A Financing Strategy for the New Jersey Tranportation Trust Fund
The New Jersey Transportation Trust Fund Authority (NJTTFA or TTFA) is an independent agency of the New Jersey state government that is responsible for administering the Transportation Trust Fund (TTF of “the Fund”), which is used to fund transportation capital project expenditures by the New Jersey Department of Transportation (NJDOT) and the NJ TRANSIT commuter-rail and bus system. The TTF is essential for maintaining, improving, and repairing New Jersey’s infrastructure system. However, since the TTFA was created in 1984, it has been inadequately financed by the state government and has irresponsibly issued enormous amounts of debt. Because of this, it has now it has run into major financing problems. Currently, the TTF’s revenues are insufficient to cover its increasing debt obligations. Because of this, the TTF is expected to be bankrupt by July of this year (2011). If this happens, New Jersey will be left without any financing for its already-troubled infrastructure system.This has become a major cause of concern for the State of New Jersey. For years, politicians and residents across the state have been unable to come to an agreement on how to best solve this growing problem. Because of this, financing strategies in the past have amounted to little more than temporary “Band-Aid” solutions focused principally on the issuance of massive amounts of debt. Now, the outstanding debt of the TTF has built up to the point that, in just a few short months, revenues will be insufficient to cover existing debt obligations. The New Jersey state government needs to take drastic action and adopt a long-term financing strategy that will allow the TTFA to meet its debt obligations and pay down outstanding debt, while still being able to fund essential transportation and infrastructure projects across the state.This paper will examine the causes and effects of the current funding deficit, as well various proposed solutions and strategies. After an in-depth examination of these topics, I will devise a recommended solution for solving the current deficit crisis faced by the TTF and for providing long-term financing for transportation requirements. The results will show that the most logical and effective long-term financing strategy will hinge upon an increase in state gasoline taxes, which are currently among the lowest in the nation. However, solving the problem will also require new sources of revenue and stringent financial management.