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Statement on Issues Relating to the Transportation Trust Fund and Local Aid
Presented to Governor-elect Christie’s Transportation Subcommittee
To the Transition New Jersey Committee
By Honorable Timothy C. McDonough, Mayor of Hope Township and
Immediate Past President, NJ League of Municipalities and
Chairman, League Transportation Trust Fund Review Committee
December 8, 2009

According to NJ DOT statistics for 2008, New Jersey’s total road mileage was 38,752. Of that total, 28,933 miles were municipal roads. In other words, New Jersey municipalities were responsible for maintaining just a little less than 75 percent of our State’s centerline road mileage.

New Jersey's counties are responsible for about another 17 percent. Local roadways and bridges carry an estimated 55 percent of all traffic. In 2003, it was estimated that, for repair and maintenance of these assets - not for the construction of any new roads and bridges, but only to ensure the safety and utility of the current stock - we would annually need $211 million for county bridges, $7.5 million for municipal bridges, $44 million for county roadways and $112 million for municipal roadways for a total of $374.5 million.

Local officials know that these investments must be made. Failure to do so can compromise the safety of the public, the economic vitality of our communities and the security of our neighborhoods.

State provided assistance through NJ DOT’s Local Aid program is vital for local governments to fund necessary improvements on these facilities and to relieve the property tax burden for residents.

Annually, $175 million from the Transportation Trust Fund is allocated to municipalities and counties for local transportation improvements. Approximately 100 county highway and bridge projects are funded each year, as well as hundreds of municipal road improvements, such as resurfacing, rehabilitation or reconstruction and signalization.  Typically, more than 400 municipalities receive funding for these projects each year.   This year the Governor, working with the Legislature added an additional $25 million for municipalities (and $25 million for counties), resulting in awards in 457 municipalities.

The Local Aid program also provides state and federal funds for special local projects to improve safety, safe pedestrian and bike routes, town centers, transit villages ($2M) and other non-traditional transportation enhancements.   The local aid funding provided by the NJDOT and FHWA results in significant savings for counties and municipalities, and provides an alternative to the use of property taxes alone to improve local transportation. 

These projects, it must be note, put people to work. This is always important to our State’s economic health; but never more so than now, as we struggle to rise from the recession.

Absent a long-term commitment of increased funding to the Transportation Trust Fund, in general; and to the Local Aid Program, in particular, New Jersey's chronic and anachronistic over-reliance on the regressive and excessive property tax will intensify.

So, a long-term fix for the Transportation Trust Fund isn't only about roads and traffic and jobs and public safety. It is also a necessary first step on the road to property tax reform. An Administration and a Legislature dedicated to property tax reform have to first make certain that the problem doesn't get any worse, before they even start to think about how they can help the people of New Jersey to make it better.

Over the past decade, New Jersey's ability to fund repairs and safety improvements to highways, bridges and public transportation has been jeopardized by poor fiscal policy and growing financial constraints. The Governor's 2003 Blue Ribbon Transportation Trust Fund Commission offered sound and feasible recommendations. In proposing that dedicated new revenues fund a $3.1 billion annual capital budget for the NJ DOT and NJ TRANSIT, the Commission did not neglect local needs. The Commission called for a doubling of Local Aid.

Increased Local Aid and the Federal Stimulus have helped. But they have not gone nearly far enough and they cannot be counted on as sources of long term dependable funding.

The State faces a shortfall in its ability to fund current and future roadway projects. We currently constitutionally and statutorily dedicate $895 million to TTFA. Almost all of the $895 million is used to pay debt service on TTFA bonds. The $895 million will only provide approximately $2 billion in total net bond proceeds to be spent in Fiscal Years 2010 ($1.6bn) and 2011($400mm). Meanwhile, New Jersey currently levies one of the lowest Motor Fuels Taxes in the country (currently the 4th lowest).

We believe New Jersey needs to find a way forward. The solution must provide funding for immediate construction and maintenance of roadways. It must provide ongoing sources of funding for transportation projects. And it must avoid utilization of other State taxes (e.g. Sales Tax, Income Tax) for transportation purposes.

A number of possibilities need to be considered. A One Cent increase in the gas tax provides approximately $49 million in annual revenue. We might maximize available proceeds from TTFA revenues by issuing additional TTFA Revenue Bonds (currently capacity provides approximately $2bn in net bonds provides). We should analyze alternative funding sources such as excess toll revenues from the Turnpike and/or South Jersey Transportation Authority to be utilized to fund other State-wide transportation projects. And we might consolidate state-wide transportation management and finance into a single entity.

We hope to be partners, as the Christie Administration develops a response to the major gap between the need for maintenance of our transportation infrastructure and the funding available to meet that need.

 

 

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