T4America Blog

New Jersey shuts down almost all transportation projects amidst fight over nearly bankrupt transportation fund

New Jersey Governor Chris Christie shut down almost all ongoing state transportation projects this week after a legislative stalemate over rescuing the state’s bankrupt Transportation Trust Fund — a debate that hinged on pairing a gas tax increase with cuts to the state’s sales tax.

Flickr photo by Bob Jagendorf. http://flickr.com/photos/bobjagendorf/5492860578

This week New Jersey Gov. Chris Christie (R) ordered a halt to all of the state’s transportation projects, other than those that are “absolutely essential”, to conserve the dwindling cash in the state’s Transportation Trust Fund.

With an incredibly low gas tax that hasn’t increased since 1988, the state has relied on bonding, rather than new revenue, to pay for road and transit projects. As a result, an astonishing 100 percent of all fuel tax revenues are now devoted to paying down debt on past projects.

Since hitting a borrowing limit on June 30^th, the fund is quickly running out of cash for new projects. The Governor, state Assembly, and bipartisan groups of senators have all backed various plans that would include a big hike in the state’s gas tax — the second-lowest state fuel tax in the country at 14.5 cents-per-gallon — to boost transportation funding.

But negotiations stalled over what tax cuts or new policies would accompany the increase in the gas tax.

While this funding crisis has been looming for years, state leaders — especially Gov. Christie — have long opposed any increases to the fuel tax as a solution. But last week, when facing a funding cliff, legislators seemed to agree on a plan to pair a 23-cent-per-gallon increase in the state fuel tax with cuts to the estate tax and an increase in the earned-income tax credit. This package had bipartisan sponsors in the state Senate when it was introduced last Monday.

But that same day, Gov. Christie came out of negotiations with Assembly leaders with a new plan: keep the 23-cent gas tax increase, but pair it with a one-percentage-point cut to the state sales tax. That plan (A12) cleared the Assembly on a 53-23 vote and was publicly backed by the governor.

The Senate balked at this alternative and the $1.7 billion hole it would blow in the state’s general fund. Cutting the state’s sales tax would jeopardize many state programs that depend on general funds, including slashing the main source of operating funds for the state’s transit agency while increasing the primary source of funds for roads.

Already, the state has cut operating funds for NJ Transit from $278 million in 2005 to just $33 million in 2016. Some extra money for transit has come from shifting long-term capital funds (including money originally set aside for Access to the Region’s Core trans-Hudson tunnel project that Gov. Christie canceled in 2010) to day-to-day operations. But the rest of the funding gap has come at transit riders’ expense, from fare hikes and service cuts, all while road users have enjoyed the same low gas tax rate since the year President Ronald Reagan left office. The Tri-State Transportation Campaign illustrated this in a picture:

The slice on the right should have a topping by now. Instead, NJ has shut down #transpo projects. #ThrowbackThursday pic.twitter.com/67Kcwus2oI

— Tri-State (@Tri_State) July 7, 2016

Gov. Christie is blaming the transportation shut down on the Senate. But transportation advocates in the state accuse the governor of holding transportation projects hostage in a bid to win bigger tax cuts.

The shutdown will have real consequences for the state. Christie’s order has halted more than 1,100 active state, county, and local highway and transit projects. Stopping and eventually restarting construction projects can add considerably to their costs. People driving and people riding transit will wait longer — at least as long as the standoff lasts — for relief and improved service the projects would offer.

The short-term crises are a disaster at the time the state needs long-term funding to complete critical, major projects, like the Gateway Tunnel into New York City, the Hudson-Bergen Light Rail extension, and the Glassboro-Camden line.

We’re closely watching New Jersey to see how the state resolves this funding crisis. Many state legislators have expressed an unwillingness to increase the gas tax in the past because they believe their citizens don’t have faith that the existing money is well spent. How can these legislators implement smarter policies to boost the confidence of those citizens in order to raise new money for transportation?

Join us for Capital Ideas II in Sacramento November 16-17 for in-depth conversations on state transportation policy and politics. Register today!