New Jersey Department of Transportation commissioner James Simpson Thursday said Gov. Chris Christie’s administration is considering several options for replenishing the state’s Transportation Trust Fund.
The plans include utilizing federal borrowing programs, implementing rapid bus services instead of developing light rail, and prioritizing capital projects, among other strategies. Simpson discussed the issues during a Senate Budget and Appropriations Committee meeting.
The trust fund finances roadway, bridge, and mass transit projects. It will run out of money for new infrastructure projects by July 1, 2011, the start of fiscal 2012, as virtually all of its $895 million of dedicated revenue at that time will be needed to pay debt service on outstanding bonds.
The commissioner also said the DOT plans to file to the Legislature by May 1 a roughly $1.88 billion final fiscal 2011 capital budget that would include $1.43 billion of bonding. In previous years, the Transportation Trust Fund Authority, which oversees the fund, has used $1.6 billion of borrowing to help finance infrastructure needs.
The TTFA’s next board meeting is May 3. The state DOT has yet to announce whether the authority’s board will weigh in on the fiscal 2011 capital plan at that meeting.
In looking beyond fiscal 2011, Simpson said the administration is analyzing how best to fund new capital projects for roadways, bridges, and public transit beginning in fiscal 2012. While saying it was not his ideal strategy, the commissioner said the state could use grant anticipation revenue vehicles, securitizing future federal revenue, in the short term to address transportation needs.
“I’m sure we could buy ourselves more time if we had to,” Simpson said before the committee. “There are things that we could do; there’s creating financing. I hate it, but if we had to we could get Garvee bonds, where you pledge some of your future earnings from the [federal government], which is maybe a short-term fix.”
Other borrowing possibilities include direct loans and loan guarantees through the federal government’s Transportation Infrastructure Finance and Innovation Act program.
“Why aren’t we using TIFIA or other innovative financing mechanisms rather than going straight to the bond market?” Simpson asked.
Overall, the executive branch is considering using more federal funding programs, though that may leave the state waiting for funding decisions in Washington before embarking on capital projects. In addition, the Christie administration may change the typical amount — $895 million — that New Jersey has generated each year to help finance infrastructure needs.
“I’m not at the point in time where I could get to a number,” Simpson said when pressed by Sen. Paul Sarlo, D-Bergen, Essex, chairman of the committee, on how the Republican administration plans to replenish the fund. “That number could be higher, it could be lower, I don’t know. Look, we would have had a solution to this by now if it was that simple.”
Prioritizing transportation projects would help direct limited funds towards the road, bridge, and mass transit developments that generate maximum return for taxpayers, the commissioner stressed.
Simpson said his team is working on a cost-benefit analysis of highway projects so that the state gets “the biggest bang for the buck” on capital spending. New Jersey Transit, the state’s largest public transportation provider, already has such an analysis.
Reassessing which capital projects the state should undertake may include using rapid-bus transit programs as opposed to building light-rail and commuter-rail lines.
“Everybody loves rail, we want rail,” Simpson said. “Well, rail is really expensive and it may not be the appropriate choice.”
He went on to say that changing how the state selects transportation infrastructure is a key component in how New Jersey funds its future capital needs.
“In these times of limited resources, it becomes even more important that we pick the right solution to the problem,” Simpson said. “The days of 'let’s build it, they will come,’ are over. We really need to be really smart and tactical in how we make our major capital investments.”
In addition, he suggested that money saved by exploiting potential operating efficiencies at the New Jersey Turnpike Authority, which oversees the New Jersey Turnpike and the Garden State Parkway, could help address transportation needs on structures outside of NJTA’s system.
While that authority’s operating and capital budget are separate from the TTFA, Simpson said the state could tap into potential NJTA operating savings of $40 million to $100 million per year.
Other funding strategies include allowing private companies to operate highway rest stops through lease agreements, naming rights, and changing state procurement laws to shorten the design and build phases of developments to save on escalating costs.
Simpson repeated his opposition to a gas tax hike.
“You will not see this administration put forward a proposal that includes a gas tax,” he said.