For decades, the way New Jersey has funded transportation projects has been faulty, as it has frequently relied on money cobbled together from continuous borrowing and monies from outside sources like the Port Authority. But now those circumstances have been dramatically reversed.
The path to fixing the state Transportation Trust Fund may have been ugly at times — it involved a period of political gridlock and a lengthy shutdown of construction work — but the outcome marks a big victory for Forward NJ. The unlikely coalition of business, labor and several other groups funded a lengthy public-information campaign to raise awareness about the TTF, and it also successfully lobbied leaders in Trenton to finally take on the gas-tax issue.
The TTF is back on solid footing for the next eight years thanks to a gas-tax increase that will generate more than $1 billion in annual revenue. A constitutional amendment approved by voters last week will also ensure that all of the state’s fuel-tax dollars can only be used to fund and finance road, bridge and rail projects.
And at a time when talk of ugly partisan division is dominating the national conversation, the coalition-building and bipartisanship that led to New Jersey’s recent TTF fix shows that there are at least some leaders still interested in finding ways to compromise.
Forward NJ officially kicked off its campaign in 2014 after testimony from legislative budget committee meetings that year showed a five-year TTF finance plan that Gov. Chris Christie enacted in 2011 was already running short on cash. Fearing the TTF would eventually go bankrupt, the group tried to raise awareness about what no funding for transportation could do to the state’s roads, bridges and rail system. It also brought attention to the state’s gas tax, which hadn’t been increased in nearly three decades even as transportation spending outpaced annual revenues, putting the TTF deep in debt.
A report sent out to Forward NJ coalition members yesterday, a week after voters passed the dedication of the fuel-tax revenue, recapped ways the group used television and radio ads, letters to newspaper editors, social media, and other formats to raise awareness about the TTF issue.
“Forward NJ led advocacy and education efforts across the state to maintain pressure on decision makers and educate and engage the public on the need for a solution,” the report said.
Though Christie and state lawmakers ultimately agreed last month to increase the gas tax by 23 cents to help fund an eight-year, $16 billion TTF reauthorization, for a long time there was no movement at all on the issue despite Forward NJ’s best efforts.
There was also a shutdown of all state-funded transportation projects over the summer after Christie, a Republican, couldn’t get Democratic legislative leaders to agree on a package of tax cuts that Christie and many other Republicans insisted had to be passed with any increase of the gas tax. At one point in late June, the Assembly agreed with Christie on a sales-tax cut that would have cost the state budget an estimated $1.6 billion, but the Senate refused to pass it, allowing the five-year TTF finance plan to run out.
Tom Bracken, the chairman of Forward NJ, described that period of chaos during an interview with NJ Spotlight yesterday. “Nobody knew what was going on,” said Bracken, who also serves as the president of the New Jersey Chamber of Commerce. “You were just kind of shaking your head, saying ‘How can this happen?’”
But eventually, Christie and the legislative leaders reached a compromise on the tax cuts, agreeing to enact several elements of a bipartisan plan that had been drafted in the Senate, including a phase-out of the estate tax and new tax breaks for retirees and the working poor. A scaled back sales-tax cut also made it into the final deal, which Christie signed into law on October 14.
“It was great because we now have a funding mechanism for the TTF,” Bracken said.
Yet to be sure, not everyone is happy with the final version of the TTF deal. Some Democrats criticize the compromise as being too generous to the rich who will benefit most from the tax cuts; and many Republicans fault the size of the gas-tax hike, which took the per-gallon tax from 14.5 cents to 37.5 cents.
Forward NJ, meanwhile, had also backed the ballot question, which was sponsored by Assembly Speaker Vince Prieto (D-Hudson), and after the TTF reauthorization was adopted the group turned its attention to the November 8 referendum.
The ballot question asked voters if the revenue from the recently increased gas tax should be dedicated to only funding transportation projects. Without the dedication, it would have meant the more than $1 billion generated by the tax increase, which went into effect on November 1, could have been used for any other purpose through the annual state budget process.
But there was also some confusion over whether the ballot question was actually a referendum on the tax increase itself — which it wasn’t — and whether the language made it clear that approving the question also meant the revenue could be used to back new borrowing to finance large-scale transportation projects.
New Jersey is already one of the nation’s most indebted states, and the TTF itself is at least $16 billion in debt. Lieutenant Gov. Kim Guadagno, a potential GOP gubernatorial candidate in 2017, was among those urging voters to reject the ballot question citing concerns about state borrowing. Some critics also directly attacked Forward NJ as a coalition of special interests.
The group spent about $1 million promoting the ballot question, and it also organized a news conference with Prieto and other leaders in Trenton to stress the merits of a constitutional dedication.
“That wound up being the most difficult part,” Bracken said of the effort to amend the constitution.
Prieto said getting the ballot question approved after the gas-tax increase was adopted was key to putting the TTF on solid footing. The state has a long history under governors of both parties of taking money that’s been earmarked by statute for a specific purpose and using it to fund something else.
“We wanted to make sure that moving forward that every penny we collected, currently, and in the future, would be dedicated,” Prieto said. “We needed partners to make sure that we got this done,” he said. “Labor and businesses came together.”
Still, the gas-tax increase remains unpopular, and New Jersey’s credit rating was downgraded earlier this week by S&P Global. In its notice to investors, the major Wall Street rating agency cited concerns about the state’s grossly underfunded public-employee pension system and the current fiscal-year budget, but also noted the tax cuts that were passed along with the TTF renewal will eventually take money away from the state budget at the same time other costs are expected to be rising significantly.
But Bracken predicted the TTF renewal could be a good thing for the state economy. “The good news is … the rebuilding of our infrastructure is going to have a positive economic impact,” he said. He also suggested relationships that were forged during the long campaign for the TTF renewal and the passage of the ballot question could be kept going as the state looks to confront other big issues like the future of the pension system.
“I think we all came out of it with a greater respect for each other,” he said.