To new Transportation Commissioner Jamie Fox, the challenge is clear, and so is the solution: After years of “taking a Band-Aid approach to everything,” New Jersey’s transportation system is in crisis. The only way out is to raise taxes to replenish the soon-to-be-empty Transportation Trust Fund (TTF) and build a new rail tunnel under the Hudson.
“Crisis is opportunity. We are broke. We can let our infrastructure fall apart and become worse. Or we can put the ‘D’ and ‘R’ aside and pass a revenue enhancer, whatever that is,” Fox said in an impassioned plea to business and labor leaders to fight for a stable, long-term source of funding for highway, bridge and mass transit projects.
“This is not an easy vote to pass,” Fox warned, referring to polls showing that most New Jerseyans oppose an increase in the gas tax. “There has to be a revenue enhancer. If it’s a gimmick, we’ve failed. We have to tell legislators we will be there with them. Anyone who thinks we’re going to get this done without a tax is just mouthing words.”
In his first public appearance since his Senate confirmation a month ago, Fox, the veteran Democratic political operative whom Republican Gov. Chris Christie tapped to fix the state’s transportation system, made it clear that New Jersey needs to work quickly with Amtrak and New York officials to come up with a new plan for a rail tunnel under the Hudson to replace the $8.7 billion ARC tunnel that Christie cancelled four years ago.
“There has to be a new tunnel under the Hudson River. That is a fact of life,” Fox told the New Jersey SEED (Society for Environmental, Economic Development) business-labor coalition in Atlantic City Friday. “Our economy and Manhattan’s economy are dependent on moving people from New Jersey into New York and getting them back at the end of the day.” Fox cited Amtrak’s warning that the two 100-year-old Hudson rail tunnels will eventually have to be closed for repairs, creating a mass-transit nightmare.
Fox made it clear that he disagreed with Christie’s cancellation of the Access to the Region’s Core rail tunnel — a project that Fox pushed for while serving as transportation commissioner and chief of staff to Democratic Gov. Jim McGreevey a decade ago.
That comment and others, including Fox’s criticism of the past reliance on “gimmicks” and a “Band-Aid approach” to transportation funding — a criticism that could apply to Christie’s cancellation of the ARC tunnel and use of $3.3 billion in toll money intended for ARC to refinance TTF instead — made it clear that the respected Fox is not on the same tight leash as other Christie cabinet officers.
Fox said in an interview following the NJ SEED speech that ideally he would like to increase annual state transportation capital funding from the current $1.6 billion a year to $2 billion. That hike has been recommended by Forward New Jersey, a broad-based pro-transportation coalition headed by State Chamber of Commerce President Tom Bracken, but one that would presumably require a larger “revenue enhancer” at a time when Christie may be about to launch a bid for the 2016 GOP presidential nomination.
Christie, who had previously ruled out a gas tax increase, said when he announced Fox’s nomination that “everything’s on the table.” When asked if that included a gas tax, he responded testily, “What part of ‘everything’s on the table’ don’t you understand?”
Fox made it clear that he will be a fervent apostle of expanding New Jersey’s mass-transit system, including both the Hudson-Bergen and Gloucester County light-rail lines. “Millennials and young people like to use mass transit more than cars,” Fox said. “That is the future, and that is how our urban centers are going to be turned around.” He predicted that the state’s extensive mass-transit system would prove to be “a major competitive edge” in the years ahead.
A former deputy executive director of the Port Authority of New York and New Jersey under McGreevey, Fox pointedly questioned why Newark Liberty International Airport was not getting the same major upgrades to its facilities that Kennedy and LaGuardia airports have gotten on the New York side of the Hudson. “The equilibrium is off. We need to make sure that the balance is equal, and right now it is not,” Fox said.
Fox reiterated his commitment to consider the merits of merging the state Department of Transportation, NJ Transit, and the state’s toll road authorities, noting that the merger of the New Jersey Highway Authority, which ran the Garden State Parkway, into the New Jersey Turnpike Authority “went smoothly” when it was implemented by the McGreevey administration.
He also said he favored the use of public-private partnership as “another tool in the toolbox” to finance the construction of major transportation projects.
Assembly Transportation Committee Chairman John Wisniewski (D-Middlesex) suggested that a public-private partnership “might be perfect” to jumpstart construction of a new rail tunnel using the existing permits and the “tunnel to nowhere” that was already dug on the Secaucus side of the river before the ARC tunnel was abandoned.
“This might be a case where a private company builds the tunnel and charges Amtrak and New Jersey Transit on a per diem basis,” Wisniewski said, noting that such a public-private partnership solution would solve the problem of where to come up with the $7 billion that was once set aside for the ARC tunnel, but is now gone. The federal government took back its $3 billion appropriation that had been the largest public works grant in the country, and Christie diverted the Port Authority and Turnpike money to plug holes in TTF and the state budget.
Public-private partnerships are not a panacea, however, Wisniewski warned: “This whole debate is about who pays and how much. There’s a misconception around the state that if you have a public-private partnership, you don’t have to worry about money for the project. That’s not true, and as legislators, we have to get out of the habit of saying, ‘We’re going to do this, and it’s not going to cost you.’ Because people start to expect it.”
A public-private partnership that built a new rail tunnel would have to be paid back either through higher rail fares or directly by the state, and if Amtrak built the tunnel, it would undoubtedly expect the state to kick in $3 billion to $5 billion as its share of construction costs.
However it is accomplished, construction of a new tunnel is critical to expansion of the state’s rail system, Wisniewski said.
“We want to take the High Bridge line and extend it to Pennsylvania to get all of those motorists who are commuting in by car,” he said. “We want to do the MOMs (Middlesex-Ocean-Monmouth) line to take traffic off Route 9 and the Parkway, but there’s no place to put the new trains because the tunnels are already at 95 percent of capacity.”
Wisniewski and Assemblyman Gordon Johnson (D-Bergen) both agreed that a motor-fuels tax of some sort would need to be part of any permanent solution for the Transportation Trust Fund. The ultimate solution, Wisniewski said, would include a mix of a dedicated revenue source and borrowing. “You wouldn’t buy a car or house with cash, but you have to make sure you have sufficient revenue set aside to make sure you can retire that debt in a reasonable amount of time.”
Assemblywoman Betty Lou DeCroce (R-Morris), who also serves on the Assembly Transportation Committee, said there is a growing recognition among Republicans that a revenue increase will be needed to pay for transportation capital projects.
“If we did a 30 cents a gallon gas tax, they (the public) would tar and feather us, and throw us out of New Jersey,” DeCroce warned, even though that tax hike would still leave New Jersey’s gas tax — currently the second-lowest in the nation at 14.5 cents per gallon — below New York’s 50.6-cent-per-gallon tax.
DeCroce said the state should consider a mixture of solutions, such as extending the state sales tax to gasoline, which would generate the equivalent of 24.5 cents per gallon based on an average price of $3.50 a gallon. She also suggested increasing the petroleum products gross-receipts tax, which is levied at the refinery or distributor level; imposing a tax on airport car rentals, as most other states do; and adding a tax on containers that come into Port Newark and Port Elizabeth.
Even Assemblyman Jay Weber (R-Morris), a former state GOP chairman and leading conservative, acknowledged that an increase in New Jersey’s relatively low gas-tax increase was a possibility, although he suggested it should be accompanied by a corresponding cut in the state’s high estate and inheritance taxes.
Political fear of raising the gas taxes is not confined to Trenton.
U.S. Rep. Frank LoBiondo (R-NJ), who serves on the House Transportation and Infrastructure Committee, noted that “just as New Jersey hasn’t raised its gas tax, the federal government hasn’t raised its gas tax either.” And just as New Jersey’s Transportation Trust Fund is scheduled to run out of money for new projects early in the next budget year, Congress was forced to do a short-term extension when its Highway Trust Fund started running out of money in July.
Because “there’s no appetite at the federal level for increasing the gas tax,” LoBiondo said he has been pushing Congress to cut oil and gas subsidies to oil companies that have been making billions of dollars in profits, and to redirect that subsidy money into federal infrastructure funding.
Finding a funding solution that guarantees the continued flow of federal transportation aid to the states is critical for New Jersey, whose $1.6 billion state Transportation Trust Fund is matched on a dollar-for dollar basis with federal aid, LoBiondo and Fox both noted.
Coming up with the money is just the first battle, LoBiondo said. “That’s when the formula has to be decided on how much money comes back to each state. That’s where the food fight starts.” Preserving a high level of funding for mass transit is a critical priority for both New Jersey and New York, he said.
“Am I worried?” Fox said, when asked about the fiscal problems that would be created if Congress was unable to agree on a sufficiently robust federal transportation funding formula. “Of course, I’m worried.”