By Carlos Rodrigues PP/AICP, New Jersey Director
Three months after Governor Jon Corzine's innovative and controversial plan to sell off tolling rights to a private company met its quiet demise in a Trenton alley, a much more limited proposal to stabilize transportation funding with the help of increased tolls is being discussed.
The New Jersey Turnpike Authority (NJTA) has released a proposed toll increase affecting the New Jersey Turnpike and the Garden State Parkway. The proposal would increase tolls three times over 15 years: 50% at the end of 2008, 50% in 2012 and 10% in 2023. NJTA needs this additional funding to meet existing commitments to bondholders and to pay for system repairs it considers necessary. RPA testified in support of the proposed toll increases.
This plan is much simpler than Corzine's original proposal, but also less comprehensive. The original plan would have sold off, to a private company, the next 30 years' worth of receipts from the State's toll roads, in order to pay down 50% of the State debt and fund the Transportation Trust Fund for the next 75 years. But effectively putting Garden State drivers at the mercy of a private (albeit public benefit) business proved too controversial for legislators.
The proposed NJTA toll increases, in absolute terms, are fairly modest: the average Parkway driver will go from a $.35 toll today to a $.85 toll in 2023; the average Turnpike driver will go from a $1.20 toll today to a $3.00 toll in 2023. Considering how ridiculously low the tolls are today, the proposed increases over 15 years are unlikely to keep up with inflation and can hardly be considered a hardship to motorists. What's more, the revenues raised will barely make a dent in New Jersey's long-term needs. Three years ago, RPA estimated that an additional $2 billion per year would be needed to address critical transportation priorities. If anything, the Authority should be talking about larger toll increases over such a long timeframe.
The increases will net the NJTA enough revenue to pay off the bondholders and undertake a capital program estimated at $9.735B. The capital plan includes $5B for the widening of the Turnpike between exits 9 and 6 and $1.7B for the widening of the Parkway between exits 30 and 63. Three billion would go towards other bridge and additional capital improvements.
Significantly, the proposal would also make a $1.25B contribution to the new commuter rail tunnel under the Hudson River (a project known as ARC) and a $120 million one-time contribution toward operating subsidies for NJ TRANSIT. The inclusion of this public transit component vastly increases the appeal of this proposal, even though it is less than 10% of the total package. A new tunnel under the Hudson River will double the capacity of the New Jersey train system. It will result in significantly higher real estate values in the many towns that will gain a one-seat ride into Manhattan, substantial job growth throughout northern New Jersey, and a measurable reduction in greenhouse gas emissions.
The NJTA does not require Legislative approval to implement this plan. Only the Governor can deny or modify it by refusing to approve the NJTA Board's meeting minutes. The NJTA held three public hearings last week, which it was required to do, but there is no effort to mobilize a meaningful public discussion around the merits of the plan.
Let's be clear: the public and politicians share the blame for the state's unwillingness to face tough choices. Spoiled by a succession of administrations and legislatures unwilling to make the case for difficult but necessary fiscal decisions, the over-indulged public wants no talk of increases in tolls, the gas tax or anything else. A recent Monmouth University/Gannett poll found that 53% of residents are against the proposed toll increases and 62% said the toll increases are more than the state needs to pay for transportation. Clearly the alarming message behind the pie and bar charts in the Governor's geeky PowerPoint from last season did not get through. The public remains in total denial with respect to the state's fiscal woes in general and its terribly under-funded transportation sector in particular.
With this in mind, the NJTA proposal is an expedient stop-gap measure for increasing funding for transportation. Of course the proposal does nothing to address the Transportation Trust Fund - which will run out of money at the end of FY 2010 - although it may close the door on using tolls for that purpose in the foreseeable future. The Administration's current position is that the TTF is solvent for the next 2 years and, given the lack of support for a permanent solution for re-capitalizing it, the discussion can be postponed until after the elections. Proposals to recapitalize the TTF through cost reductions in the state budget have lacked sufficient specificity to make them credible.
Of greater concern is that since the revenue stream is backed by highway tolls there will be considerable pressure to apply it primarily to toll road projects, whether or not these are truly justified. According to the project list released by the NJTA, 90% of the anticipated funding would be dedicated to toll road capital projects, which seem to be measured in $10 million increments (e.g., median barrier improvements: $120 million; maintenance building improvements: $100 million; etc) - truly a highway contractor's dream come true. To put this in context, the state spends barely $30 million annually on pedestrian and bicycle projects, even though the demand from local governments alone is estimated by the Tri-State Transportation Campaign to be 10 times that. As we understand it, the NJTA's project list is not definitive and could be changed. It probably should be.
Last year, the United Kingdom created a new national transportation policy that gave greater priority to projects based on their Return on Investment, measured in economic and environmental benefits, rather than solely where the funding came from. We should follow suit. We do not demand that all taxes on food, for example, be spent on agriculture. Our addiction to driving everywhere is subsidized well beyond what the gas tax and tolls bring in. If the goal is to promote greater mobility in the state, we should not prioritize one mode (automobiles) over all others.
The Administration is placing a Keynesian spin on these projects - priming the pump in rough economic times - but beyond the investments in maintenance, the reality is that the jury is still out on the need for the Turnpike and Parkway widenings. The two Environmental Impact Statements are extremely thin when it comes to alternatives' analyses. No effort has gone into figuring out how to better manage traffic on these facilities, through variable tolling or other mechanisms, or how to even assess the costs and benefits of these investments relative to other highway improvements or transit investments. Do we think we are going to meet the energy and global warming challenges of the 21st century with mid-20th century solutions? Not likely.
Three months after Governor Jon Corzine's innovative and controversial plan to sell off tolling rights to a private company met its quiet demise in a Trenton alley, a much more limited proposal to stabilize transportation funding with the help of increased tolls is being discussed.
The New Jersey Turnpike Authority (NJTA) has released a proposed toll increase affecting the New Jersey Turnpike and the Garden State Parkway. The proposal would increase tolls three times over 15 years: 50% at the end of 2008, 50% in 2012 and 10% in 2023. NJTA needs this additional funding to meet existing commitments to bondholders and to pay for system repairs it considers necessary. RPA testified in support of the proposed toll increases.
This plan is much simpler than Corzine's original proposal, but also less comprehensive. The original plan would have sold off, to a private company, the next 30 years' worth of receipts from the State's toll roads, in order to pay down 50% of the State debt and fund the Transportation Trust Fund for the next 75 years. But effectively putting Garden State drivers at the mercy of a private (albeit public benefit) business proved too controversial for legislators.
The proposed NJTA toll increases, in absolute terms, are fairly modest: the average Parkway driver will go from a $.35 toll today to a $.85 toll in 2023; the average Turnpike driver will go from a $1.20 toll today to a $3.00 toll in 2023. Considering how ridiculously low the tolls are today, the proposed increases over 15 years are unlikely to keep up with inflation and can hardly be considered a hardship to motorists. What's more, the revenues raised will barely make a dent in New Jersey's long-term needs. Three years ago, RPA estimated that an additional $2 billion per year would be needed to address critical transportation priorities. If anything, the Authority should be talking about larger toll increases over such a long timeframe.
The increases will net the NJTA enough revenue to pay off the bondholders and undertake a capital program estimated at $9.735B. The capital plan includes $5B for the widening of the Turnpike between exits 9 and 6 and $1.7B for the widening of the Parkway between exits 30 and 63. Three billion would go towards other bridge and additional capital improvements.
Significantly, the proposal would also make a $1.25B contribution to the new commuter rail tunnel under the Hudson River (a project known as ARC) and a $120 million one-time contribution toward operating subsidies for NJ TRANSIT. The inclusion of this public transit component vastly increases the appeal of this proposal, even though it is less than 10% of the total package. A new tunnel under the Hudson River will double the capacity of the New Jersey train system. It will result in significantly higher real estate values in the many towns that will gain a one-seat ride into Manhattan, substantial job growth throughout northern New Jersey, and a measurable reduction in greenhouse gas emissions.
The NJTA does not require Legislative approval to implement this plan. Only the Governor can deny or modify it by refusing to approve the NJTA Board's meeting minutes. The NJTA held three public hearings last week, which it was required to do, but there is no effort to mobilize a meaningful public discussion around the merits of the plan.
Let's be clear: the public and politicians share the blame for the state's unwillingness to face tough choices. Spoiled by a succession of administrations and legislatures unwilling to make the case for difficult but necessary fiscal decisions, the over-indulged public wants no talk of increases in tolls, the gas tax or anything else. A recent Monmouth University/Gannett poll found that 53% of residents are against the proposed toll increases and 62% said the toll increases are more than the state needs to pay for transportation. Clearly the alarming message behind the pie and bar charts in the Governor's geeky PowerPoint from last season did not get through. The public remains in total denial with respect to the state's fiscal woes in general and its terribly under-funded transportation sector in particular.
With this in mind, the NJTA proposal is an expedient stop-gap measure for increasing funding for transportation. Of course the proposal does nothing to address the Transportation Trust Fund - which will run out of money at the end of FY 2010 - although it may close the door on using tolls for that purpose in the foreseeable future. The Administration's current position is that the TTF is solvent for the next 2 years and, given the lack of support for a permanent solution for re-capitalizing it, the discussion can be postponed until after the elections. Proposals to recapitalize the TTF through cost reductions in the state budget have lacked sufficient specificity to make them credible.
Of greater concern is that since the revenue stream is backed by highway tolls there will be considerable pressure to apply it primarily to toll road projects, whether or not these are truly justified. According to the project list released by the NJTA, 90% of the anticipated funding would be dedicated to toll road capital projects, which seem to be measured in $10 million increments (e.g., median barrier improvements: $120 million; maintenance building improvements: $100 million; etc) - truly a highway contractor's dream come true. To put this in context, the state spends barely $30 million annually on pedestrian and bicycle projects, even though the demand from local governments alone is estimated by the Tri-State Transportation Campaign to be 10 times that. As we understand it, the NJTA's project list is not definitive and could be changed. It probably should be.
Last year, the United Kingdom created a new national transportation policy that gave greater priority to projects based on their Return on Investment, measured in economic and environmental benefits, rather than solely where the funding came from. We should follow suit. We do not demand that all taxes on food, for example, be spent on agriculture. Our addiction to driving everywhere is subsidized well beyond what the gas tax and tolls bring in. If the goal is to promote greater mobility in the state, we should not prioritize one mode (automobiles) over all others.
The Administration is placing a Keynesian spin on these projects - priming the pump in rough economic times - but beyond the investments in maintenance, the reality is that the jury is still out on the need for the Turnpike and Parkway widenings. The two Environmental Impact Statements are extremely thin when it comes to alternatives' analyses. No effort has gone into figuring out how to better manage traffic on these facilities, through variable tolling or other mechanisms, or how to even assess the costs and benefits of these investments relative to other highway improvements or transit investments. Do we think we are going to meet the energy and global warming challenges of the 21st century with mid-20th century solutions? Not likely.
@RegionalPlan