Transportation Chief Warns Short-Term Funds Won’t Solve Long-Term Problems

Meir Rinde | May 5, 2015 | Transportation
State treasurer’s one-year fiscal fix for depleted Transportation Trust Fund called dangerously inadequate for longer-term

Ramp Closed Traffic
For months, state Transportation Commissioner Jamie Fox has been warning of the dire condition of New Jersey’s highways and bridges and the urgent need to replenish the state’s Transportation Trust Fund, which had been poised to run out of borrowing power for new projects later this year.

Then, last month, state Treasurer Andrew Sidamon-Eristoff announced that the funding situation wasn’t so bad after all. Using remaining bonding authority and cash, along with Port Authority money and a loan repayment from NJ Transit, the state would cobble together $1.5 billion and stretch out the TTF for another year.

That drained the urgency out of what was becoming an increasingly tense debate over whether to hike the state’s gas tax to replenish the trust fund, a move Gov. Christie seemed reluctant to support as he prepared to run for president as a fiscal conservative.

Fox, a Democrat serving in a Republican administration, acknowledged during an Assembly budget committee yesterday that the treasurer’s fiscal maneuvers had changed the terms of the debate over transportation funding. Yet he sought to minimize the impact of last month’s announcement and insisted that his campaign for a new revenue source remained as relevant as ever.

“This budget will fund our operations for one year. Let me repeat: just one year. The short-term fix is anything but ideal,” he said.

“Since my confirmation in September, I’ve traveled the state with one message: Our infrastructure is in disrepair and our Transportation Trust Fund is running out of money,” Fox said. “My message is the same. Our bridges and roads are crumbling and getting worse every day. We can longer kick the can down the road.”

“The treasurer has determined, whether you like his ideas or not, that we are funded for this year. And then we are broke. And that’s not up for debate,” Fox said.

Robbing Peter to pay Paul?

Fox’s warnings had a receptive audience in the budget committee’s chairman, Assemblyman Gary Schaer (D-Passaic).

Schaer asked the commissioner whether the Department of Transportation has a contingency plan in case no new revenue is approved and the trust fund does eventually run out of money for new projects, sometime around June 2016.

Fox said NJDOT could not foresee a situation in which the funding dilemma is not resolved.

“I find it impossible to believe that the members of this house, and the other house and of the executive branch, will allow the Transportation Trust Fund to go bankrupt,” he said.

“For someone involved so long in government service, you’ll forgive me, sir, but your comments reflect a certain naivete,” Schaer responded.

The commissioner’s description of the one-year funding scheme as less than ideal was also picked up by Assemblyman John Burzichelli (D-Gloucester), who criticized the use of a loan repayment from cash-strapped NJ Transit to close the transportation funding gap.

NJ Transit executive director Ronnie Hakim told the committee that the agency regularly uses short-term borrowing from the TTF to cover project costs until expected federal funds arrive and allow it to repay the loan.

But Burzichelli noted that the relatively large, $241.5 million repayment planned for next year came at the same time that NJ Transit plans to raise bus and train fares by 9 percent.

The fare increase, which will bring in $56 million, follows a hike five years ago that averaged 22 percent.

“Your agency is now going to be asking ratepayers to pay essentially a 30 percent increase from 2010 to 2016, well ahead of the cost of living (increase),” Burzichelli told Hakim. “It continues to be obvious to us trying to understand things that we’re asking for a portion of this fare increase to go toward the Transportation Trust Fund, which is not a place we traditionally fund that from.”

Assembly Speaker Vincent Prieto (D-Hudson) also criticized the simultaneous loan repayment and fare hike yesterday.

“You’re taking from one pocket, put it in the other. Robbing Peter to pay Paul,” he said in a press release. “And then now on the people that are most vulnerable, that need this mass transit, you’re actually raising taxes on them.”
In addition, with the trust fund nearing insolvency, it will likely not be able to provide NJ Transit with bridge loans in the coming year. Instead the agency has had to open a loan of credit with Royal Bank of Canada at a cost of $900,000 plus interest, Hakim said.

“There’s a limited pool of available dollars to get us through fiscal year ’16, through the end of the TTF authorization period,” she told the Assembly committee.

The “chairman’s flight”

While yesterday’s budget hearing focused on transportation agencies, including NJDOT, NJ Transit and the Motor Vehicle Commission, it touched only briefly on the Port Authority of New York and New Jersey, which subsidizes the TTF through its funding for the renovation of the Pulaski Skyway and some other smaller projects.

The independent, bi-state Port Authority is spending $1.8 billion from tax-exempt bonds originally intended to finance construction of a new trans-Hudson rail tunnel. Christie canceled the tunnel and had the Port Authority redirect the money to shore up the TTF.

U.S. Sen. Cory Booker (D-NJ) held a Senate subcommittee hearing in Newark on Monday to discuss funding for Amtrak, which wants to build its own new tunnels under the Hudson River as part of its Gateway rail project.

Booker also toured the existing, 105-year-old tunnels used by NJ Transit, which may need to be closed in the coming years to repair damage from Hurricane Sandy.

[related]At the Assembly hearing, Schaer noted that the Pulaski funding is reportedly under investigation by the U.S. Securities and Exchange Commission because the skyway is outside the Port Authority’s jurisdiction and the spending may go beyond the agency’s authority. He asked Fox whether NJDOT had a contingency plan in case the state is required to reimburse the Port Authority for that funding; Fox said it did not.

Fox’s own name has been raised in connection with one of the investigations sparked by the Port Authority’s Bridgegate scandal. U.S. Attorney Paul Fishman announced three indictments in the main lane-closure investigation last week, but has not discussed a separate investigation he is reportedly conducting that involves United Airlines, which Fox worked for as a lobbyist before becoming transportation commissioner.

In 2011, former Port Authority Chairman David Samson allegedly pressed United to reinstate a flight from Newark Liberty International Airport, which the agency operates, to an airport near his weekend home in South Carolina. The airline was seeking hundreds of millions in investments in the Newark airport and a new PATH line at the time.

Fox, a close friend of Samson’s and himself a former Port Authority executive, was present at the dinner where Samson made the request and subsequently acted as a United’s liaison with him regarding the so-called “chairman’s flight,” according to a Bloomberg News report.

Fox has not responded to questions about the reports. After yesterday’s Assembly hearing, upon hearing the preface to a reporter’s question that mentioned Friday’s indictments, he said, “No,” and walked away.