Transportation Crisis Puts Christie, Democrats On Collision Course

Mark J. Magyar | April 25, 2014 | Politics, Transportation
Battles loom over gas tax to fund Transportation Trust Fund and the future of the Port Authority after Bridegate

Pulaski Skyway
New Jerseyans pay more for unnecessary repairs caused by driving on poor or mediocre roads than residents of any other state. One out of every three bridges is decrepit or obsolete. Trains into Manhattan are jammed to capacity, with construction of a new rail tunnel at least a decade away.

Meanwhile, the Christie administration has borrowed so heavily that the Transportation Trust Fund that pays for highways, bridges, and mass-transit projects is going to run out of money a year early. And Gov. Chris Christie has called for the breakup of the Port Authority, the bistate agency set up to fund large-scale projects in the busiest transportation hub in the world.

“We certainly cannot renew the Transportation Trust Fund without a revenue source,” said Assembly Transportation Committee Chairman John Wisniewski (D-Middlesex). “But I’m not sure that the public is prepared for the sticker shock of what it’s going to cost to fix our transportation system.”

While Sen. Raymond Lesniak (D-Union) has introduced legislation raising New Jersey’s gas tax, which is the second-lowest in the nation, by nine cents a gallon over three years, New Jersey Policy Perspective yesterday slapped a realistic sticker price on New Jersey’s transportation crisis: The liberal think tank suggested a plan to raise $1.25 billion a year by hiking the tax on a gallon of gas from 14.5 cents to 39 cents a gallon — which would still be lower than New York, Pennsylvania, and six other large urban states.

Click to expand/close

It’s a question of economic competitiveness, Gordon MacInnes, NJPP’s president, insisted.

“We have a transportation system that is deteriorating at a pace that is frightening, and we are ignoring the assets that we need to be paying attention to because we are plagued by a short-term outlook and a failure to accept the fact that our transportation network is at the heart of our economic future,” MacInnes said.

The need to renew the Transportation Trust Fund and reform the Port Authority this year sets Christie and Democratic legislative leaders on a collision course over how to pay for the state’s transportation infrastructure needs.

It is a critical policy battle that will be fought out on a complicated political landscape.

Read My Lips . . .

It pits Christie’s determination to keep his “no new taxes” pledge — a political necessity if he still plans to run for the Republican presidential nomination in 2016 — against a growing recognition by Democratic legislative leaders that approval of a gas tax increase will be necessary to provide the revenue needed to fund TTF for five more years and avoid another credit downgrade by the Wall Street bond rating agencies.

The battle will be waged against the backdrop of Bridgegate hearings by a legislative investigative committee focused not only on potential misconduct by the governor’s office in the controversial George Washington Bridge lane closures, but also on whether Christie killed the Access to the Region’s Core (ARC) rail passenger tunnel in order to fund the renewal of the last five-year TTF plan without raising the gas tax in 2011.

And it will take place as the Port Authority — whose reputation has been damaged by Bridgegate, conflict-of-interest charges against ex-Chairman David Samson, and allegations that it misled the public on its massive 2011 toll hike — strives to return to its core mission as a regional transportation planning agency in the face of suggestions by Christie and New York Gov. Andrew Cuomo that the agency should instead by broken in two.

Breaking up the Port Authority is virtually the only option that could provide Christie with a way to renew the TTF for another five years without raising the gas tax and without having to borrow virtually the entire $1.6 billion a year in state funds needed.

Christie used $1.8 billion in Port Authority money diverted from the cancelled ARC Tunnel as the main pay-as-you-go funding in the five-year, $8 billion TTF plan he announced in 2011, but not without internal opposition from the Port Authority’s professional staff, who argued that spending the toll money on rebuilding the Pulaski Skyway would be illegal.

Dissolution of the bistate agency would give each state about $1.3 billion in annual toll revenue from the six trans-Hudson bridges and tunnels. And Christie would presumably have the ability to put Port Authority funds into TTF pay-as-you-go projects in North Jersey without agency interference.

Wisniewski said, however, that “any plan that would result in the Port Authority being broken up into two agencies that write checks to the two states is a non-starter,” and it is the Democratic-controlled Assembly that is prepared to move the cones in Christie’s way.

Assembly Speaker Vincent Prieto (D-Hudson), the new member of New Jersey’s ruling triumvirate who bucked Christie and Senate President Stephen Sweeney (D-Gloucester) on a critical interest-arbitration bill recently, publicly called for an increase in the gas tax to provide a significant level of pay-as-you-go funding for transportation construction projects as part of the next TTF renewal.

Kicking the Can

Prieto, who previously served as Assembly Budget Committee chairman, appointed his vice-chair, Schaer, an even more outspoken opponent of what he has criticized as the Christie administration’s practice of “kicking the can down the road” by relying on borrowing and budget gimmicks that will increase the costs for future administrations.
Wisniewski, who has chaired the Assembly Transportation Committee for 12 years, noted that he has always been an outspoken proponent of raising the gas tax to put TTF on a firm fiscal footing.
“Our Achilles heel as a state has always been that we acknowledge that we can’t fund the Transportation Trust Fund without a revenue source, but our reluctance to identify one. We thought we had a gas tax increase in the Democratic administration of Gov. (Jim) McGreevey. We were close,” Wisniewski said.


Martin Robins, director emeritus of Rutgers University’s Alan M. Voorhees Transportation Policy Institute, recalled that he served on a bipartisan blue-ribbon panel commissioned by McGreevey that recommended a 14.5-cent increase in the gas tax. McGreevey, politically weakened by looming ethics scandals, backed off and killed it.

Treasurer Andrew Sidamon-Eristoff confirmed at Schaer’s Assembly Budget Committee hearing that he would have to begin working on a plan to renew TTF this summer, rather than the following year, because the administration borrowed so heavily in its first four years that it would not have enough debt capacity left over to pay for transportation projects in the 2016 fiscal year that starts July 1, 2015. The treasurer refused to respond to questions about transportation-funding options after the hearing, and administration officials have failed to respond to emailed questions on the subject.

Transportation Commissioner Jim Simpson will undoubtedly face questions on both the TTF renewal and on prospective Port Authority reforms when he testifies before Schaer’s committee Monday afternoon.

Not since the bankruptcies of the Penn Central, Jersey Central, and Erie Lackawanna commuter railroads and the defeat of three successive bond issues led to the creation of New Jersey Transit in 1979 has New Jersey faced such a crisis simultaneously in transportation funding, planning, and infrastructure needs. And the report issued yesterday by New Jersey Policy Perspective recognized the magnitude of the challenge.

Asserting that New Jersey needs a state-of-the-art transportation infrastructure in order to remain economically competitive, the Trenton-based public policy institute urged that the state increase funding for TTF from $1.6 billion a year to $2 billion a year — a figure that would come closer to meeting the massive transportation infrastructure needs identified by Facing Our Future, a bipartisan group of former high-ranking state officials convened by the Council of New Jersey Grantmakers.

“It’s no surprise that funding for the Transportation Trust Fund has stagnated, since New Jersey’s leaders have been unwilling to raise additional money to support this important investment,” said David Rousseau, the former state treasurer under Democratic Gov. Jon Corzine, who serves as NJPP’s budget analyst and coauthored the report with MacInnes, a former Democratic state senator who serves as NJPP’s president.

“Policymakers haven’t increased the tax on gas in nearly 25 years and, as a result, New Jersey’s gas tax is now the second-lowest in the nation and the state is running out of options to fund vital transportation needs,” Rousseau said.

Click to expand/close

Rather than increasing the current 14.5-cent per gallon gas tax which is already being used entirely to pay off debt on past TTF projects, New Jersey Policy Perspective recommends extending the 7 percent state sales tax to gasoline, which would generate the equivalent of an additional 24.5 cents per gallon at the current $3.50 per gallon average price.

With gasoline usage — and therefore, gas tax revenues — likely to drop in future years as cars become more fuel-efficient, the sales tax option has the advantage that it will grow incrementally as gas prices increase, Rousseau noted. Sixteen states and the District of Columbia already have similar sales taxes on gasoline, and Florida and Massachusetts impose a gas tax that automatically rises with inflation.

Even with New Jersey Policy Perspective’s proposed increase, New Jersey’s per-gallon gas tax of 39 cents per gallon would rank ninth nationally, behind California (52.9 cents), New York (49.9), Connecticut (49.3), Hawaii (49.0), Pennsylvania (41.8), Michigan (41.4), Indiana (40.8), and Illinois (39.1), and just ahead of North Carolina (37.8) and Florida (36.0).

All 10 of those states have increased their gas taxes in the past five years. Connecticut, Pennsylvania, and New York raised their gas taxes by 15.0, 8.6, and 9.5 cents a gallon, and Georgia’s 16.1-cent increase was second only to California’s 17.6-cent increase.

Even conservative Wyoming, which previously ranked below New Jersey in 49th place at 13 cents a gallon, raised its gas tax by a dime to 23.0 cents per gallon, leaving the Garden State ahead of only oil-rich Alaska, which levies a 12.4-cent gas tax on the few motorists who use its sparse arctic roadways.
That’s what makes New Jersey’s failure to raise its gas tax in 25 years — since Republican Gov. Tom Kean, creator of the Transportation Trust Fund, was in office — so inexplicable, even considering the antitax political climate that has prevailed since the ouster of Gov. Jim Florio and the Democratic Legislature that raised state income and sales taxes by $2.8 billion in 1990. Since then, the only increase in a broad-based tax was Corzine’s restoration of the sales tax to Florio’s 7 percent from the 6 percent to which it had been reduced by Republicans.

Christie ran on a “no new taxes” platform, insisting that “New Jersey has a spending problem, not a revenue problem,” and vowing to cut income and business taxes. It is a popular position: A Rutgers-Eagleton Poll released a week ago found that two-thirds of New Jerseyans oppose a gas tax increase, even if the entire increase was devoted to road maintenance.

Nevertheless, David Redlawsk, the poll director, noted that Prieto and Lesniak have room to make their case that raising the gas tax would be preferable to increasing borrowing to pay for transportation construction projects. In fact, 60 percent of independents, 58 percent of Democrats, and 53 percent of Republicans prefer a gas tax increase to higher borrowing.

“Borrowing more money for road repairs appears to be even more distasteful than raising taxes for many New Jerseyans,” Redlawsk said in announcing the poll’s results. “The choices are not good — pay now or pay more later — and as a result, the usual differences across political parties are washed out. Some people think nothing should be done, but most appear to recognize there is a need to fix roads.”


What Redlawsk did not ask about was whether New Jerseyans recognized the high out-of- pocket cost of driving on poor or mediocre roads.

Click to expand/close

An annual survey by the American Society of Civil Engineers last year found that New Jersey motorists paid an average of $601 in additional repair costs due to driving on structurally unsafe roads — an estimated total tab of $3.476 billion, which is larger than the total federal and state dollars spent by the TTF not just on highway and bridge projects, but on mass transit as well.

New Yorkers, in contrast, paid an average of $403 in extra repair costs due to poor roads, Pennsylvanians $341, Connecticut motorists $294, and Delaware drivers $257.

“It takes a lot of resources to maintain, improve and expand New Jersey’s transportation networks, and the state has clearly fallen behind by not property tending to these important assets,” New Jersey Policy Perspective warned. “Two-thirds of New Jersey’s roads are of poor or mediocre quality, and 36 percent of the state’s bridges are either structurally deficient or functionally obsolete.”
The same challenges face New Jersey’s mass transit system, the study noted.

“Rail service, particularly into and out of New York City, is fragile and prone to delays, as it relies on two Hudson River tunnels operating at more than full capacity,” the report pointed out. “Had the ARC tunnel project to provide an additional rail tunnel between New Jersey and New York City not been aborted in 2010, NJ Transit’s access to Manhattan during peak travel hours would have eventually more than doubled (from 20 to 44 trains).”

New Jersey’s failure to invest adequately in its transportation infrastructure compared to other states is particularly troublesome, given the importance of the state’s transportation network to its economy, MacInnes noted.

New Jersey has the busiest airport and the fourth-busiest port in the nation, 50,000 miles of roads, and almost 7,000 bridges. New Jersey Transit runs the fifth-largest bus system in the nation, with 537,675 daily riders in the past fiscal year.

New Jersey Transit ranks second only to the Long Island Railroad with 302,000 rail passengers on an average weekday, and the PATH (Port Authority Trans Hudson) rail line run by the Port Authority carries 248,100 riders more. That doesn’t include the 73,250 riders on NJ Transit’s Hudson-Bergen Light Rail Line, the Newark Light Rail, and the River Line from Trenton to Camden, or the South Jerseyans who make up the bulk of the 36,300 daily riders on the PATCO Speedline in and out of Philadelphia.

Assessing Transportation Needs

“This transportation system is our biggest asset,” MacInnes said. “The problem is that we haven’t done a really serious long-term comprehensive study of what our long-term transportation needs are. The capital plan that the DOT (Department of Transportation) puts our every year is not based on what New Jersey needs, but on what the likely funding stream is for the next 10 years. That’s not going to work.”
The Department of Transportation’s current capital plan anticipates no increase in the $1.6 billion a year the state is currently putting into TTF, and “flat funding means you’re losing ground at a rapid pace,” said Robins, a former NJ Transit deputy executive director.

“The problem is that DOT officials don’t want to stick their necks out and make an assessment of what we really need to spend because they know we need revenue to do it, and Christie doesn’t want people to say we need a gasoline tax increase to pay for it,” Robins said.

The New Jersey Policy Perspective was equally scathing in its critique of the failure of both the Corzine and Christie administrations to raise the gas tax.

“What would have happened if either the Corzine or Christie administrations, or both, had chosen to increase the gas tax?” New Jersey Policy Perspective asked. “The Transportation Trust Fund would not be in peril, as it now is. The amount of money borrowed would be less and far less of the current dedicated revenue would be committed to paying off debt. And the ARC tunnel project might be under construction, employing thousands of workers and promising improved access to New York City.

“The failure of the past two administrations over the past eight years to acknowledge and act on the depletion of the Transportation Trust Fund has brought it to its present condition of near bankruptcy: no money for ongoing projects, no authority to issue additional bonds and the expiration of bailout funding from the Port Authority and the Turnpike Authority,” the report concluded.