NJ Spotlight News: How spending on NJ’s transportation projects this year quietly went from $2B to $2.6B - Garden State Initiative



NJ Spotlight News: How spending on NJ’s transportation projects this year quietly went from $2B to $2.6B

November 23, 2020


By John Reitmeyer

Despite revenue losses triggered by the coronavirus pandemic, Gov. Phil Murphy’s administration has turbocharged spending on transportation projects this year. To do so, fine print in the state budget was quietly rewritten with help from lawmakers to reach deeper into New Jersey’s Transportation Trust Fund for extra dollars.

Murphy and fellow Democrats who control the Legislature added more than half a billion dollars to the line item for transportation projects for the current fiscal year with a little-noticed tweak that they approved in September, according to budget documents.

The extra funding covers more than three dozen “shovel-ready” projects administered by the Department of Transportation, including bridge and road repairs, waterway dredging, and congestion-relief initiatives, among others, according to a list provided by the Murphy administration.

The increase pushed the state’s annual appropriation for transportation investment to $2.6 billion, the most such spending for one year since the trust fund was reauthorized in 2016.

The transportation commissioner and other officials have pitched the increase as much-needed stimulus for a state still reeling from the economic effects of the ongoing pandemic, including revenue losses and persistently high unemployment.

Republicans suspicious of timing

But Republican lawmakers have raised concerns about the timing of the increase, which comes just as Murphy is getting ready to run for reelection next year. They’re also calling out the Murphy administration after preliminary documents for an upcoming $1.5 billion bond sale that will raise more revenue for the transportation fund suggested principal payments won’t be required until 2035, meaning the bulk of the bill wouldn’t come due until long after Murphy leaves office.

“You’re going to create this big bubble that you’re not going to be able to pay off,” warned Sen. Steve Oroho (R-Sussex), a certified financial planner who sits on the Senate Budget and Appropriations Committee.

The Transportation Trust Fund, or TTF, is an off-budget account that relies on funds generated through borrowing and the state’s gas tax, among other resources, to pay for road, bridge and rail projects across New Jersey. The state’s annual investments also generate federal matching funds that help further stretch state TTF dollars.

The TTF was last reauthorized in 2016, when the per-gallon gas tax was hiked by nearly 23 cents to help generate new cash for the fund. At the same time, $12 billion in new TTF borrowing was also authorized to support an overall eight-year, $16 billion finance plan.

For several years, roughly $2 billion has been appropriated annually from the fund to support the state capital program for transportation infrastructure projects. But this year’s spending increase — enacted using what’s known as a budget resolution — pushed the annual appropriation to a record $2.6 billion, according to DOT records.

No change in NJ Transit allocation

As a result, the allocation for DOT projects could be increased, from $810 million to $1.41 billion. The allocations for New Jersey Transit and for local transportation aid stayed as originally planned, at $760 million and $430 million, respectively, according to the DOT records.

Stephen Schapiro, a spokesman for the transportation department, cited “favorable market conditions, and a desire to move additional projects into construction,” among the reasons for advancing the additional funding into fiscal year 2021.

“There are projects that are ready to go to construction but for which funding was not available in the traditional annual funding amounts,” Schapiro said. “This additional funding falls within the 2016 Reauthorization of $16 billion for capital projects and no more than $12 billion of transportation bond issuances.”

During a public event last week, Murphy said maintaining good transportation infrastructure is sound economic-development strategy for New Jersey, given its location along the Eastern Seaboard.

“We know that safe and modern transportation infrastructure is key to our future economic health and success,” Murphy said during the event at Port Newark.

The increased transportation spending is praised by Robert Briant, chief executive officer of the Utility and Transportation Contractors Association of New Jersey. He predicted it would deliver a “huge return” on the state’s TTF investment.

Contractors approve

“The materials that will be used in construction — like asphalt, concrete and stone — are all made here in New Jersey,” said Briant, who is also a member of the state Transportation Trust Fund Authority.

“The people we are putting to work mostly live here in New Jersey and will be buying meals and materials here, shopping here, getting ready for the holidays here, etc.,” he added.

But the $600 million increase also comes at a time when the Murphy administration has already faced criticism for its handling of transportation-related spending and the issuance of debt.

Regina Egea, who was an official in the Department of the Treasury during Republican Gov. Chris Christie’s tenure, has faulted the Murphy administration for not advancing capital projects more effectively, by using resources already authorized in previous years but not spent. She argues this is especially troubling, given the mandatory gas-tax hike that was enacted last month to help sustain the current TTF finance plan. Egea noted in a recent interview that a significant share of the existing $12 billion borrowing cap remains untapped.

All existing funds have not been used

“Why advance more authorization when they have plenty of capacity to award contracts already at their fingertips?” asked Egea, who now serves as president of Garden State Initiative, a conservative-leaning think tank based in Morristown.

Read the full report here.