Blue Ribbon Commission issues report

Members recommend constitutionally dedicated gas tax increase

The Transportation Trust Fund, which has been the primary funding mechanism for State transportation dollars since 1984, needs new revenue or the New Jersey Department of Transportation’s $2.6 billion annual capital program will shut down, the Commission noted in a 50-page report unveiled today at a press conference at the New Jersey Institute of Technology in Newark.

“The Transportation Trust Fund is broken and the Blue Ribbon Commission has given long and serious consideration on how to fix it,” said Jack Lettiere, BRC Chairman and Commissioner of Transportation. “Our recommendations balance New Jersey’s transportation needs with the financial needs of our residents along with a new level of accountability for the fund to restore public confidence in government stewardship of taxpayer monies.”

The recommendations include:

• Increasing the NJDOT and NJ TRANSIT combined annual capital program to $3.1 billion, $520 million more than the FY2004 program to improve New Jersey’s roadway and rail infrastructure. The investments will target congestion relief, improved safety, transit rehabilitation and increase Local Aid to counties and municipalities by $150 million.
• Increase annual TTF revenues by raising the State Motor Fuels tax by 12.5 cents per gallon but potentially by up to 15 cents, contingent upon the expectation that the reauthorization of the federal transportation program will bring an additional $125 million a year to New Jersey, or the equivalent of 2.5 cents in the state motor fuels tax. The new revenue should be constitutionally dedicated.
• Increased revenues for NJ TRANSIT operations with equitable fare increases for all of its services that reflect both past and present inflation.
• Implementation of strict, new financial standards to prevent future insolvency of the TTF and restore public confidence, including: limited bonding, reversal of a trend that diverted capital revenue for operation costs, and capping of the annual capital program.
• Creation of a Financial Policy Review Committee to increase public accountability, prevent future insolvency and annually certify adherence to new financial standards of the TTF.

“Just as responsible companies must make capital investments to ensure reliable, efficient service for their customers, so must the State of New Jersey maintain and upgrade its mass transit and highway systems,” said Al Koeppe, Vice Chairman of the Blue Ribbon Commission and President of PSE&G. “Renewal of the Transportation Trust Fund is critical for our economy, our quality of life and our future.”

The Commission identified $40 billion in transportation needs for New Jersey over the next 10 years.

"Despite the financial problems facing the TTF, our State's transportation needs are formidable," said Dr. Robert A. Altenkirch, NJIT President and BRC member. "This commission has made responsible recommendations to address these needs and to put in place a mechanism to ensure that New Jersey will be in a position to continue to invest in its transportation infrastructure for the future."

The needs include:

• $1 billion annually for the next 10 years to rehabilitate 15,254 lane miles of highway;
• $7 billion to eliminate the backlog of structurally deficient bridges;
• $4.9 billion over the next 10 years to restore NJ TRANSIT infrastructure to a state-of-good-repair;
• $7 billion over the next 10 years to increase capacity on NJ TRANSIT services;
• $50 million annually to improve customer service and technology on NJ TRANSIT;
• $90 million for programs and improvements to make driving safer;
• $5.5 billion over the next 10 years to alleviate heavy traffic;
• $360 million over the next 10 years for rail freight infrastructure improvements to maintain the State’s economic advantage in the goods movement industry;
• $22 million annually to support commuter ferry services, boating infrastructure, and shipping-based national and international trade;
• $340 million over the next ten years to acquire and preserve the State’s core airport system in the State.

The TTF is a self-replenishing program funded with motor fuels, gross petroleum and sales tax revenues.

“New Jersey relies more on its transportation system than any in the state,” said Raymond M. Pocino, Vice President and Eastern Regional Manager of Laborers’ International Union of North America and BRC member. “Our intermodal system of roads, bridges, ports, aviation and transit is our gateway to world markets and allow us to compete with other regions for attracting business. Investment in our infrastructure creates jobs and provides the foundation for a sound economy.”

The impending insolvency of the TTF is directly linked to decisions made over the past ten years to increase reliance on bonding, to extend the term of bonds from 10 to 20 years, and to raise spending caps without additional revenues, the Commission found. In addition the report described general fund appropriations inadequate to meet maintenance operations needs which have required NJDOT and NJTRANSIT to use TTF funds to cover many maintenance operations at a cost to their capital programs.

"This financial crisis for the TTF comes at a time when New Jersey's transportation networks are plagued by aging infrastructure and costly congestion," said John P. Sheridan Jr., former NJDOT Commissioner and BRC member. "Our roads, rails and bridges are deteriorating, years of deferred maintenance have come due and repair costs will only rise if we delay."

Once a self-replenishing, pay-as-you-go mechanism, the TTF now pays $536 million in annual debt service and the figure will grow to nearly $805 million by FY2006, thereby consuming all dedicated TTF revenues. If this were to occur, the State will also lose federal transportation funding because it would be unable to meet the matching fund investment levels required by federal law.

“While the TTF is necessary to ensure the continued movement of more than $7 billion annually in goods and services, it also offers critical property tax relief for local road and bridge projects which we cannot allow to be jeopardized,” said The Honorable Harry Larrison, Jr., Director of the Monmouth County Board of Chosen Freeholders and BRC member.

Each year, the TTF provides $150 million in grants to assist local governments through the NJDOT’s Local Aid Program. If the TTF fails to generate capital, the Local Aid Program will not distribute any funding, and local governments will be forced to either abandon projects or pay for infrastructure improvements by other means, including cuts in services or increased property taxes.

“The most important part of this report is not what will get the most attention – raising the gas tax – but the recommendations to ensure that the money is not siphoned away from improving our transportation infrastructure, nor used to spur sprawl,” said Barbara Lawrence, Executive Director of New Jersey Future and BRC member.

On January 7, 2003, Governor James E. McGreevey signed Executive Order No. 43, creating a Blue Ribbon Transportation Commission to examine and make recommendations related to pressing transportation issues facing New Jersey over the next 10 years in time for the upcoming TTF reauthorization.

The Commission reviewed a variety of technical reports and presentations prepared by transportation experts including NJDOT and NJ TRANSIT staff and private consultants. These reports provided the Commission with detailed information on the current status of the TTF, transportation system needs, potential future revenue requirements and options for raising needed revenue.

Lou Gambaccini, former NJDOT Commissioner, Senior Fellow at the National Transit Institute at Rutgers and BRC member said, “The needs of the State are great, and we must attack this problem if we’re going to fix it. While the Commission must in good faith recommend a level of investment that addresses the State’s transportation needs, residents of New Jersey cannot be asked to pay any money without assurances that this money will be spent wisely, to fix the problem before us. One of the most important recommendations of this Commission - the creation of a Financial Policy Review Committee - will ensure fiscal discipline and provide financial accountability to the public.”

In addition to information provided by the transportation experts, the Commission held three public outreach meetings at which time New Jersey residents were given the opportunity to testify on the current condition of the State’s transportation system and identify future infrastructure needs.

The full report (pdf 2,272kb) can be found on the NJDOT web site.