Treasurer Fields Questions from Lawmakers About Transit Infrastructure

Sidamon-Eristoff defends size of Transportation Trust Fund budget and where money is coming from, insists plan is ‘not a double count’

State Treasurer Andrew Sidamon-Eristoff testifies before the state Senate Budget and Appropriations Committee.
Lawmakers seized on the state treasurer’s appearance before the Senate Budget and Appropriations Committee yesterday to question how much Gov. Chris Christie says the state will spend on transportation-infrastructure upgrades during the next fiscal year — and pin down exactly where the more than $1 billion will come from.

Christie has been saying at recent town hall-style events that even though the state is running out of both cash and borrowing capacity for the Transportation Trust Fund there’s no crisis because his administration will still be able to spend $1.6 billion through June 30, 2016.

But in the State House yesterday, Committee Chair Paul Sarlo (D-Bergen) asked Treasurer Andrew Sidamon-Eristoff to explain how the administration is getting up to $1.6 billion, a number Christie first laid out in a five-year transportation spending plan put forward in 2011.

The treasurer said the administration will raise $627 million by borrowing, use $281 million in cash balances, and receive a $241.5 million loan repayment from New Jersey Transit. Another $353 million in revenue from the Port Authority will get the state up to nearly $1.5 billion.

“So we don’t in reality have a $1.6 billion program,” responded Sarlo.

Later, a news release issued by Sarlo and other Democratic senators said the administration is spending $175 million below $1.6 billion this fiscal year, and plans to fall short of the goal by another $125 million during the next fiscal year.

“That’s unconscionable in a state whose roads and bridges rank among the worst in the nation,” Sarlo said.

But a statement issued in response by Department of Treasury spokesman Christopher Santarelli drew a distinction between “cash-flow needs” and “project authorizations.”

“Any suggestion that we are shrinking the size of the program is completely false,” he said.

The treasurer’s appearance before the committee comes as lawmakers have begun to evaluate more closely the $33.8 billion spending plan Christie has put forward for the fiscal year that begins July 1. Transportation-funding questions were also raised on Monday when Sidamon-Eristoff appeared before the Assembly Budget Committee, one in a series of hearings that will be held in Trenton leading up to the July 1 deadline for a balanced budget set by the state constitution.

Democratic legislative leaders and Christie, a Republican, have been discussing for the past several months how the state will come up with a new source of revenue for the Transportation Trust Fund given the current funding source, tolls and the state’s 14.5-cent gas tax, will only be bringing in enough money to pay down debt later this year. A gas-tax hike has remained “on the table” during those talks, the governor and lawmakers have said.

But the discussions have cooled recently as lawmakers have turned their attention to this year’s legislative elections — all 80 seats in the state Assembly are up for grabs in November — and as Christie has begun to explore a 2016 run for U.S. president.

With no new source of revenue yet in place for the fiscal year that begins July 1, 2016, Sarlo asked the treasurer during yesterday’s hearing, whether it’s wise to spend down the trust fund’s cash balances. Sidamon-Eristoff said the current plan will still leave a roughly $60 million cushion.

Sarlo also asked Sidamon-Eristoff when he would like to see the next long-term plan for transportation spending put in place.

“The sooner the better,” the treasurer said, but he added traditionally legislation is advanced in the fall and a new plan is enacted early in the next year.

[related]But the hottest part of the debate over transportation spending came as the lawmakers asked more questions about the loan repayment from New Jersey Transit, an agency that last month said it is considering its first fare hike since 2010 to help cover an $80 million budget gap.

Shifting money between New Jersey Transit and the trust fund is “routine,” the treasurer said, citing the different cycles of the federal and state budgets.

He later called the loan repayment a “true-up across a number of fiscal years.” In addition, New Jersey Transit is getting a line of credit in the next fiscal year, he said, instead of asking the state for a cash-flow loan.

When reached after the hearing, a spokeswoman for New Jersey Transit confirmed those details.

“With NJ Transit’s expenses spread evenly over the fiscal year, NJ Transit is authorized to borrow short-term from the TTF, repaying the TTF upon receipt of the federal funds,” spokeswoman Nancy Snyder said.

“Moving forward and in conjunction with the Treasurer’s office, NJ Transit is pursuing an opportunity to secure alternative means of financing to address FY 16 cash-flow needs,” she said. “The process is underway and subject to board review.”

But the lawmakers questioned how the state could count a loan as spending in one year and then also count the repayment as spending again in another year, suggesting the administration was double counting and thus again shortchanging transportation investment.

Sidamon-Eristoff disputed that characterization.

“It’s not a double count,” he said.

Still, asked after the meeting about the loan repayment, Sarlo said he wasn’t convinced.

“It’s a sizable portion of the (spending plan). Is it just a number on paper or is it real investment in infrastructure?” he said.

Sarlo was also asked if New Jersey Transit’s fare hike, in the context of the $241.5 million loan repayment, could be looked at as helping to prop up the administration’s plan for the Transportation Trust Fund.

“You could potentially connect those dots,” he said.
Earlier yesterday, the committee also heard from David Rosen, the budget officer for the nonpartisan Office of Legislative Services. He said his own forecast for the next fiscal year is slightly higher than Christie’s, but that New Jersey’s broader economic recovery since the last recession has been lagging the overall national pace.

Asked why, Rosen referred to the state’s changing economic landscape, which once relied heavily on the telecommunications and pharmaceutical industries.

“It seems like we haven’t come up with the next thing to drive the economy,” Rosen said.