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N.J. faces tough choices as transportation funds run out

TRENTON - Pressure is ramping up on Gov. Christie and the Legislature to develop a long-term plan to shore up New Jersey's depleted transportation fund.

TRENTON - Pressure is ramping up on Gov. Christie and the Legislature to develop a long-term plan to shore up New Jersey's depleted transportation fund.

For decades, the state has borrowed money to finance road and bridge repairs, instead of finding new revenue to pay for maintenance and upgrades. Now, that policy has resulted in a crisis: All revenue from the state gasoline tax is devoted to more than $1 billion in debt service, and the Transportation Trust Fund won't have enough money to last through fiscal year 2016, which begins in July.

Debt service will climb to $1.2 billion next fiscal year, almost as much as the state's $1.6 billion capital program.

The state's transportation infrastructure "is in horrible shape, and there's essentially no money left to pay for any improvements," Assemblyman John S. Wisniewski (D., Middlesex), chairman of the Transportation Committee, said after a hearing in Montclair on Wednesday. "If we do nothing, we do so at our own peril, and put jobs and lives at risk."

Investment has waned as the state has struggled just to maintain roads, let alone embark on new projects, experts say.

Christie, a Republican, last week tapped veteran Democrat and lobbyist Jamie Fox to be his next transportation commissioner. The move was widely applauded by Democrats, who control the Legislature. The Senate confirmed Fox's appointment Monday.

Also last week, a cross-section of business, transportation, consumer, and industry groups announced that they had banded together in a coalition called ForwardNJ to push for a dedicated funding source for the trust fund.

Reaching a solution could be complicated by presidential politics. Christie says he is considering a White House run in 2016, and he could face backlash from the right if he were to raise taxes to help fund transportation.

However, when asked last week about ways to replenish the trust fund - the main mechanism for financing transportation projects - Christie responded, "Everything is on the table."

The state may have to act quickly. To qualify for $1.6 billion in matching federal funds, the state must develop a funding plan by spring, perhaps as early as March.

"It's a two-part issue: How do you fix the state's revenue portion and not lose the federal share of your funding?" said Kris Kolluri, who was transportation commissioner under Gov. Jon S. Corzine.

During legislative budget committee hearings this year, Transportation Department officials testified that the fund could borrow a maximum of $620 million next fiscal year. "So we need another billion," James Simpson, who was commissioner at the time, told legislators.

This isn't the first time the state has faced a transportation funding crisis. Gov. Thomas H. Kean created the Transportation Trust Fund in the 1980s to provide a stable and predictable funding source. However, since his administration, governors and legislatures of both parties have largely opted against funding projects on a pay-as-you-go basis, instead choosing to borrow money.

Gov. Jim McGreevey came close to tackling the problem in 2003, when a commission recommended a 12.5-cent increase on the gasoline tax. Then, as now, New Jersey had one of the lowest gas taxes in the nation. Ultimately, McGreevey backed off.

"We've been on a dangerous slide ever since, because we didn't add a penny to our revenue," said Martin E. Robins, director emeritus at the Alan M. Voorhees Transportation Center at Rutgers University.

Christie has continued to borrow to finance projects. But his five-year spending plan, announced in 2011, won't cover expected costs through the next fiscal year.

That shortfall, coupled with mounting debt and a recognition among state leaders that New Jersey's infrastructure is crumbling, has added urgency to efforts to finding a long-term funding solution.

Two-thirds of New Jersey's major roads and bridges are of poor or mediocre quality, while its highways are the most expensive to maintain in the country, according to recent studies.

Experts said addressing the problem requires a multipronged approach, possibly including consolidation of the state's four main transportation agencies: the Department of Transportation, NJ Transit, the Turnpike Authority, and the South Jersey Transportation Authority.

Another option is to form public-private partnerships that would allow hedge funds and pension funds to invest in New Jersey's transportation.

Both of those ideas have been pushed by lawmakers and mentioned by the ForwardNJ coalition.

Those proposals alone are unlikely to provide enough savings or funding for the long term. Any true fix must include new revenue, according to transportation experts and lawmakers.

One possibility is to raise the state's 14.5 cent-per-gallon tax on gasoline, which hasn't changed in more than 20 years. Key Democrats, including Speaker Vincent Prieto (D., Hudson), have offered support for such a move.

More likely, Statehouse observers said, is an increase in a tax on refineries, which would likely be passed on to the consumer.

With business groups like the state Chamber of Commerce joining the ForwardNJ coalition, Christie may be able to raise taxes without facing political repercussions.

"The governor is looking for the opportunity to do something that he normally wouldn't do politically - and to get cover for it," said Patrick Murray, director of the Monmouth University Polling Institute.

Fox, now in his second stint as transportation commissioner, could be instrumental in formulating a solution. A former chief of staff to McGreevey who has worked in Washington, Fox is known for his political acumen.

His former lobbying firm, Fox Shuffler, ranked among the top 20 in New Jersey by receipts last year, according to data compiled by the Election Law Enforcement Commission.

"There are different options we can look at," Fox told reporters Monday. "There's not one way to skin a cat."