Tag Archives: Transportation Trust Fund

Gov. Christie’s Pothole

Did you hear that New Jersey halted every transportation project it funds? The plug has been pulled from all current projects.

Transportation Commissioner James Simpson ordered an immediate stop Friday to all state-funded road construction

This is a political move that is sure to be an ugly matter.

The Transportation Trust Fund is underfunded. This is not surprising. I have been writing about this for years . The very first thing that then-Governor Jon Corzine did when he took office was to borrow money to fund TTF. The money he borrowed was to last five years. It didn’t. The debt on the borrowed money is for 30 years. Lovely.

The Transportation Trust Fund is the poster child of what is wrong with government. It is a government agency charged with maintaining the roads and bridges of the state. That is important stuff. We need our roads and bridges in good order to do business. The problem, however, is that it costs a lot of money to do so. With such a large pot of money in one place, politicians see the Promised Land. And they raid the pot of cash.

The raiding of the TTF left it with structural deficits. That is why Corzine borrowed money to fund it. Now it is broke again. Governor Christie proposed doing more of the same. Christie wanted to re-structure $1.25 billion of debt to loosen up up $500 million for projects through next year.

Yes, $1.25 billion of debt. Unbelievable isn’t it?

The hold up is that Paul Sarlo has to agree to the deal. He doesn’t. He wants the governor to present a long-range plan of how TTF will be fixed. I wholeheartedly support that move.

More Band-Aids, a la what Governor Corzine did, isn’t going to help us. Governor Christie has promised to bring fiscal sanity back to politics. Here’s his chance.

So why has all construction stopped? Without knowing there are funds available to complete the projects, Transportation Commissioner James Simpson has halted all work. Apparently New Jersey has a huge payment due on the debt in December. That’s a $50 million payment. That’s all TTF has left. Simpson is acting reasonably.

All of this is going to force Christie’s hand. There will be a plan, no doubt. Sarlo will permit New Jersey to re-structure its debt to pay for the next year. We hope that Christie puts together a sound plan. That’s his job. We’ll be watching.

Not be forgotten, however, is the little thing in the article that represents what is wrong with all this.

the Legislature’s nonpartisan Budget and Finance Officer, David Rosen, said that the state can issue up to $300 million in new bonds for transportation projects without any legislative approval.

Without any oversight from elected officials, every taxpayer in the Garden State can have his debt load increased. This has to stop. Agencies, authorities, and other pseudo-government entities need to have its bonding ability curtailed immediately. Circumventing the public, even if it is for a good project, is wrong.

Governor Christie, take a break from targeting teachers and put your fiscal talents to correcting this ongoing failure of government.

New Jersey’s Bad Government

Governor Christie announced today that he will borrow $1.4 billion to fund the Transportation Trust Fund this year. The TTF budget is $895 million. Of that, $850 million is payment on TTF’s debt. That’s correct, the TTF is so in debt, most of its budget is to pay the vig on money it has already borrowed. What do you think new borrowing is going to do to next year’s budget?

Oh sure, Christie has promised to fix this.

“What it’s going to look like, I have no idea yet,” he said. “I have not given it deep thought in terms of how we’re going to fix the problem and, candidly, I want to get advice from other people on how to fix it.”

This is how we got into this mess. Five years ago I said the same thing. Voters elected Governor Corzine. The very first thing Corzine did was borrow money to fill the potholes. That bill will come due 30 years from now. We will have re-filled the potholes with new borrowing long before then.

There is absolutely no difference between Christie’s move today and Corzine’s then. Different men, same bad government. How pathetic it is that even the highly inefficient federal government laments New Jersey’s decisions?

This is not leadership. Not one dime should be loaned to New Jersey for the TTF until a real plan is in place. Christie’s move is pure politics . . . just stemming the tide until later. Later, the bill balloons. He was supposed to be different. This is the same corrupt politics we have had all along.

Governor Christie, you talk tough to the teachers, but you are on your knees servicing your political cronies on this one. We deserve better than this.

Bayshore Heritage Byway

There is a new coastal trail being proposed to snake through Cape May, Cumberland, and Salem counties here in southern New Jersey.

The Bayshore Heritage Byway is a route through unique natural and historically significant landscapes along southern New Jersey’s “western shore.” The proposed Byway through Salem, Cumberland and Cape May Counties offers travelers a multitude of destinations to explore the Bayshore’s natural, historic and cultural assets.

Offering views of the Delaware River and Bay, marshlands, wildlife, farm fields, historic architecture and evidence of past and present industries inextricably tied to land and water, the Bayshore Heritage Byway is seeking nomination for designation as a New Jersey Scenic Byway through the New Jersey Department of Transportation (NJDOT). Funding for this project was provided through the Federal Highway Administration’s National Scenic Byways Discretionary Grant Program.

This sounds wonderful.  I am definitely among the target audience of such a trail.  I favor it . . . in theory.

I would love for this project to succeed.  The problem is that New Jersey cannot afford the project.

Notice who the participants include:

  • Delaware River Bay Authority
    Policy and Planning
  • NJ Department of Agriculture
    Division of Agriculture and Natural Resources
  • NJ Department of Agriculture
    Development Committee / Farmland Preservation Program
  • New Jersey Department of Environmental Protection (NJDEP), Green Acres Program
    Planning & Information Management
    Division of Fish & Wildlife
  • NJ State Park Service
    Southern Region Office
  • U.S. Fish and Wildlife Service/
    Cape May National Wildlife Refuge
    NJ State Historic Preservation Office
  • NJ Department of State
    Division of Travel and Tourism
  • Parvin State Park
    NJ Park Service
  • Pinelands Commission
    South Jersey Transportation Planning Organization

All taxpayer-funded agencies.  There are more on the list.  The big one who is spearheading the project is the New Jersey Department of Transportation.

Recall dear reader, that the DOT is broke. So broke that Governor Corzine indebted us for 30 years to fund it for five years. Those five years are coming to an end and Corzine has other ideas to fund it like raising the tolls on New Jerseys highways significantly.  Recall that most New Jerseyans are not in favor of that plan.

The alternative is not to add to the spending of the DOT.  Rather, it is to cut costs.  The Bayshore Heritage Byway is a cost that needs to be cut.  New Jersey taxpayers cannot afford such a project.

Would it be wonderful?  Indeed.  But severe financial issues need serious attention.  We need to say No to new spending.  This is new spending.  Say No, no matter how much you want it.

The Shell Game

Governor Corzine’s latest scheme for the taxpayers of New Jersey involves a shell game.

After much criticism when he floated that he wanted to sell and/or lease state assets such as the Turnpike and the Garden State Parkway, he is back with another idea. Corzine wants to leverage those assets to borrow billions of dollars.

Corzine wants to use state assets to raise cash in order to pay mounting state debt and free money for unmet needs.

. . .

he prefers creating a nonprofit corporation that legislators have said would issue bonds to bring a quick upfront payment. The bonds would be paid back from future toll revenue boosted by toll increases.

The state has debt. Debt arises from borrowing money, such as when Governor Corzine borrowed $1.8 billion to pay to patch potholes last year. While the state received that money last year and patched the roads, New Jersey taxpayers will pay far more than that amount over the next 30 years to pay back that loan.

Of course, there is plenty of other debt New Jersey has incurred over the years. Meeting the interest demands on this money is a liability. This is why generally it is best to pay the bills as one incurs them rather than borrow against future “earnings”. There are things which make sense to borrow for (a new highway system, perhaps), but to borrow to pay the interest on previous borrowing is ludicrous. This is what chronic gamblers do; bet money they do not have to pay off the money owed. It is a very risky game to play. And when it is someone else’s money (as in the case of the taxpayers), it is foolhardy.

New Jersey is having a difficult time making the interest payments for money already borrowed. It wants to borrow more money using our state assets to pay off that debt. One might say that it is a unique situation and if it cleared the debt, perhaps it is worth doing once. I may even agree.

Unfortunately, the problem does not go away. Governor Corzine has no desire to scale back spending in the state. Not only has the budget increased again this year, he is proposing even more borrowing.

Voters may also be asked this November to support borrowing $450 million to provide stem cell research grants in New Jersey for 10 years. The Legislature approved the plan last month, and Corzine is expected to sign it.

Not one more cent should be borrowed.  Not a penny.  New Jersey has redefined bad government.  Until budgets decrease (not rates, but actual dollars) and taxes are removed, I will not support shell games like this.

Governor, it is time for those tough choices you spoke of a year ago.  Cut spending.  Absent that, there is no leadership.

AG SuBpoenas Newark Developer Over MIA TTF $

One of the first things Governor Corzine did when he took office last year was to indebt all New Jersey taxpayers for the next 30 years to fill potholes. The Transportation Trust Fund was underfunded and rather than jeopardize federal transportation dollars coming to the state, Corzine decided to fill the coffers with borrowed money.

It now looks like we know where some of that money disappeared to. You and I provided a $30 million gift grant to Newark in order to build the new arena to house the New Jersey Devils (the Nets are fleeing to Brooklyn). And out of that $30 million, $3.45 million was used to purchase the land that the arena is being built on.

Wondering what land to build a hockey stadium has to do with transportation? Yeah, me too. And apparently the state’s Attorney General is curious too as his office has issued subpoenas to the redevelopment group leading the project.

Follow this closely, dear reader. James may no longer be the mayor, but I predict this will lead to a host of corruption issues with the project. Do not let this one be swept under the rug. Remember, we’ll be paying for the borrowed money until 2036 to cover this non-approved expenditure.

Corzine, Gimmicks & A Floundering Administration

Governor Corzine stated:

We must stop borrowing and using gimmicks to pay today’s bills

. . . every time we use a gimmick or a trick to pay for this year’s expenses, all we’re doing is making next year’s problem bigger.

when he introduced his proposed budget in March. We took the governor to task at that time as he had just indebted the Garden State taxpayers for 30 years to fill potholes this year.

By all accounts, the budget he passed with the Legislature controlled by his party is a flawed one. State government was shut down only to increase spending and increase taxes.

Corzine has not come through on his campaign promise of increasing property tax rebates. Of course, we knew that wouldn’t work before he was elected. And sure enough, the piddily $250 we received is proof that the rebate program is flawed. How much did it cost for that money that I paid more than a year ago to be returned to me?

Corzine promised that the property tax mess would be reformed this year. New Jersey has the highest property taxes in the nation averaging more than $6000 per household. The committees that meet keep reporting that everything they look at will not reform the system. First we were going to consolidate services, but it appears that doesn’t save much. Then we were going to go after the double- and triple-dippers. And while that would be worthwhile, it won’t save taxpayers significantly. Other proposals have come and gone and no one is optimistic.

Now Corzine is returning to an old idea. He wants to either sell or lease the roads and bridges of our state. According to this Star~Ledger article, doing so will net the state somewhere between $6 and $20 billion dollars.

That’s a lot of scratch, I agree. But it seems to me that this is nothing more than a one-time gimmick. Once one sells the Turnpike, he cannot sell it again.

Let’s say Trenton pulls in $10 billion through such a deal.

What then? Do we have a one-time reduction in our taxes next year as the budget will only require $22 billion (plus whatever increases are piled on) from taxpayers and the other $10 billion coming from the sale?

What happens the year after? We go back to fully relying on the overtaxed citizens? If so, that doesn’t seem like anything but a gimmick.

The only logical thing to do is to reduce the size of government. Doing so reduces the obligations taxpayers have to continue funding the machine. Yet, nowhere have we read anything about this administration considering any such thing. Until it swallows this pill, all that anyone can possibly hope for is a string of gimmicks. Selling off assets is not a smart move, methinks.

Corzine Indebts NJ for Three Decades

The Transportation Trust Fund (TTF) has a budget of about $800 million. This money is raised through the gasoline tax and tolls. The federal government also contributes a sizable amount of money. This fund then is used to build and fix roads and bridges throughout the state. Because of the large amount of cash in the fund, state government has used it over the years for other projects. This is done by borrowing from the fund. Having a billion dollars on hand can leverage borrowing more than a billion dollars. Those other dollars were not spent on roads and bridges, but placed in the general fund to pay salaries, benefits, and other expenses of the state.

This borrowing has gone on for 15 years or more. As with any borrowing, there is always interest to be paid. Each year the borrowing has added to the interest due. It has grown so much that next year’s $800 million budget for the fund is large enough to only pay the interest on the debt the fund owes. That means that without an influx of money, no roads or bridge will be worked on as there will be no money. Obviously, this is a huge issue. Add to it that the federal government will not provide money to New Jersey if it does not earmark enough money to actual roads and bridges and this becomes a critical issue.

One of the “easiest” ways to address this is by raising the gasoline tax. New Jersey has one of the lowest taxes on gasoline in the country at $.105 per gallon. By raising the tax, more money would be available for the fund and roads and bridges could be addressed. To raise enough money so as not to lose federal funds, New Jersey drivers would need to pony up a lot more at the pump. This is neither desirable nor is it efficient.

The TTF is in the hole because government has not been fiscally sound. I find it unreasonable to “fix” this issue by taxing the citizens. Governor Corzine has decided not to raise the gasoline tax at this time. That is the good news. Unfortunately for New Jersey, the governor has not remedied the funding issue; he has extended the issue.

Governor Corzine has proposed to borrow more money to fund the TTF for the next five years. He wants to do it by refinancing the $1.18 billion debt that the TTF currently has. Refinancing will provide $105 million more in cash available for the TTF each year. He will not allow some of the money that is siphoned off into the general fund. Those dollars can then be leverage for $6.4 billion of new debt that will finance the TTF for five years. The debt of this will extend for three decades. That means that in 2035, we will be paying for the potholes fixed this year.

This credit card mentality is not sound financial policy. Notice, this remedy is only good for five years and the taxpayers will be paying for it for 30 years. In five years, the governor will need to address this issue again. And there will be more debt to refinance.

When people speak of gimmicks, it is this kind of governoring that they are speaking of. This is not a fix. This is a short-term solution with long-term consequences. It is politically expedient as it gets the job done for his administration, but it causes headaches for either term two (who really thinks Corzine will be governor in 2011?) or the next governor. New Jersey taxpayers are going to pay billions more because of this borrowing. Rather, as I proposed six months ago, tightening the belt this year would have resolved this now. Yes, finding a billion dollars in other agencies is tough. But it could have been done. And think of the lesson all would learn: we are not going to pay debt decades from now for the mismanagement of government a decade ago.

This is a state problem and the state would have paid for it by cutting services across the board. If all of government were held responsible for the mismanagement of any component of government, I suspect we would eradicate this kind of issue from ever occurring again. A leader would have remedied this out of government surplus, not taxpayers’ wallets. And to think, this is but the first issue the new governor has addressed. The future ones will most likely raise taxes since the governor spared us a gasoline tax this time.

What Was the Deal?

Carnival of the NJ Bloggers
Carnival of the NJ Bloggers

A deal was cut today in which the feds have indicated New Jersey will receive its transportation money. What concerns me, however is this:

With the help of the state’s congressional delegation, the FHA was assured that New Jersey could pay for its highway and transit projects, Lettiere said. The state will provide FHA with additional details as needed, he said.

What did Senators Corzine and Lautenberg do to convince the FHA? New Jersey citizens do not know how the projects are going to paid for. How can the senators make that assurance?

Dear reader, something is not right about this. Yesterday the feds were not going to provide the funding. Today they are because of what they were assured. What was the assurance? Could it be a promise to raise the gasoline tax?

Feds Claim NJ Government Has No Clue

Carnival of the NJ Bloggers
Carnival of the NJ Bloggers

The feds have sent an unsigned letter to the state documenting that up to $1 billion in transportation funds are set to be withheld from New Jersey. The feds claim:

New Jersey officials cannot say how they will pay for them.

The feds may begin withholding transportation funds this month. So, the feds are set to withhold funds and the Transportation Trust Fund has no money other than than to pay off the debt the state has run up on this fund.

Dear reader, your state government is primed to reach deep in your pocket to remedy this situation. Do not stand for it! This situation is due to poor governing and legislating. Increasing taxes does nothing to remedy the cause, let alone the issue.

Gas Tax Hike Does Not Solve the Problem

Carnival of the NJ Bloggers
Carnival of the NJ Bloggers

The recent report about the financial woes of the Transportation Trust Fund is being used to raise New Jersey’s gasoline tax. This is paying for mismanagement and abuse with the taxpayer’ wallets. It should not happen. The $805 million budget of the TTF for FY 2006 is budgeted to pay the debt on the money borrowed from the fund. That’s right, what was created to be a pay-as-you-go source of funds for roadwork in the Garden State has been dipped into for well more than a decade. Beginning in 1991, the state began borrowing from the fund. Then the state began borrowing from future money to be placed in the fund. Unbelievable! Now the debt has grown and $805 million will be spent next year paying off what was borrowed beforehand. Now everyone is frantic trying to figure out how roads are going to be fixed next year. With no money to spend on projects, federal highway money could be reduced. It is a terrible mess. But not one which will be solved by raising the gasoline tax. According to the Star~Ledger article:

Even if lawmakers raised the gas tax 60 percent, to 16.5 cents a gallon, the transportation trust fund would be broke again in three years.

That is not acceptable. Raising taxes to pay off debt is bad business plain and simple. Instead, borrowing from the cash rich fund has to stop now! That needs to be done before any remedy is considered. Without that, whatever money is placed in the fund is susceptible to leveraging more borrowing. The Transportation Trust Fund needs to be a pay-as-you-go fund.

Until there is commitment to that there should be no money spent on road repair. None. Assuming Trenton can own up to its past mistakes and put a complete stop on raiding this fund, a very hard and real lesson is going to need to occur.

Obviously the taxpayers are going to have to pay. They can pay at the pump or they can pay in other areas. I suggest we pay in other areas. The budget for FY 2006 is about $28 billion. The TTF has a budget of close to $1 billion. That’s roughly 1/28 of the budget. Each department is going to be hit up for a portion of its budget to make up the shortfall.

Yes, taxpayers will lose services. But for one year, an election year at that, Trenton will be biting the bullet for its reckless spending. The entire state pays, but at least not more financially. We will be paying through a loss of services. And as bad as that will be, perhaps it will be enough to keep this kind of abuse from ever happening again.

We cannot continue to pay from our wallets for the mismanagement that our elected politicians are responsible for. There has to be a limit and this is it.

Not one penny should be raised through taxes, fees, etc. to balance this mistake. This needs to be adjusted through the already anticipated revenues. Should certain areas be precluded by law from contributing (i.e. education) then the crunch is going to be harder on the other areas of government.

During the budget debates, did anyone note that the TTF will have no money left after debt payments? This is just like the $37 million provided to Camden after the budget was settled. The budget process is supposed to ensure that we are not put in a spot where we have to “invent” funds that were unanticipated. This is not one of those areas. We need to live within our means.

The state is able to raise $28 billion in revenues. If it cannot pay for all its debt and services with that, then it needs to scale back on what it purchases. The citizens cannot afford bigger government. Just think, this will provide incentive for the administration and legislature to be efficient and frugal. If they are able to increase business revenues this year, then tax revenues to the state would rise, making this pill a little easier to take. Say No to gas tax hikes!