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N.J. transportation borrowing reaches a roadblock

Federal data show New Jersey stands out as one of the nation's biggest transportation borrowers, second in total debt only to Texas.

The Associated Press


TRENTON, N.J. — New Jersey has become so hooked on borrowing to pay for transportation projects that this year, for the first time, money from gas, sales and other taxes earmarked for transportation spending didn't cover debt payments.

The state is not alone in struggling to find money to improve its roads and bridges, among the nation's worst.

But federal data show New Jersey stands out as one of the nation's biggest transportation borrowers, second in total debt only to Texas.

A report released this month by the nonpartisan Office of Legislative Services concluded that the Transportation Trust Fund, meant to finance transportation projects, is locked in an "unsustainable pattern" of borrowing. In a first, it noted, the $895 million in fuels, sales and other taxes earmarked for the fund didn't cover the debt payments, forcing money previously used in the state's general fund to go toward debt.

Assemblyman Gary Schaer, the Democrat who serves as vice chairman of the Budget Committee, likened the predicament to a Ponzi scheme during a recent budget hearing.





Assemblyman John Wisniewski, chairman of the Transportation, Public Works and Independent Authorities Committee, said in an interview that the state will need more revenue to break out of the debt cycle but he doesn't see that happening anytime soon.

"It's a political time bomb," he said. "Nobody wants to touch it. The minute anybody talks about a solution that involves an increase in revenue, they're immediately branded as wanting to increase taxes and not caring about ordinary people, and the discussion runs off the rails."

New Jersey has the nation's third-lowest gas tax and sixth lowest diesel tax but the tax burden is otherwise high. Homeowners are saddled with the nation's highest property tax rates.

Borrowing money to pay for transportation projects is an expensive practice for taxpayers, data from the state Treasury Department show. The Transportation Trust Fund has paid out $2.8 billion in interest on borrowed money since 2000, and the fund's debt is projected to be $13.4 billion by mid-year.

Gov. Chris Christie is seeking to reduce borrowing, but trust fund debt is still expected to grow to nearly $16 billion by the end of his five-year plan.

The governor's five-year plan calls for about $8 billion in spending, with $4.3 billion coming from bonds and $1.8 billion in pay-go funds. An additional $1.8 billion would come from the Port Authority of New York and New Jersey, where money was freed up by the governor's cancellation of the New Jersey-to-New York rail tunnel. The pay-as-you-go share would nearly match borrowing by the final year.

Treasury spokesman Andy Pratt said that would be a big improvement over past practice. The state's five-year plan under former Gov. Jon Corzine, a Democrat, was financed almost entirely through bonding.

"Even after coming off the worst economic crisis since the Great Depression," he said, the governor "has expanded the level of pay-as-you go transportation spending to levels far exceeding his predecessor's plan."

At the transportation hearing, Schaer said Christie, who made "pay-as-you-go" a theme of his campaign in 2009, should have come up with a way to pay for current infrastructure improvements without relying on borrowing.

At this point, though, Wisniewski said lawmakers will have little choice but to authorize additional borrowing as part of Christie's five-year plan.

"There are a lot of people who from a purely issues-oriented view would say we can't be issuing more debt," Wisniewski said. "Where's the money coming from to pay it? But then you look at if we don't issue this debt. Our roads and bridges are in bad shape now. If we reduce that to zero, you can only imagine how bad things will get."

According to a report from the Council of State Governments, New Jersey ranks fourth-worst behind Washington, D.C., Hawaii and Rhode Island in the condition of its highways, with 82 percent of roads rated as "less than good."

Robert Noland, director of the Voorhees Transportation Center at Rutgers University, said the low gas tax and climbing bond payments have meant less money available for the state's deteriorating infrastructure.

"The money is going to projects in the past because of a lack of political leadership," he said. "And we're paying the price for it now."

Kevin Jones of The Trucker staff can be reached for comment at

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