Road-funding crisis looms for N.J.

The day of reckoning for New Jersey roads and mass transit is drawing closer, with no indication from Gov.-elect Christopher J. Christie about how he hopes to replenish the nearly empty fund for transportation projects.

The state Transportation Trust Fund is projected to run dry by June 2011, leaving the new governor with two unsavory options: borrow more money or raise taxes and tolls. So far, he has said he is against both.

Christie, who argued against additional debt during his gubernatorial campaign, approved a decision by the Transportation Trust Fund Authority this month to borrow $1.2 billion, bringing the fund's debt to about $11.6 billion.

The new borrowing should provide enough money to pay for transportation projects for the six months after Christie takes office on Jan. 19.

That will leave about $1.6 billion before the fund is tapped out. After that, all of the $895 million that annually flows to the fund from tolls and fuel and sales taxes will be needed to pay the interest on previously borrowed money. No money will be available for new transportation projects.

With New Jersey's budget deep in the red, transportation funding is just part of the financial nightmare that awaits Christie.

Late last month, the state said it faced a $1 billion shortfall in this year's budget - a deficit five times larger than previously disclosed - and would have to cut funding for schools, municipalities, higher education, hospitals, and pension plans.

In the area of transportation, Christie will confront several unpleasant realities. New Jersey has the worst roads in the country, according to road-condition data compiled by the Federal Highway Administration. It also has the highest state/local tax burden in the country, according to the Tax Foundation.

With the third-largest debt load of all the states, New Jersey has little room to borrow its way out of trouble.

Christie is "committed to ensuring our roads are safe and viable" because a "strong infrastructure is critical to New Jersey's economic growth," his spokeswoman Maria Comella said.

"However, the way to fund these projects is not by relying on borrowing and undercutting the purpose of having a fund that is meant to provide a stable, long-term financial resource."

Christie will "reevaluate everything" to find ways to cut the deficit, Comella said.

But he "will not support an increase in the gas tax or tolls," she said.

Some state legislators have advocated raising the state gas tax, the fourth-lowest in the nation. The current tax is 14.5 cents per gallon, including a 4-cent-a-gallon petroleum-products gross-receipts tax.

State Sen. Ray Lesniak (D., Union) said he would introduce a bill in the next legislative session to increase the gas tax "gradually and incrementally," perhaps by a penny a year. He said he was looking for support from Christie.

"Sooner rather than later, we will have to increase the gas tax to fund our transportation needs," Lesniak told a New Jersey Business and Industry Association meeting this month.

Some Republican lawmakers have said privately they might be willing to join Democrats in voting to increase the hike if the added income was constitutionally required to go to highway projects. That would require approval from voters.

Other Republicans don't foresee a successful push to raise the tax.

"The gas tax is a nonstarter," said State Sen. Sean Kean (R., Monmouth), a member of the Senate Transportation Committee. "The governor has already said he's not doing a gas tax."

Kean suggested that about $500 million from Motor Vehicle Commission fees could be shifted to transportation spending. That money now goes to the general fund for spending on such things as education and care for the indigent.

"That does create another gap somewhere else," Kean acknowledged. "We could not ask for a worse set of circumstances. . . . We're going to see draconian cuts across the board in the first several months of the year."

Kean said the state might also have to accept less spending on transportation projects. "We may have to lessen the capital program. We may not get everything we want," he said.

But Assemblyman Scott Rumana (R., Passaic), the assistant GOP leader and a member of the Assembly Transportation Committee, said the state needed to keep transportation spending at the current annual $1.6 billion.

"I think you need to carve out that $1.6 billion and put it in a lockbox somewhere," Rumana said. "We know that we're going to have to make very radical cuts, based on the crisis we're in . . . but I think that out of a $30 billion budget, you have to find $1.6 billion for transportation."

Christie will deliver his first budget to the Democratic-controlled legislature in March. By then, the transportation-funding crisis will be a key issue, and he is unlikely to present any rosy options to lawmakers.

"The choices suck," said one GOP aide. "You can cut back heavily on other spending, raise the gas tax or the sales tax, or defer stuff even further" with more borrowing.

The most recent borrowing was approved Dec. 9 by the Transportation Trust Fund Authority. Christie's office was consulted before the $1.2 billion bond issue was authorized, Comella said.