitutionally dedicated source of revenue and the gas tax is the most logical and equitable means to that end. Without constitutional dedication, future legislatures will be able to divert funding that should go to the TTF – one of the practices that started this downward spiral (revenues statutorily dedicated to the TTF have been poached by the state, as will be explained in the next article in the series). The unwillingness of state officials to seriously consider a gas tax increase only serves to continue the cycle of debt and endanger the future of NJ’s transportation infrastructure.