NJ Transportation Trust Fund Faces Bankruptcy

According to an article in today's Home News Tribune New Jersey's Transportation Trust is facing imminent bankruptcy:

"'If no new money is found for the fund, it will go bankrupt on July 1, 2005', said Martin Robins, director of the Alan M. Voorhees Transportation Institute at Rutgers University, New Brunswick."

I won't summarize the entire article here, but here's the gist, it's nearly broke because of "more than a decade of mismanagement, heavy borrowing, inaction by officials and snowballing debt."

I think the article fails to stress how avoidable the current crisis once was. A consistent lack of foresight from politicians on both sides of the aisle has allowed the fund's financial woes to spiral dangerously out of control. The Transportation Trust is funded by multiple sources, but a significant portion comes from the state's gasoline tax. According to state law, New Jersey's gas tax is dedicated to the Transportation Trust, but "the annual state budget reroutes millions of dollars each year into the general treasury because the budget can supersede state law." New Jersey's 10-cent gas tax is the third lowest in the nation, only Alaskans and Georgians pay less. (Before anyone gets upset, I'll clear this up, since depending on where you look you get different answers to this issue--New Jersey drivers currently pay a 10-cent gas tax and a 4.5-cent petroleum products gross-receipts tax. The 10-cent gasoline excise tax is the third lowest, the 14.5-cent total tax is the fifth lowest in the nation--everyone happy now)

All but four states - Georgia, Alaska, Minnesota and Indiana - have raised their gas tax since New Jersey last did in 1988. Proposed gas-tax increases have been proposed and either rejected by Governors, voted down in legislatures, or ignored since '88.

"In 1998, a proposed 5 cent per-gallon increase in the gasoline tax was never voted on. The current commissioner of the state Department of Transportation, John F. 'Jack' Lettiere Jr., said such an increase might have averted the current crisis.... 'Guts and leadership are the reason we're in this situation. No one's had the leadership to say we've got a real problem here,' Lettiere told a Gannett New Jersey editorial board meeting last month. 'Maybe the responsible thing to do a couple years ago would have been to raise the gas tax 2 cents a gallon.'"

One can't help but think of the phrase, 20/20 hindsight, when reading Lettiere's quote, especially in light of a blue ribbon panel of transportation experts' recommendation for a 12.5-cent hike in the gas tax. That proposal was summarily killed by Gov. James E. McGreevey last week. Word is that McGreevey won't support a gas tax increase in '04 either. Ironically, a report published by New Jersey Policy Perspective in '02 noted that "when NJ Transit bus and rail fare increases were approved in January [of 2002] the action was in part defended on grounds that they had not risen since 1991 - but New Jersey's gas tax hasn't been increased since 1988.

Adding to the Trust's problems is the relatively recent (2000) modification of the law's language, to allow salaries and other nonconstruction items to be paid from the trust fund which was originally created to fund "transportation projects." (The language was changed to "transportation purposes.")

Perhaps the biggest problem facing New Jersey commuters has received little coverage. The Press of Atlantic City reports:

A spokesman for [New Jersey Alliance for Action], Ernie Landante, said New Jersey stands to lose close to $10 billion in federal aid if it does not reauthorize the transportation trust fund.

'We only get the money if we provide a 20 percent match,' Landante said. 'The only way to do that is by having funds available in the transportation trust fund. Otherwise, money that would be ours would go to building roads in Utah and railroads in Iowa.'"

Addenda

While researching this post I came across the following article from the Courier Post Online, it made me laugh. It's because of people like Martin Cruz that I'm proud that I don't drive anymore.:

Governor rules out gas tax increase

Wednesday, December 10, 2003

Panel supported up to 15-cent hike to fund road work
By LILO H. STAINTON
Courier-Post Staff
WOODBRIDGE

Gov. James E. McGreevey on Tuesday put the brakes on plans to raise New Jersey's gas tax by up to 15 cents, directing the transportation commissioner to find ways to fund road and rail repairs and improvements with existing revenues.

"With New Jersey just beginning to emerge from an economic downturn, with small businesses struggling to create new jobs, with families struggling to pay bills, it is the wrong time to increase the gas tax," McGreevey said.

New Jersey's gas tax of 14.5 cents per gallon is the nation's third lowest. A panel recommended a 12.5- to 15-cent hike two weeks ago as a way to pay for transportation projects.

Customers at the Race Track Texaco on Route 70 in Cherry Hill were elated to learn McGreevey scuttled the plan.

"God bless him, especially as high as (gas prices are) now," said Martin Cruz of Camden, who paid $30 to fill his sport utility vehicle Tuesday...