A $1.4 billion New Jersey Transportation Trust Fund Authority deal is caught in a political stalemate as the state’s Department of Transportation announced Friday it would halt all state-funded transportation projects until the Legislature approves the bond sale.
Officials are looking to sell in mid-October about $950 million of new-money bonds and up to $500 million of refinancing bonds to help finance road, bridge, and mass-transit infrastructure needs through April. Barclays Capital is the bookrunner on the transaction.
Officials anticipate using taxable Build America Bonds for the new-money portion of the deal. BABs offer issuers a federal subsidy of 35% of interest costs. That federal program will expire on Dec. 31, unless Congress extends the program. A potential extension could involve a lower subsidy rate for issuers.
New Jersey’s Joint Budget Oversight Committee will meet on Monday to review the TTFA borrowing plan. Democrats, who control the Legislature, delayed scheduling a meeting on the sale as lawmakers want to know how Republican Gov. Chris Christie plans to keep the transportation fund afloat.
In fiscal 2012, which begins July 1, all of the fund’s dedicated revenues will be needed to paydown prior debt.
On Friday, Transportation Commissioner James Simpson said he would stop work on Monday on all state-funded transportation projects as the Legislature has yet to authorize the TTFA bond deal.
“We have been forced to implement this work stoppage due to the Legislature’s failure to approve a routine bond transaction for the fifth and final year of a transportation program that was approved under the previous administration,” Simpson said in a prepared statement.
Conversely, JBOC chairman Sen. Paul Sarlo, D-Bergen, said that while the fund needs new-money bonds for new projects, current developments already underway have the necessary support.
“We believe that they have enough money to finish any existing projects and shutting any projects down now would be purely a scare tactic,” Sarlo said in a phone interview.
The Senator said the Christie administration has known about this funding issue since taking office in January. Democrats have been asking for a plan or financing strategy for months.
“They’ve been non-responsive on what their plan moving forward is,” Sarlo said of the administration. “They’ve indicated that they don’t have a plan at this point in time, and that’s frustrating.”