New Jersey funds transportation projects using an accounting device called the Transportation Trust Fund. Â Despite this warm and fuzzy name, itâ€™s not like the trust fund rich kids and widows have. Â In fact, it is a liability on the books of the state of New Jersey. Â It doesnâ€™t have assets, but rather owns $16 billion in the form of bonds. Â It is broke.Â The gasoline tax, at 10.5 cents per gallon generates to $416 million per year. Â Debt service on the bonds is $1,117 million.Â So somethingâ€™s gotta give.
This situation didnâ€™t sneak up on us, but the solution has been contentious.Â Trenton did what Trenton does when the problem seems intractable.Â It kicked the can down the road.Â This month, there wonâ€™t be a penny left in the coffers. Â Last week, the balance was down to $85 million.Â In order to avoid a default like Detroit or Puerto Rico, the legislature needs either to approve an increase in the debt ceiling, increase road use taxes, or fund it from other state revenues.
Wherefrom do we get the money?
There is no more statutory authority for the TTF to borrow money. Â The legislature hasnâ€™t discussed this option â€“ and probably for good reason.
The legislature has the option to fund the TTF from its general revenue, which comes from sales tax and income taxes.
The historical source of TTF funds has been from fuel taxes. Â This follows the federal model, which commits revenues from aviation fuel taxes to the FAA and so on. Â In some way, it makes sense.Â Drivers of cars and trucks pay for the toads they drive on. Â It turns out that drivers are not the primary beneficiaries of the TTF.
Where is TTF money spent?
Governor Christie announced work stoppages on 1,375 nonessential transportation projects. Â The devil is of course in the details. Â I looked at the biggest 125 projects, which comprise 80% of the value of the list. Â My subset includes all the big projects down to $4 million.
Of the big projects, 91% are NJTransit projects. Â The biggest is the purchase of new buses for NJTransit. Â The old buses were put into service between 2000 and 2008.Â I am surprised that these buses, which cost a half a millionÂ apiece, would wear out so quickly.
Ninety-one million dollars were slated for capital replacement (read: new cars) for the Hudson-Bergen light rail system. Â It astounds me that a system that went into service in 2000 should be ready for new cars already. Californiaâ€™s BART is using cars that opened the service in 1972. Â Note to self: Hudson-Bergen is a great name, but it has no tracks in Bergen County.
The second biggest expenditure is compliance with the federal Passenger Rail Investment and Improvement Act (PRIIA). Â Huge federal subsidies to NJTransit require lots of reports and studies for Washington. Â Apparently, these will cost $248 million.Â Itâ€™s a good investment; the federal checks will be far larger. Â One might question, however whether a quarter billion dollars isnâ€™t a cost higher than justified for a stack of three-ring binders.
Gas taxes for highways?Â Nope
A look at the details shows that the proposed NJ gas tax has little to do with the stateâ€™s highways. Â Itâ€™s the funding source for public transit.Â Motorists of the state have every reason to oppose the increase. Â If the Democrat-controlled legislature chooses to fund mass transit at the expense of motorists, thatâ€™s their choice. Â Voters elected them to do their business.Â If thatâ€™s not wat voters want, it will be their choice in the voting booth.