The New Jersey Transportation Trust Fund is nearly broke.

Losing Trust: Part 1 in a Three-Part Series
The New Jersey Transportation Trust Fund is nearly broke. How did such a great idea become a major crisis?

The number of people who die in car crashes on New Jersey’s roadways has fallen steadily over the last five years, not by much, but incrementally and respectably to less than one death per every 100-million vehicle miles traveled. Over 750,000 road trips are made each day in New Jersey. Last year, there were 649 vehicle-related fatalities on the state’s roads and highways. Statistics like this don’t happen by accident. They’re the result of highway safety improvements as well as education and awareness programs, and none of these comes cheap.

Neither is it inexpensive for the state to provide over 320,000 people with reliable public transportation on 178 bus routes and 12 regional rail lines. Over 600,000 trips per day are made on New Jersey Transit, enough to make it seem like an afterthought, an endless ebb and flow of people and commerce that always was and always will be.

Or, maybe not. With financial collapse looming over the state’s transportation system, this ebb and flow could grind to a halt, skid marks and all. Listen to transportation officials and legislators, and you’ll get the impression the metaphor stands a good chance of becoming a reality.

A review of New Jersey’s transportation resource and expenditures plan for fiscal year 2006 shows $671 million in funding coming from its 20-year-old main financing source, the Transportation Trust Fund (TTF). Move one column over to fiscal year 2007 and that number is zero. About $1.5 billion, half of which is federal dollars, is earmarked for 2006 transportation expenses. Most of the money will go to maintenance, while bridges, roads and transit facilities continue to deteriorate. Yet, unless the Trust Fund secures more revenue by July 2006, it will be capable of paying for nothing more than its accumulated debt service. In other words, that zero in the 2007 column will become more than an ominous placeholder. It will yield a stark certainty—one producing unfortunate results that New Jersey drivers and transit riders could be living with for generations.

The urgent question, then, for the people of New Jersey is how can you go from more than a half-billion to zero in less than a year? The answer begins with a simple and all-too-familiar sentence: it wasn’t always this way.

In 1984, under then-New Jersey Governor Thomas Kean and his Commissioner of Transportation, John Sheridan, the TTF was created to provide a stable source of funding for transportation capital expenditures. A history of poorly funded transportation capital programs motivated Kean, Sheridan and a bi-partisan group of legislators to rethink transportation funding.

The TTF was originally designed as a pay-as-you-go, self-replenishing source, fed by tolls and a motor-fuels tax of 8 cents-per-gallon. In 1985, during the fund’s first full year of existence, it was fed entirely by these two revenue streams. Twenty years later, pay-as-you-go monies have declined to roughly 25 percent of the fund’s source of revenue.

Yet, in the honeymoon years, from the late ’80s to the early ’90s, the success of the fund yielded ambitious proposals for expensive transportation projects, in the same way a shiny new piece of plastic with a high credit limit motivates a spending spree. In combination with federal money, the fund financed all sorts of ventures, including the Hudson-Bergen Light Rail Line; the marina tunnel in Atlantic City; and the rebuilding of the Routes 4 and 17, and 1 and 130 interchanges, among other projects.

In February 2004, Martin Robins, director of the Alan M. Voorhees Transportation Institute at Rutgers University, addressed attendees at the New Jersey Alliance for Action’s second annual transportation conference. Robins presented the findings of a Blue Ribbon commission appointed by then-Governor James McGreevey in 2003. The commission was charged with examining the TTF’s history and developing recommendations to save it.

“A number of policy choices made in the last dozen years have undermined the principle goals of ‘stable and assured’ transportation funding,” Robins told the conference attendees. “The Trust Fund’s constitutionally dedicated funds are about to be consumed by sharply rising debt service.” Moreover, Robins pointed out that as a result of New Jersey’s ongoing budget challenges, money had also been diverted from the TTF to the General Fund and not replenished.

Despite billions spent on projects over the years, the costliest policy choice appears to have been the decision to help finance the TTF through bonding, specifically the selling of bonds against the revenue generated by the pay-as-you-go system. Rising capital costs and a soured economy during the early ’90s forced the state to turn to bonding as a temporary solution to the problem. In 1995, a series of amendments to the TTF re-authorization legislation made bonding a permanent policy. Voters in New Jersey agreed in a subsequent referendum. The debt began to mount, despite itinerant but failed initiatives such as calls for raising the gas tax by 12.5 cents to replenish the fund.

At this point, the TTF resembles the bill on a maxed-out credit card, and there is barely enough to make the minimum payment. As Robins indicated in his October 2004 report The Crisis in State Transportation Finance: Lessons Learned from the New Jersey Experience, “The progressive decisions to resort to increased borrowing in 1992 and 1993 were made to ease pressure on the General Fund during a period of severe economic recession and anti-tax fervor.”

To be sure, few in Trenton, fearing the political poison of increasing taxes, were able to follow through on lobbying for a higher gas tax. There continues to be a reticence to address it today, even in the face of such a crisis.

“The gas tax is the elephant in the living room that nobody wants to talk about,” said Assemblyman John Wisniewski, chair of the state’s transportation committee and co-sponsor of a bill (A3414) that would set policies, including the establishment of an oversight committee with managerial powers, to restore the Trust Fund to permanent solvency. “The people who send us to office understand that it is not practical to make every decision a decision that involves more spending and less taxes.”

The gas tax was last raised in 1988, when the original 5 cents-per-gallon increase was whittled down to 2.5 cents. New Jersey’s gas tax, the fourth lowest in the nation, has remained at 10.5 cents per gallon since then. Of that 10.5 cents, 9 cents goes to the Trust Fund while the remaining 1.5 cents is going to pay off debt. With the state tax added to the excise tax, the grand total is 14.5 cents per gallon, but this is still way below the national average of 44 cents.

In the past, when the Fund was in danger of approaching insolvency, dollars were constitutionally dedicated from the General Fund to the TTF. This last occurred in 2000, during, as Robins noted, “flush economic times.” When the recession of 2001 hit, however, legislators were again faced with the reality of a dwindling Trust Fund sapped by debt service and increasing transportation costs that represented little more than general maintenance.

This time around, a bailout from the General Fund is not possible. New Jersey’s ballooning budget forced current Acting Governor Richard Codey and his predecessor to find alternative resources. Over $100 million from the Trust Fund has actually been redirected to the General Fund during the last four years. It would make sense to replenish the TTF, especially now, but there are literally no dollars to go around.

Moreover, shifting funds around, according to officials, is no longer a desirable or feasible option since it does nothing more than provide a temporary fix, and temporary fixes seem to be at the root of the crisis.

“We must surrender the credit-card mentality,” warned Wisniewski. “Responsible policy is more important to people in this state than safe politics.”

But when that policy involves transportation, a subject that doesn’t generate the kind of media interest or political excitement that other issues do, how do you get the people behind you?

“The 2006 (transportation) program will absolutely be the last,” said New Jersey Department of Transportation (NJDOT) Commissioner Jack Lettiere. “We’ve reached this point because of a lack of focus and quick fixes. Transportation was not made a priority.”

Lettiere, a veteran of the NJDOT and its leader for the last three years, speaks in the starkest of terms, deliberately taking an alarmist tone, to stress the immediacy of the problem.

“The real message is that we’ve become complacent,” he explained. “We’re willing to tolerate certain levels of deterioration. But, it’s going to catch up with us. Our bridges are well over 50 years old, I-80 is deteriorating, and buses that should have been retired after eight or so years of service are still in our fleet.”

Old buses, crumbling roads and dilapidated bridges; drivers stuck in bottlenecked interchanges and exit ramps for hours during a commute, losing days and possibly years of their lives while idling in traffic. That puts New Jersey in league with a number of other places in the country also succumbing to the wear and tear of generations of use and the lack of funds, hearing the sound of their own voices against the silence of the federal government.

Texas, Michigan, Philadelphia and New York City are among the states and cities now facing a transportation crisis. This problem is bigger than New Jersey. It’s national. What astonishes Lettiere is that, amid the talk of homeland security, there’s no connection made between reliable transportation and infrastructure and national security. He believes that a benefit of living through 9/11 is the realization that solid transportation, which includes improved infrastructure, is an integral part of homeland security.

“In a post-9/11 New Jersey,” Lettiere observed, “infrastructure can be either of two things: a target or an avenue to provide relief. The U.S. military uses our highways and ports. A problem with transportation infrastructure hinders homeland security.”

The relationship between a hot-button issue like national security and transportation could help fuel interest and efforts to save the TTF, hopes Lettiere. He also thinks the argument has to be made personal. For years transportation has been treated merely as an expense and not as a necessity or a quality-of-life issue. Hours lost in traffic and trips across deteriorating bridges and on unreliable trains and buses all contribute to the collective angst of the New Jersey commuter. Suddenly the issue becomes less of an abstraction, a math problem for the numbers crunchers, and more of an issue in which voters have a stake. Lettiere believes the key to saving the fund is turning the issue into an emotional one.

“The biggest threat to our national security isn’t bin Laden,” Letttiere contends. “It’s rust.”

Texas, Michigan, Philadelphia and New York City are among the states and cities now facing a transportation crisis. This problem is bigger than New Jersey. It’s national.

No. It's not national. It's Texas, Michigan, Philadelphia, NYC and New Jersey. Those are rich places that don't need national help, and the statement that it is a national problem is just evidence how they got into this problem. They don't take responsibility for their own goof ups.

Michigan is a DONER STATE - we send more to Washington in taxes then we get back. The solution is not sending money to Washington in the first place.

The State of New Jersey should be allowed to sell special long term bonds to provide bridge financing. These bonds would only be allow to be purchased by the Social Security Trust Fund (Lock Box).

When any politician names anything with 'trust' remember that simply means he ain't going to be around when you find out the piggy bank is empty.

I am a recent transplant from the south to the northeast. I can't figure out how these stupid, (yes, stupid) yankees have got in place a tax that: pollutes the environment, causes you to sit idling your car waiting to comply, makes you late for work, wastes fuel energy, causes me to drive miles out of my way on Highway 1 to avoid the $5 per car toll to cross the bridge on I-95. Back home in Louisiana, we could cross any bridge across the Mississippi for free, including the free ferries. You don't idle your car spewing pollutants and burning fuel to pay sales tax.

Politicians who 'give' the voters everything in an attempt to be re-elected need to be held for their decisions. The financial management of public facilities must be observed by all involved. Fiscal projections are not to be forecast lightly. Financial officers should be required to make public all of their projections because this is public funding. Annual evaluations and corrections should be taken to insure continued success.

The pending bankruptcy is the result of repeated years of poor financial management. Someone or some comittee kept the truth from the public. These are the people who need to be held accountable for the loss. It was not the result of ignorance, that I can assure you.

There aren't very many states that aren't donor states, and most of those which aren't donor states get just barely more than they send. A few states like NM get substantially more than they send, but it's only because they don't send hardly anything because they are very poor states to begin with.

On the other hand, D.C. gets vastly more money than it sends. VA and MD get some of the spillover, so they get more than they send. That is really where the loss is. D.C. spends the bulk of the tax money, and the rest of us are paying for it.

It's another good reason for not making DC a state. They've got more than adequate representation as it is. A large number of Congressmen live in DC. And they all work there (if you can call it that).

you're too kind in your description of the spending habits of the current batch of politicans.

poor management is at the very least an understatement. criminal comes to my mind.

heres is a very small list of pork in tealu the recent figure is 17 billion of the funding is pork

probably much, much more...

Here are a few of the earmarked non-highway projects (along with their congressional beneficiaries):

-- Construction of "Renaissance Square" in Rochester, N.Y., including a performing arts center. $7 million. Rep. Louise Slaughter, a highly partisan liberal Democrat.

-- Renovation of a historic depot and bus station in Jessup, Ga. $1 million. Rep. Jack Kingston, a leading Republican conservative.

-- Improvement of the Henry Ford Museum in Dearborn, Mich. $1.5 million. Rep. John Dingell, the senior member of the House and a fierce Democratic battler.

-- A new parking building in Oak Lawn, Ill. $4 million. Rep. William Lipinski, an 11-term Democrat.

-- A series of improvements for the Blue Ridge Music Center in Galax, Va. $2.5 million. Rep. Rick Boucher, an 11-term Democrat.

guess why NJ's really broke and our roads are falling apart...

Politicians who 'give' the voters everything in an attempt to be re-elected need to be held for their decisions.

From the article . . .

In 1995, a series of amendments to the TTF re-authorization legislation made bonding a permanent policy. Voters in New Jersey agreed in a subsequent referendum."

Oh, well.

I got into a heated discussion about this very subject with a member of the New Jersey state senate at a conference six years ago, and I predicted that the state was going to end up in this mess because he and his fellow legislators didn't have a clue about how to oversee this kind of infrastructure "trust fund."

Here is a list that shows the amount of Federal money that every state gets for every dollar it sends to Washington.

There are 19 "donor states" (shown by a "-" minus sign, they get back less than what they pay in Federal taxes). Connecticut and New Jersey are the two biggest donor states. Florida breaks even (one Federal dollar back in aid for every tax dollar send to Washington). The 30 other states (shown by a "+" plus sign) and the District of Columbia all get more in Federal aid than they pay in taxes.

- California $ 0.86
- Colorado $ 0.85
- Connecticut $ 0.62
- Delaware $ 0.84
- Georgia $ 0.99
- Illinois $ 0.74
- Indiana $ 0.92
- Massachusetts $ 0.86
- Michigan $ 0.81
- Minnesota $ 0.76
- Nevada $ 0.69
- New Hampshire $ 0.71
- New Jersey $ 0.66
- New York $ 0.86
- Ohio $ 0.97
- Oregon $ 0.93
- Texas $ 0.96
- Washington $ 0.87
- Wisconsin $ 0.83

Florida $ 1.00

+ Alabama $ 1.54
+ Alaska $ 1.68
+ Arizona $ 1.18
+ Arkansas $ 1.38
+ Hawaii $ 1.56
+ Idaho $ 1.30
+ Iowa $ 1.04
+ Kansas $ 1.02
+ Kentucky $ 1.41
+ Louisiana $ 1.39
+ Maine $ 1.32
+ Maryland $ 1.32
+ Mississippi $ 1.78
+ Missouri $ 1.26
+ Montana $ 1.59
+ Nebraska $ 1.09
+ New Mexico $ 2.03
+ North Carolina $ 1.06
+ North Dakota $ 1.86
+ Oklahoma $ 1.46
+ Pennsylvania $ 1.06
+ Rhode Island $ 1.18
+ South Carolina $ 1.27
+ South Dakota $ 1.46
+ Tennessee $ 1.20
+ Utah $ 1.06
+ Vermont $ 1.08
+ Virginia $ 1.48
+ West Virginia $ 1.75
+ Wyoming $ 1.09

Interesting information. It's worth noting that there is one potential aspect of those figures that may skew them. If these figures include Social Security and Medicare outlays, then I would expect that states with more retirees per capita would be somewhat more likely to be "recipient" states.

In any case, there is definitely a noticeable trend there. States in which a large portion of the population lives in urban areas are overwhelmingly "donor" states simply because the higher cost of living drives taxpayers into higher Federal income tax brackets. This is why smaller Northeastern states like New Jersey, Connecticut, and Delaware are among the biggest "donor" states.

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