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Post Info TOPIC: Options bleak to shore up N.J. transportation fund


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Options bleak to shore up N.J. transportation fund
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Options bleak to shore up N.J. transportation fund

(The following story by Paul Nussbaum appeared on the Philadelphia Inquirer website on March 22, 2010.)

PHILADELPHIA As New Jersey looks for ways to pay for highways and transit after the state's Transportation Trust Fund runs dry, it can expect to find pain at every turn.

The possibilities, based on what other states have done, include higher taxes, new taxes, higher tolls, new tolls, and higher fees. Or maybe a combination of them all.

The option that would raise the most money would be to no longer exempt motor fuels from New Jersey's sales tax, which would raise about $890 million a year. But that would be difficult politically in a state whose residents already are among the most heavily taxed in the nation.

And Gov. Christie won election last year campaigning on a no-new-taxes pledge.

Given the state's current budget crisis, Christie and legislators are reluctant to take on next year's problems now.

But the Transportation Trust Fund, which pays for highway and transit projects, is projected to run dry in about 15 months. After June 2011, all of the $895 million annually that flows to the fund from tolls, gasoline taxes, and sales taxes on other goods and services will be needed to pay the interest on borrowed money. No money will be available for projects.

If the state trust fund runs out, that also could jeopardize the $1.6 billion in matching transportation funds New Jersey gets each year from the federal government.

In 2006, the last time the trust fund nearly went broke, the state borrowed its way out of trouble, postponing the day of reckoning by refinancing debt and extending the repayment time.

"This fiscal gimmick bought us a few years' reprieve but did nothing to address the long-term issue: that New Jersey does not commit enough tax revenue to fund its growing transportation capital program," according to Spiral of Debt, a recently released report from the Regional Plan Association, a planning group for New Jersey, New York, and Connecticut.

The report suggested New Jersey should consider ways that other states have raised money to pay for transportation. It did not evaluate how much the various options might raise.

An Inquirer analysis of some revenue options shows a wide range of choices and results:

* Sales tax on motor fuels: $890 million. Assuming current prices and recent consumption levels, a 7 percent sales tax on gasoline and diesel would produce nearly $900 million a year.

* Sales tax on transit fares: $53.5 million. Assuming current fare revenue, adding sales tax to transit fares would raise about $52 million from NJ Transit passengers and $1.5 million from PATCO riders.

* Ten-cent increase in fuel tax: $550 million. At recent consumption levels, increasing the gasoline and diesel taxes by a dime a gallon would generate about $550 million. New Jersey's current tax is third-lowest in the nation.

* Fifty percent increase in motor-vehicle fees: $550 million. Based on current Motor Vehicle Commission revenue of $1.1 billion.

* Fifty percent increase in highway tolls: $520 million. Based on current toll revenue on the New Jersey Turnpike, the Garden State Parkway, and the Atlantic City Expressway. Tolls were increased nearly 50 percent in late 2008 and are scheduled to go up again in 2012.

* Dollar-a-pack increase in cigarette taxes: $80 million. The Campaign for Tobacco-Free Kids, an antismoking group, said in a February report that raising the state tax from the current $2.70 a pack to $3.70 would generate $80 million in new revenue. New Jersey's current tax is fourth-highest in the nation.

* Tolls on I-80: $110 million. Pennsylvania seeks federal permission to put tolls on I-80, and if it succeeds, New Jersey might do the same on its 68-mile stretch of the interstate. An average toll of 10 cents per mile paid by 100,000 vehicles a day traveling 30 miles each would produce about $110 million a year. Revenue estimates, however, would be altered if drivers opted for alternative roads. And because an expensive toll-collection system must be installed, this option would be more costly than those involving taxes, fees, and existing tolls, for which there are already collection mechanisms.

In its report, the Regional Plan Association concluded that "it would be an understatement to say that breaking this cycle of debt will be politically difficult.

"Gov. Christie has been vocal about not raising taxes, but without several hundred million dollars in new revenue dedicated to the trust fund, New Jersey will lose the transportation system that our economy depends on."

James Simpson, the state's new transportation commissioner, told a state Senate confirmation committee this month that the Christie administration recognized the need for more revenue.

Simpson, an administrator of the Federal Transit Administration during the presidency of George W. Bush, suggested the state seek more federal money to reduce its reliance on state money. The state could streamline engineering practices and review its true transportation needs to save some money, he said.

"We're in agreement that we need to raise revenue," Simpson said, adding that he needed more time to determine how much money was required.

Monday, March 22, 2010



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