At December’s NJ Transit board meeting held Wednesday, members approved spending $500 million to help the cash-strapped agency buy more buses and trains. The money will be raised by bonds through New Jersey’s Economic Development Authority and paid back over 28 years at no more than 6% interest. It’s like the mother of all car loans to buy 600 commuter buses and 17 locomotives.
“Some of this is also on the debt service on buses that have already been delivered that have been purchased so it’s stretching out, just like if you buy a car. Rather than paying cash all in one time, [instead] paying a monthly payment over the life of the car,” said NJ Transit Executive Director Kevin Corbett. “[The bonds are] tied to the life of both the buses and the rail cars, that’s why it’s roughly 28 years.”
For years, NJ Transit’s been moving money around — in effect robbing Peter to pay Paul — and transferring capital money to operating expenses in order to make ends meet. These bonds will pretty much do the same thing.
“The issuance of the bonds will enable NJ Transit to free up over $450 million of near-term TTFA [Transportation Trust Fund Authority] appropriations for application to other currently unfunded capital projects,” said William Viqueira, NJ Transit CFO.
NJ Transit says the revenue stream to pay it all back will come from the state gas tax — appropriated through New Jersey’s Transportation Trust Fund Authority. It’s another addition to the state’s already-heavy $45 billion debt load, the fourth-highest among 50 states. And borrowing through the EDA lets NJ Transit skirt the state’s constitutional requirement that such big-ticket loans obtain prior voter approval.
Corbett insists it’s appropriate.
“I voted for legislators who would support the gas tax increase for the Transportation Trust Fund and that’s where this money comes from,” he said.
And some transit advocates welcomed the half-billion dollar borrow.
“Which will of course benefit everybody who rides by making the fleet younger and less prone to breaking down,” said Raritan Valley Rail Coalition Chair Bruce Bergen.
The agency on Wednesday also celebrated graduating 11 new locomotive engineers. It’s one of seven new classes designed to backfill severe staff shortages and reduce train cancellations.
NJ Transit says it’s boosting performance metrics, according to its new dashboard, but admits there’s still a lot of room for improvement. It’s facing an $86 million operating deficit next year. Lawmakers will hold a special hearing Thursday to look for a dedicated funding source that would avert fare hikes for riders who already feel overcharged and underserved.