As the name suggests, the Transportation Trust Fund (TTF) provides New Jersey with a way to pay for the roads, bridges, rail lines, and buses that residents and businesses rely on every day. For more than 30 years, state revenues—prominently including receipts from the state’s tax on gasoline—have been deposited into the fund to improve and rehabilitate state-controlled transportation assets.
However, contributions have failed to keep up with needs. A pay-as-you-go system became borrow-as-you-go1 until the summer of 2016, when the trust fund’s resources were exhausted.2
Multiple factors caused the TTF’s depletion:
- Capital funding, an average of $1.5 billion per year, had not increased substantially in the past 15 years.
- Except to repair damage from Superstorm Sandy, the federal contribution to transportation infrastructure capital investment increased only modestly.
- All funding streams previously dedicated to specific transportation needs were pledged, for many years into the future, to paying the debt on bonds previously issued for capital investment.
The Transportation Trust Fund desperately needed more resources. In October 2016, the state raised its tax on gasoline to 37.5 cents per gallon from the previous 14.5 cents, the second lowest gas tax in the U.S., a rate that had gone unchanged since 1988. In a referendum in November 2016, voters decided that all the increased revenue from the gas tax would have to go to the uses of the TTF.
The 2016 reauthorization of the trust fund extended New Jersey’s annual transportation capital spending for eight years, at a rate of $2 billion a year.3 However, these new funds barely respond to needs that have compounded after so many years of neglect.
For one thing, the equivalent of 7 cents of the 23-cent increase in the price at the pumps was devoted to relieving the state budget’s General Fund of the Transportation Trust Fund debt service obligations incurred since 2010.4
For another, the size of the gas tax increase was not based on the state’s actual needs. Rather than conduct a strategic assessment of New Jersey’s full range of transportation capital needs and objectives and then determine how much money would be needed, legislators and the governor capped the revenue-raising process at a level chosen to satisfy the political imperative of keeping gas prices lower than in New York and Pennsylvania. Ironically, the political capital spent to secure the gas tax increase did not actually address the problem of constrained resources.
A more forward-looking approach is needed.
Proceed methodically to understand and articulate what New Jersey’s transportation aims should be, and why, then realistically determine the amount of public investment required and the resources that could be made available.
New Jersey’s last comprehensive transportation capital assessment was conducted 14 years ago. In the 2003 “Blue Ribbon Commission Report, Recommendation for Ensuring a Strong Transportation Network for the 21st Century,” a bipartisan group of transportation experts5 identified an average capital investment need of $4.6 billion annually for 10 years, to be spread between the state Department of Transportation and local road work ($2.8 billion a year), and NJ Transit ($1.8 billion a year).
The difference between the annual needs projected in 2003 and current resources is almost $1 billion annually, a gap of more than 25%.6 If additional factors are considered—inflation since 2003, the accelerating deterioration of New Jersey’s aging infrastructure from harsh winters and heavy truck traffic, and the legal obligations arising from operating trains on the Northeast Corridor – these factors could add still another 25% or more to the gap.
To make the numbers add up to a transportation system that meets public needs, including paying the state’s share of building an additional Hudson River tunnel, New Jersey needs to leverage maximum support from external sources, including bistate and in-state authorities and federal transit discretionary aid. The allocation of Turnpike revenues for transportation capital improvements, which was used in the state fiscal year that began July 1, 2010, should be considered for permanent support of the Transportation Trust Fund.
Even with these steps, it will be difficult to move New Jersey’s transportation system from an economic liability to a strength without another increase in state petroleum taxes in the next four years—unless policymakers take such alternative actions as:
- Raising motor vehicle license and registration fees beyond that needed for Motor Vehicle Commission improvements, and devoting part or all of the new revenues to transportation capital needs
- Charging tolls on Interstate highways in New Jersey
- Leasing toll roads to private operators and using the upfront cash to finance road and rail projects that have been on the shelf due to lack of funds
- Replacing petroleum-consumption taxes with mileage fees