The Transportation Trust Fund was established in 1984 to provide a stable source of funding for New Jersey’s transportation infrastructure. It worked as designed for years, but it is now running on fumes and will be bankrupt July 1. If that happens, construction projects around the state will grind to a halt, including state, county, and municipal projects that depend upon the Transportation Trust Fund for hundreds of millions of dollars of mission critical capital. How’d we get here in the first place?
We’ve reduced “Pay as You Go” financing over the years
Pay as You Go financing is like paying with cash; there’s no interest to be paid and it’s fiscally responsible. But it’s not always feasible with large infrastructure projects, much like most people don’t cash for their homes. The goal is to find the right balance between Pay as You Go and bonds (debt).
We are relying too much on bond debt to maintain our roads
Bond debt is like a mortgage or a credit card, useful if used responsibly, but fiscally irresponsible if not.
At this point, our bond debt is spiraling out of control
Nearly every dollar of revenue for the Transportation Trust Fund is used to pay bond debt accrued from prior years, so we’ve gotten into the bad but necessary* habit of taking on more bonds to maintain the roads. It’s like maxing out a credit card, and then getting another one to pay for groceries. This outsized bond debt (and the subsequent debt payments) also increases the perceived cost of NJ’s roads, just like interest payments on a car loan increase the overall cost of the car.
* Necessary in the sense that we cannot just let our roads crumble and bridges fail.
Our children and grandchildren will be paying for our over reliance on bond debt.
Even if we started paying for our roads with cash (Pay as You Go) today, we’ve got over $1,000,000,000 of annual bond payments from now well into the next decade.
We’re paying for our infrastructure with 1989 dollars
The current condition of NJ’s roads is a direct consequence of these debt-heavy policies. Simply put, we have not invested in infrastructure, instead choosing to take on debt. So while the Consumer Price Index has risen nearly 300% since 1980, the gas tax has not been increased since 1989.
Part of the problem is that whenever the gas tax is mentioned, many react with, “but my property taxes are high enough as it is!” While we understand the anger over high property taxes (we live in NJ too), we need to understand the bulk of property taxes goes to pay for our schools, police, and other services, not transportation infrastructure. We believe that this anger over property taxes has made it harder to make smart decisions about our roads, bridges, tunnels, and quality of life. We pay for it every time we hit a pothole, get stuck in traffic, or cross a bridge that should have been replaced decades ago.
The Transportation Trust Fund goes bankrupt July 1. We need a bi-partisan solution to the Transportation Trust Fund that is dedicated to infrastructure. Now. We invite NJ’s legislators, media, and citizens to engage in a fact-based, substantive discussion about the state of our state’s roads, bridges, and tunnels.
ELEC supports a fully funded Transportation Trust Fund that is DEDICATED to capital improvements.
New Jersey Transportation Trust Fund Authority, http://www.state.nj.us/ttfa/financing/
Consumer Price Index, All Urban Consumer, Bureau of Labor and Statistics, http://data.bls.gov/.