Recently-released reports by a transportation activist organization complain that over the years, New Jersey has gone from funding its transportation projects as they come to taking out bonds to pay for future projects, then not having the funds to repay them.The revenue sources used to pay current transportation upgrade costs around the state will be exhausted at the end of fiscal year 2006. And future revenue sources from the state's Transportation Trust Fund are being used to pay debt service for the next 15 years on bonds that kept the fund going through previous shortfalls. "The whole idea of the Secaucus Transfer Station is to create new public transit opportunities from New York and other counties [in New Jersey]," said Regional Planning Association Vice President and NJ Director Thomas Dallessio last week. "Without the Trust Fund intact, we won't be able to make repairs to existing rail lines, let alone reactivate old or create new ones." The Regional Plan Association released two reports in the last four months criticizing how the state gets and uses its transportation funding. The RPA is an independent, not-for-profit regional planning organization serving New Jersey, New York and Connecticut. Transportation in New Jersey is funded by four sources: the state's Transportation Trust Fund, other state fees and sources, federal funds that match state funds, and a small amount from passenger fares. Some of the federal funds require state funds to match. "This is a bipartisan problem," said Dallessio. "Everyone needs to step up to the plate and do their part."
Making the big picture work
The state must come up with new revenue sources for the next generation of infrastructure repair and improvement by this coming July, when the new fiscal year begins.
Currently, 30 percent of the $4.1 billion New Jersey spends on transportation comes from the state Transportation Trust Fund, with another 30 percent coming from other federal sources. The remaining 40 percent comes from various state sources plus fares and other system-generated revenues.
"Ambitious capital improvement projects have been adopted with a deficit on the other side of the column (meaning, without money to pay for them," said Alexis Perrotta, Senior Policy Analyst for the Regional Plan Association, last week. "It's like taking out a loan to put a new deck on your house when you can't pay for groceries."
Perrotta is the author of the RPA's two recent reports.
"We could recreate this crisis if we don't fix the things that got us there," said Perrotta. "We have to change the way transportation planning and financing is done in New Jersey."
According to her July 2005 report, "Putting the trust back in the NJ transportation Trust Fund," when the Fund first began in 1984, it was a solution to "highly unstable and insufficient funding."
Initially the funds were spent as they were collected, without being borrowed against.
In the end, not only did the Fund borrow against itself, it also started to use funding to pay for operations, rather than just capital improvements.
"In layman's terms, the state took out a mortgage to pay for its heating bill," said Perrotta.
The report states that the core of the problem is that "leaders chose short-term responses such as tax cuts, one-shot deals and no toll or fare increases, over long-term solutions."
"The taxpayers are getting more for less," said Perrotta. "There have been no fare or gas tax raises in over 10 years."
The report recommends eliminating capital-to-operating transfers by fully funding the state Department of Transportation and NJ Transit, regularly increasing NJ Transit fares to keep pace with expenses, and constitutionally dedicating all intended resources to the Transportation Trust Fund, as well as the DOT and NJT operating budgets.
In other words, they would rather see commuters pay higher fares than see the state keep taking out bonds. Their reforms call for limiting the terms of bonds over the next five years.
The report also calls for the institution of an independent financial policy review committee and making public bi-annually funds collected from transportation-related taxes, tolls, and fees.
How transportation helped NJ's economy blossom
New Jersey's economic prosperity was often driven by transportation improvements, according to James W. Hughes and Joseph J. Seneca of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University in New Brunswick.
Hughes and Seneca are the authors of yet a third report commissioned by the RPA, this one back in April. "You have to realize the impact of being on the leading edge of transportation systems," said Hughes. "There were three eras of transportation investment, and they all linked up to the state economy."
Back in the 1920s, New Jersey stood at the forefront the country's beginning transportation phenomena. New Jersey legislature created the State Highway Department in 1917, designating 15 routes as the state's highway system. Some of the innovations included the first clover leaf interchange and the first divided highway, as well as the groundbreaking Pulaski Skyway, built in 1932. It was the first-limited access elevated freeway nationwide to link two cities (Newark and Jersey City).
Hughes said that as a result of the innovative highway advancements, New Jersey's economy expanded by 50 percent.
Recurring transportation investments
Despite upgrading and improvement, New Jersey's 1,900 miles of state highways were reaching capacity limits within 25 years. Even though New Jersey's postwar economic muscle grew out of this infrastructure, transportation funding was depleted by further major expansion of the system.
In 1947, the State Highway Department was able to plan the Garden State Parkway. Again, funding constraints left only 19 miles built by 1952. The newly created New Jersey Highway Authority became responsible for the completion of the Parkway as a toll road and for its operation and maintenance.
The New Jersey Turnpike, also begun at that time, faced similar funding constraints. A bond for $225 million was issued to build a toll road to support this superhighway. Employment had increased by nearly 30 percent in the 1960s.
The New Jersey Department of Transportation replaced the New Jersey Highway Department in 1966.
Within 10 years, trouble again plagued NJ infrastructure. The state's accessibility to major economic markets was challenged by Southern states linked to the new interstate system. As a result, Southern firms became more cost competitive. In the 1960s and 1970s, there were still gaps in the interstate system in New Jersey.
NJ Transit was the independent arm of NJDOT created in 1979 to improve commuter rail and bus operations. In 1984, the passage of the Transportation Trust Fund kicked in just as bond funding ran out.
In 1980, New Jersey "was a non-player in the regional market office," according to Hughes, but by 1990, there was a seven-fold increase of office space development. The state emerged as the fifth largest metropolitan office area in the United States.
When asked about RPA's recommendations on the Transportation Trust Fund, Acting Gov. Richard Codey's spokesperson, Kelly Heck, said that the governor may not have read the RPA report but "is hoping to get something done in the way of replenishing the fund in the coming weeks before he leaves office."
NJT spokeperson Dan Stessel said, "NJT is certainly in support of the Transportation Trust Fund being reinstated, but since it's a [state] policy matter, we defer to the governor's office and legislature."
There are many pros and cons of RPA's recommendations, and certainly there will be more put on the table by Jan. 10 when the current legislative session ends. What happens next will impact Secaucus as well as the rest of the state. To read the full reports, which are extensive in their research, go to www.rpa.org.
"We're living large on the previous generation's sacrifices," said RPA Vice President Thomas Dallessio. "If we don't take care of what they gave us, their heritage will disappear."