BUSINESS & ECONOMY

Budget Breakdown: What do increases in transportation spending mean?

BY Rhonda Schaffler, John Reitmeyer |

One of the biggest spending increases that was just included in the new state budget Gov. Phil Murphy signed into law was a boosting of the general fund subsidy for NJ Transit, from about $140 million up to $380 million. That’s basically enough new cash to build another Prudential Center in Newark.

Murphy said the new money for NJ Transit will help make up for years of flat or even reduced funding that was provided out of the state budget by former Gov. Chris Christie, and also to help to cushion the blow on riders whose fares help to support NJ Transit’s overall $2.3 billion operating budget. In fact, there will be no fare increase in the immediate future for those riders.

But outside of the operating costs, there’s even more state spending on transportation that occurs in New Jersey each year through what is technically counted as the “off-budget” Transportation Trust Fund, or TTF. These dollars are predominantly used to cover large-scale capital investments like fixing the Pulaski Skyway or funding the proposed extension of light rail into Bergen and Gloucester Counties.

In all, a total of $2 billion in state dollars will be spent on capital projects through the Transportation Trust Fund during the 2019 fiscal year, which would be enough money to build five more Prudential Centers.

So where does all this money come from? Well, about $200 million is siphoned directly out of the state budget thanks to a constitutional dedication of revenue from the sales tax. Another roughly $1.1 billion is generated by taxes that are levied on gasoline and diesel fuel in New Jersey – taxes that you may recall were just increased a few years ago to help keep the TTF afloat.

Borrowing money via the sale of state bonds is another major source of revenue — totaling $800 million — for the TTF, and that makes some sense since many of the large-scale capital projects are too costly to be paid off in just one fiscal year, and the infrastructure they help fund will be used for decades by New Jersey residents as the bonds are being paid off.

But governors and lawmakers from both parties have also abused the state’s TTF credit card in the past, since it generally takes less courage to borrow money for capital projects than it does to ask motorists to pay more at the pump. In fact, the need to pay down all of the TTF’s debt – which now totals nearly $20 billion – was a big reason for the gas-tax increase that was approved by Christie in 2016.

If there’s a silver lining, perhaps it’s the fact that New Jersey’s gas tax dollars are subject to constitutional protections that generally allow them to be used only to pay for road, bridge and mass transit improvements, or to pay off bonds that are funding the big capital projects. And unlike past years, Murphy’s TTF spending plan for fiscal 2019 includes some $500 million in what’s known as “pay as you go” spending, or “pay-go,” which is money that isn’t raised from new borrowing or by refinancing bonds. That’s a record amount of pay-go for the state of New Jersey, and something many lawmakers are encouraging Murphy to stick with in the future.

Lastly, the state’s TTF spending also draws some matching dollars from the federal government, which helps to push total capital spending on transportation projects in New Jersey to nearly $4 billion a year – or what would be roughly 10 percent of the entire state budget.