Wednesday, October 19, 2016
At long last – after a 3 ½ month shut down of the state’s Transportation Trust Fund – the New Jersey Legislature has passed and the Governor has signed a bill increasing the gas tax by 23 cents a gallon. The tax increase will generate more than $1 Billion in revenue for the Trust Fund, essentially restoring capital funding levels to where they were before the shutdown. Why was such a massive increase necessary? Because nearly 30 years of increasing debt obligations without any new revenue had essentially bankrupted the whole system. As a veteran of the many failed attempts to get the gas tax increased over those years I am happy to see it finally happen, though I have to shake my head that it needed a complete financial meltdown to spur action.
So, it’s all good, right? Well, not quite.
First, I hate to say it, but it’s not enough money. Although it may be stretched to about $1.6 Billion a year through debt financing (which brings it own problems), the huge costs that New Jersey will be facing over the next decade, especially on the transit side (think Hudson River tunnels) will require more resources.
Second, the Trust Fund mainly finances capital costs, so the new bill leaves the operations and maintenance side woefully underfunded. Under New Jersey’s wacky transportation finance system, operations and maintenance costs mainly fall on the state’s general funds, which have been continually squeezed for a generation. The damage caused on the transit side was recently documented in the New York Times (here). On the highway side, routine maintenance is chronically underfunded, so bridges and highways are allowed to deteriorate until they are in bad enough condition to require capital projects. Staff functions which can’t be sheltered under a capital line item are just left undone. This squeeze will actually be made worse by the Trust Fund bill, which cuts general fund revenue sources (sales tax and estate tax) as part of the political price exacted by the Governor.
Third, although a funding bill is a big step forward, it really should be accompanied by significant transportation reform. Some of the issues that need to be addressed on the NJDOT side – in my opinion – include better budget control of project costs, much more emphasis on operations and maintenance (both of these issues related to the transportation finance system), a renewed connection between transportation planning and land use planning (which has waned in recent years), a stronger connection to climate change resilience and other sustainability issues, and a stronger commitment to collaborative and robust planning.
I should point out that there are some substantive problems common in other states that are not prevalent in New Jersey. One is transit funding. Although transit funding is inadequate, especially on the operations and maintenance side, it’s not because transit is an unwanted houseguest, as it is in many states. New Jersey being a geographically compact and densely populated state, transit is political popular in all regions and in the Legislature. Another problem not prominent in New Jersey is overinvestment in highway capacity increases. Transportation decision makers decided a long time ago (first explicitly stated in the 1989 Transportation Plan) that New Jersey could not “build its way out of congestion” and resources have increasingly focused on system preservation, and especially the bridge program.
A companion bill to the tax bill does, however, offer hope for the future on these unaddressed issues. It creates a Transportation Policy Review Board, to be composed of nine public members, all of whom are supposed to have transportation expertise. The Board is given a broad mandate to “provide independent analysis of the transportation capital program, provide comments on the cost effectiveness of the program, evaluate the condition of the State transportation system, and identify needed infrastructure investments.” The Board is to have its own budget and the ability to conduct its own research and to produce its own reports. (One of the specific tasks spelled out in the legislation is a study of a VMT tax.) If the Board fulfills its statutory charter it will become, in effect, a state transportation commission, something New Jersey has not had since 1948. History instructs us, however, not to assume success (the new Board is legislatively built on the statutory ruins of a previous failed review board).
The companion bill contains various other provisions, but I will mention just two: one very good and one very bad. The very good provision requires that New Jersey DOT set up a monthly online project reporting system – long overdue – which could become the kernel of a New Jersey Grey Notebook (see Washington State DOT). The really bad provision establishes a Capital Program Approval Committee with appointees from the Legislature. The Committee is to assure that “legislative input” is considered in putting together the annual program. The program can’t be adopted until each member of the Committee approves each project!
So two cheers for the Trust Fund bill and on the next challenges!