By Michael Aron
Chief Political Correspondent
Senate Budget Committee Chairman Paul Sarlo, a Democrat, blamed today’s credit rating downgrade on overly optimistic revenue projections by the Christie administration.
“What we’re seeing is every major credit rating agency in this country downgrading the fiscal health of the state of New Jersey. It really goes back to missing revenue projections year in and year out,” Sarlo said.
Sarlo’s comment came at a hearing on the Department of Transportation budget. The big question there is how to finance another five years’ worth of Transportation Trust Fund road and bridge improvements.
Gov. Christie laid out a five-year plan in 2010 that envisioned less and less borrowing, more and more direct spending, known in the jargon as pay-go.
That didn’t pan out as planned, forcing more and more borrowing each year, as DOT commissioner Jim Simpson acknowledged.
“Admittedly, we only managed the Transportation Trust Fund with pay-go the first year, including this year, three years without pay-go and I’m not gonna sit here and tell this committee about the competing pressure for cash in the state, so we won’t go there. But the only good news story to the lack of pay-go is the historically low rates,” Simpson said.
“We tried pay-go. The administration tried pay-go and we haven’t done it,” said Sarlo.
Next year’s budget earmarks another $1.8 billion for infrastructure.
The problem arises the year after that.
“If we are fundamentally going to put together a five-year plan, we need to find a new revenue source,” Sarlo said.
Sarlo is considering a hike in the gas tax.
“You need to have a dedicated revenue source that’s in a lockbox that nobody can touch; whether it’s a user fee, whether it’s a gas tax,” he said.
His fellow Democrat Jeff Van Drew objects to that.
“The alternatives are limping along the way we are now or increasing taxes. I don’t support increasing taxes, so I think we’re going to have to limp a little bit, be careful and mindful of the taxpayer and the toll payer,” Van Drew said.
Commissioner Simpson said the administration will present a new five-year plan at the end of 2014 that likely won’t include a tax hike.
“It would seem to me that it’s gonna be a combination of traditional bonding again plus a component of pay-go,” Simpson said.
The fact that the state is suddenly bracing for $1.8 billion in new budget cuts only adds to the difficulty for Transportation.