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Administration Diverted Nearly $400 Million into Transportation Fund in Past Year

Borrowing has become business as usual as administration goes from one budget crisis to next.

How broke is the state’s transportation trust fund? Broke enough that the Christie administration resorted to diverting $393 million from the state’s depleted general fund this past year to keep transit and highway projects moving ahead.

The diversion, described as routine and a normal course of business by administration officials during a contentious meeting of the Joint Budget Oversight Committee yesterday, offered insight into how dependent state government has become on borrowing to navigate from one budget shoal to another.

The hearing in the Statehouse Annex in Trenton was called to consider the administration’s efforts to have the committee approve the Transportation Trust Fund Authority’s sale of $1.25 billion in bonds to pay for transportation projects through next spring. The administration and Republicans on the committee claimed it was a routine bond sale to pay for previously legislatively authorized projects.

Much of the hearing involved partisan sniping over who was to blame for the decision by Department of Transportation Commissioner Jim Simpson to halt all transportation work projects, effective yesterday. Simpson said he had no choice but to suspend the work because lawmakers had balked at approving the latest bond sale. “The bottom line is you can’t pay the bills if you don’t have the money,’’ he said.

The meeting, which ended with the panel approving the bond sale, also offered little cause for optimism that the administration and lawmakers will come to an agreement anytime soon on how to fund the transportation trust fund long term. The fund only has $50 million in it, which is committed to debt service payments. Simpson said the administration “hopefully’’ would have a long-term plan by the end of year, a decision Democrats described as “unacceptable.’’

The borrowing from the general fund surprised even some veteran lawmakers, including Assemblyman Louis Greenwald (D-Camden), the chairman of the Assembly’s Budget and Appropriations Committee and one of the legislature’s foremost experts on budgetary matters.

“That was not discussed with me,” Greenwald told state Treasurer Andrew Sidamon-Eristoff, who described the borrowing from the general fund as one of many interfund transfers approved each year to keep state government operating. Anyone who closely watches the state’s fiscal affairs would be aware of the problem of cash flow problems within the trust fund, he said.

“You borrowed without telling us about it and all of a sudden, it’s important to pay it back," responded Greenwald, who implied the administration could have gone out and refinanced $500 million without legislative approval had it not diverted money from the general fund.

Sen. Paul Sarlo (D-Bergen), the co-chair of the joint committee, agreed, saying the Treasury Department never made it clear it was borrowing from the general fund. “Whatever happened to transparency?’’ he asked. “That is wrong."

Lawmakers also unsuccessfully tried to press administration officials on whether it plans to divert money to finance New Jersey transportation projects from a proposed $8.7 billion new rail tunnel to Manhattan, if projected cost overruns lead the state to back out of the project. Gov. Chris Christie halted work on the tunnel last month, citing cost overruns.

After the hearing ended, both Simpson and Sidamon-Eristoff brushed past reporters, offering terse “no comments’’ when approached by the press. Michael Drewniak, Christie’s press secretary, said afterward the borrowing was a routine step taken by the administration to deal with cash flow problems.

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