TRENTON - New Jersey lawmakers are considering a new tool to boost the state's underfunded pension system: Allow the Treasury Department to purchase unlimited bonds from the state's transportation fund.

Gov. Christie and the Democratic-controlled Legislature this year raised the gas tax to replenish the Transportation Trust Fund, which finances maintenance and new projects for roads, bridges, and mass transit.

Even with that new revenue, policymakers in Trenton expect to borrow $1.2 billion annually to help finance new capital projects.

Rather than pay interest to Wall Street, some lawmakers want that money going to the $73 billion pension system for some 770,000 active and retired public workers.

Regulations currently prohibit the State Investment Council from buying more than 10 percent of any one bond issue. Forthcoming legislation sponsored by Senate President Stephen Sweeney (D., Gloucester), Sen. Dawn Addiego (R., Burlington), and Assemblyman Adam Taliaferro (D., Gloucester) would eliminate that cap for transportation bond sales.

The investment board would retain its authority over how to invest pension funds. If the board were to authorize the purchase of $1.2 billion in transportation bonds, with an estimated interest rate of 5 percent, that would net $60 million annually for the pension system, Sweeney noted.

"It's not a lot of money, but every penny you can squeeze is a lot of money to put the pension back into fiscal health," Sweeney said at a Statehouse news conference Thursday.

New Jersey's pension system is the worst-funded in the nation, according to Bloomberg News, with just 37.5 cents to pay for each $1 in benefits.

Sweeney's announcement Thursday comes after the Legislature passed a bill last month that would require the state to make quarterly contributions to the pension system, rather than making one payment at the end of the fiscal year.

That bill, which is designed to increase investment income, awaits action from Christie.

Neither move is seen as a panacea to solving New Jersey's pension obligations. In August, the investment council voted to slash the fund's allocation to hedge-fund managers by more than 50 percent, citing the sector's poor performance and high fees.

856-779-3846 @AndrewSeidman