TRENTON — New Jersey’s Transportation Trust Fund has the borrowing capacity to cover the state’s proposed $1.6 billion capital improvement budget for the upcoming fiscal year, but the fund’s financial solvency will need to be addressed before next summer, the state’s transportation commissioner said Monday.
Testifying before the Assembly Budget Committee, Commissioner James Simpson said that all the funds from the state’s gasoline tax are now devoted to paying off debt service, and that Gov. Chris Christie’s proposed budget for the 2014-15 fiscal year calls for highway and bridge repairs and other transportation improvements to be funded with more borrowing.
Among the capital projects the administration plans to fund during the upcoming fiscal year are ongoing construction of a Route 72 Manahawkin Bay Bridge to Long Beach Island in Ocean County and continued work on the Direct Connection project in Camden County to improve the interchange of interstates 295 and 676 and Route 42.
Another $25 million is earmarked to assist counties with bridge repairs, and $329 million is being reserved for local aid grants to counties and municipalities for roadwork.
NJ Transit’s $1.2 billion capital improvement budget includes $62 million for upgrades along the Northeast corridor between Trenton and New York City, officials said.
The proposed budget calls for no fare increases in the upcoming fiscal year, according to the agency’s executive director, Veronique “Ronnie” Hakim, who testified at the hearing with Simpson.
Pressed by lawmakers on the panel, Simpson said the trust fund is expected to max out its current borrowing authority during the 2015-16 fiscal year.
“We can get through (the 2014-15 fiscal year), but going into next year we can bond only another $600,000, and we’ll need another billion,” he said in response to questions from lawmakers on the panel. “It’s fiscal year ’16 that’s the problem.”
Simpson said he could offer no fix for the near-bankrupt transportation fund, which is the primary mechanism used by the state to finance highway and transit projects, arguing that financing is an issue best left for the Department of Treasury.
Assembly Speaker Vincent Prieto, D-32nd of Secaucus, and Sen. Ray Lesniak, D-20th of Elizabeth, have proposed increasing the state’s modest 14.5-cent gasoline tax to raise more revenue to keep the fund solvent, but Christie has vowed to oppose any tax increase.
So far, the Republican governor has kept the fund solvent by refinancing some of its debt and by canceling the ARC Hudson River rail tunnel, but his administration has continued to add to the debt load by borrowing to pay for new transportation projects.
That trend continues under Christie’s budget, Simpson said, noting that the administration has benefited from historic low interest rates.
“No one wants to borrow, but that’s where we’re at,” he said.
Assemblyman Troy Singleton, D-7th of Palmyra, was disturbed by the continued reliance on borrowing to pay for crucial transportation improvements, which he said would cost taxpayers more in the long run.
“It’s troubling we have a five-year capital improvement program and have exhausted our funding after four years,” the assemblyman said during the hearing.
Singleton also questioned whether the gas tax was a sustainable revenue source for the trust fund, given the rapid improvement of gas mileage on modern vehicles.
Simpson said that it wasn’t, and that New Jersey is not alone in wrestling with how to fund transportation improvements and repairs.
“It’s a dilemma every state has, along with the federal government,” he said.
After the hearing, Singleton said he favors creating a state infrastructure bank to help finance transportation projects by leveraging public funds together with private investments. A bill he introduced to create the bank was approved by the Legislature but died at the end of the last legislative session when Christie declined to sign it.