The state’s Transportation Trust Fund may be nearly bankrupt, but the Christie administration must have some solution up its sleeve: It’s advertising for a financial advisor to help three New Jersey transportation agencies track spending on capital projects. Actually, the administration must see a pretty rosy future for the cash-strapped TTF — which runs out of spending money at the end of the coming fiscal year — the RFP for the financial advisor job calls for a three-year contract. (Firms interested in filling the slot must respond by September 9).
Treasury’s search for a financial advisor comes at a critical time for New Jersey’s road, bridge, and rail infrastructure; the state is in the final year of a five-year, $8 billion transportation-spending initiative launched by Gov. Chris Christie, a Republican, in 2011.
As the current funding plan winds down, it’s unclear right now how the Christie administration plans to sustain the TTF beyond June 30, 2016, when the state fiscal year ends.
By then, revenue from New Jersey’s 14.5-cent gas tax and other sources of cash for the trust fund will only cover its significant debt — unless the tax is increased or some other funding option is agreed on.
But the request for proposals issued by Treasury makes no direct reference to the funding crunch, and agency spokesman Christopher Santarelli said yesterday the search for a financial advisor is unrelated to the current status of the trust fund.
According to Treasury’s request, the financial advisor will be asked to work over the next three years with the state Department of Transportation, New Jersey Transit, and the state Transportation Trust Fund Authority, which administers financing for road, bridge, and rail projects.
The firm that’s hired will help the agencies track “prior, current and future authorized capital projects to determine current project expenditures and to forecast future project expenditures,” the request for proposals says.
“Heretofore, such analysis has largely been predicated on historical information, with little or no projection capability,” the request says. The establishment of a cash flow forecasting system would improve the timing of the Authority bond issuances, provide key information for the financial models that drive the periodic reauthorization of the Authority’s program, and enhance ongoing analysis of Authority operations.”
Santarelli said there’s no maximum dollar amount assigned to the contract.
Christie and Democratic legislative leaders had been engaging in transportation-funding talks earlier this year. But those discussions largely ended as Christie began to focus more energy on his bid to become president in 2016, and as lawmakers turned their attention to this year’s legislative elections with all 80 seats in the Assembly up for grabs in November.
[related]And Christie has already confronted a similar transportation-funding predicament. He avoided raising New Jersey’s gas tax in a five-year plan rolled out in 2011, instead relying heavily on new borrowing and funds from outside sources like the Port Authority and highway tolls.
He also pledged in 2011 to increase the use of “pay-as-you-go” funding out of the state budget to ease the reliance on borrowing, but has not lived up to that promise in recent years. And to fill the gap, the state has instead had to use bond premiums and other sources of funding.
The plan for the current fiscal year calls for the use of $281 million in cash balances and the return of $241.5 million in funds borrowed by New Jersey Transit, an agency facing its own budget issues as it prepares to implement a [https://www.njspotlight.com/stories/15/07/15/despite-last-minute-appeals-and-arguments-nj-transit-approves-fare-hikes/|9 percent fare hike].
Several Democratic lawmakers have called for increasing New Jersey’s gas tax to renew the trust fund, but Christie has yet to take a firm position, saying repeatedly that “everything is on the table” as he discusses the issue with Democrats.
Many in Trenton expect the governor and lawmakers will eventually strike a “revenue-neutral” deal that will involve trading new revenue from a gas-tax hike in exchange for reducing the tax burden somewhere else, possibly by the lowering the state’s estate and inheritance taxes. They have until the spring to reach an agreement.
And even though Christie last month signed an anti-tax pledge as his presidential campaign continues to search for ways to increase his standing among a crowded field of Republican hopefuls, it shouldn’t necessarily be an impediment to reaching a Transportation Trust Fund deal.
The Americans for Tax Reform “taxpayer protection pledge” that was endorsed by Christie is a promise that he will “oppose and veto any and all efforts to increase taxes” if he becomes president.
He did not sign the pledge as a candidate for governor of New Jersey in either 2009 or 2013, and the organization has said that endorsing a gas-tax hike as part of a larger, “revenue-neutral” deal would not run afoul of the pledge’s spirit as long as the net result is no increase in the state tax burden.
Santarelli, the Treasury spokesman, said yesterday there’s no update on the status of trust fund reauthorization negotiations.