by Alexis Perrotta, Senior Policy Analyst, RPA
I'm not usually one for hyperbole, but it's been hard to avoid as I've been researching the transportation funding situation in New Jersey. After months of delving into this subject with a broad collaboration of academics and advocates, I'm comfortable using phrases like "impending catastrophe," "road to ruin," and even "transportation meltdown." Here's why.
The Transportation Trust Fund is the primary funding source for New Jersey's entire transportation system (rail, bus and road), and it will be completely maxed out as of June 30, 2006. At that time, all of the $805 million that gets collected each year for transportation from New Jersey's gas tax and other related taxes will be needed to pay for Trust Fund debt through 2021. None of the tax revenue will be left to fill pot holes, fix bridges, or maintain NJ TRANSIT trains and buses. If the situation isn't remedied, millions in federal funds will be lost as the State will be unable to provide the necessary matching funds, because all the transportation funding will be going to pay debt service. NJ DOT will be reduced to emergency functions and snow removal; speed limits will go down to ensure safety; bridges will be closed; trains and buses will be less frequent; the system and the state will grind to a halt, and, along with it, the largest part of New York City's commuter shed. The economic impacts are potentially enormous.
More resources than ever are needed to maintain and grow the system. As bridges across the state reach their 50th birthdays, major, costly rehabilitation work is necessary. Demand for TRANSIT's buses and trains has never been higher, and capacity expansion is needed if the economy of the region is to continue growing. For these and many other projects, DOT and NJ TRANSIT estimate their 10-year capital need at $24 billion. In addition, more than $8 billion is needed over ten years to fully fund their operating budgets and stop the practice of using capital funds for operating expenses. With a reasonable, sustainable level of borrowing for the capital program taken into account, along with all federal, Port Authority, and state funds, and a TRANSIT fare increase, the net total bill is at least $2.7 billion per year.
To stop the system from literally falling apart, New Jersey needs to find a way to raise revenue significantly above what it's been in past years, and to reform the management system that is supposed to effectively collect and distribute the money. The situation is not easily remedied. Raising taxes, as difficult as that can be, won't be enough because the Trust Fund is not set up to handle the new revenue properly. Putting more money into the Trust Fund as it is structured now is like running water through leaky pipes. All of it can be borrowed against and the debt payments can pile up so that the crisis repeats itself only a few years after raising taxes. Poor accounting adds to the fiscal mess: There is no clear record of how much is raised from the gas tax and other transportation-related revenue sources, so revenue streams intended for transportation can leak into the State's general fund.
A unique collaboration of researchers and advocates - including both AAA and a major environmentalist group - studied this crisis and recommend solutions in a recent report available on RPA's website, "Putting the Trust Back in the New Jersey Transportation Trust Fund." The recommended reforms are crucial to making the transportation funding system work again. We call for improved and politically independent oversight, full accounting of revenues, stopping the leakage of transportation-related revenues into the general fund, and reasonable restrictions on borrowing.
While it is clear that significant new revenue will be needed to bolster the fund, the fund itself must be fixed first. In the next six months, New Jerseyans may be asked to consider revenue raisers such as gas taxes or privatizing the Turnpike. First they should insist that whatever money is raised is fully accounted for, is invested in its intended transportation projects, and does not contribute to an insurmountable pile of debt.
I'm not usually one for hyperbole, but it's been hard to avoid as I've been researching the transportation funding situation in New Jersey. After months of delving into this subject with a broad collaboration of academics and advocates, I'm comfortable using phrases like "impending catastrophe," "road to ruin," and even "transportation meltdown." Here's why.
The Transportation Trust Fund is the primary funding source for New Jersey's entire transportation system (rail, bus and road), and it will be completely maxed out as of June 30, 2006. At that time, all of the $805 million that gets collected each year for transportation from New Jersey's gas tax and other related taxes will be needed to pay for Trust Fund debt through 2021. None of the tax revenue will be left to fill pot holes, fix bridges, or maintain NJ TRANSIT trains and buses. If the situation isn't remedied, millions in federal funds will be lost as the State will be unable to provide the necessary matching funds, because all the transportation funding will be going to pay debt service. NJ DOT will be reduced to emergency functions and snow removal; speed limits will go down to ensure safety; bridges will be closed; trains and buses will be less frequent; the system and the state will grind to a halt, and, along with it, the largest part of New York City's commuter shed. The economic impacts are potentially enormous.
More resources than ever are needed to maintain and grow the system. As bridges across the state reach their 50th birthdays, major, costly rehabilitation work is necessary. Demand for TRANSIT's buses and trains has never been higher, and capacity expansion is needed if the economy of the region is to continue growing. For these and many other projects, DOT and NJ TRANSIT estimate their 10-year capital need at $24 billion. In addition, more than $8 billion is needed over ten years to fully fund their operating budgets and stop the practice of using capital funds for operating expenses. With a reasonable, sustainable level of borrowing for the capital program taken into account, along with all federal, Port Authority, and state funds, and a TRANSIT fare increase, the net total bill is at least $2.7 billion per year.
To stop the system from literally falling apart, New Jersey needs to find a way to raise revenue significantly above what it's been in past years, and to reform the management system that is supposed to effectively collect and distribute the money. The situation is not easily remedied. Raising taxes, as difficult as that can be, won't be enough because the Trust Fund is not set up to handle the new revenue properly. Putting more money into the Trust Fund as it is structured now is like running water through leaky pipes. All of it can be borrowed against and the debt payments can pile up so that the crisis repeats itself only a few years after raising taxes. Poor accounting adds to the fiscal mess: There is no clear record of how much is raised from the gas tax and other transportation-related revenue sources, so revenue streams intended for transportation can leak into the State's general fund.
A unique collaboration of researchers and advocates - including both AAA and a major environmentalist group - studied this crisis and recommend solutions in a recent report available on RPA's website, "Putting the Trust Back in the New Jersey Transportation Trust Fund." The recommended reforms are crucial to making the transportation funding system work again. We call for improved and politically independent oversight, full accounting of revenues, stopping the leakage of transportation-related revenues into the general fund, and reasonable restrictions on borrowing.
While it is clear that significant new revenue will be needed to bolster the fund, the fund itself must be fixed first. In the next six months, New Jerseyans may be asked to consider revenue raisers such as gas taxes or privatizing the Turnpike. First they should insist that whatever money is raised is fully accounted for, is invested in its intended transportation projects, and does not contribute to an insurmountable pile of debt.
@RegionalPlan