Testimony S.
16
Congestion Relief and Transportation
Trust Fund Renewal Act of 2000
Senate Transportation Committee, May 4, 2000
Senate Budget and Appropriations Committee, May 11,
2000
Judith Cambria, LWVNJ Education and Fiscal Policy
Specialist
First and foremost, the League of Women Voters of New Jersey
supports the reauthorization of the Transportation Trust Fund as
essential to the future of New Jersey. However, that does not mean
that the League supports this legislation.
It is important to remember that there have been major changes
in the way the Transportation Trust Fund carries out its
responsibilities since its inception in the 1980s. In earlier
years, debt was repaid over short periods of time, five to ten
years. In the 1990s, some older debt was refinanced to a 20-year
payback period, and new bond offerings usually employ 20-year
repayment schedules. As a consequence, the proportion of borrowed
funds has soared while pay-as-you-go has declined
significantly.
Because of increased borrowing and longer repayments, annual
debt service is a rapidly growing cost which is eating into the
amount available for construction purposes. In the 2001 budget,
the annual debt service payment for TTF is projected to be $433
million.
The League cannot support S. 16 for a number of reasons.
Foremost is that this legislation provides no new revenue to
support transportation capital construction. Instead, it shifts
existing money from the General Fund. Furthermore, it calls for
constitutionally dedicating the revenue from two existing sources,
$200 million from the Petroleum Products Gross Receipts Tax and
after a phase-in period, $200 million in Sales Tax revenue from
new automobiles.
The League does not have a problem with using revenue from the
Petroleum Products Gross Revenue Tax to fund the capital programs
financed by the Transportation Trust Fund. There is a logical
relationship between the revenue source and the use for
transportation related construction. However, the League strongly
opposes the use of Sales Tax revenue, particularly the
constitutional dedication of $200 million of this revenue to
transportation capital projects. What we are doing is simply
robbing Peter to pay Paul while pretending it is a solution to our
mobility needs.
Our transportation needs are not a four year problem; they are
a decades long challenge. What is proposed in S. 16 is not a
solution. It is a stopgap measure that will compound the problem
of future funding of transportation needs. The increase in
pay-as-you-go funding in the first year will soon disappear. It
continues to rely on a high level of annual borrowing with long
repayment periods. It continues to authorize the sale of $700
million in bonds each year for the next four years. In the first
year, it is projected that $580 million in bonds will be needed.
That amount will increase yearly as debt service payments
grow.
Over the four-year period, borrowing by the Transportation
Trust Fund will grow by around $2.5 billion. This will come on top
of $5 billion of bonds already issued by TTF. In addition,
repayments will begin on up to $500 million in bridge and highway
bonds approved by the voters in November 1999, as will debt
payments on other borrowing through the Economic Development
Authority for light rail projects. EDA issued $634 million in
bonds for this purpose.
Four years from now, annual bond payments for transportation
will increase to $700 million or more that we must pay before we
can spend a single dime on actual construction of road or rail
projects. All of the constitutionally dedicated Petrol Products
Gross Revenue tax and much of the sales tax revenue will be eaten
up in debt service payments. You will be back where we are right
now, this year, but now needing massive new revenues.
The business and labor officials in this room know that this
proposed legislation does not solve the long-term problem of
paying for transportation infrastructure. You know it is a stopgap
that will only make it far more difficult to solve four years from
now.
Legislators need to provide new tax revenue now to reduce the
amount of future borrowing and accompanying future increases in
debt payments. Today's legislators do not have the right to force
future legislators and taxpayers to raise even higher taxes, or
reduce other programs, because they refuse to accept fiscal
responsibility for the programs they approve.
During the past 6 1/2 years, 39 taxes have been reduced,
significantly reducing future revenues of the state. Billions in
borrowing, for schools and other needs as well as transportation,
will put enormous pressure on future state budgets. Any slow down
in the economy will be disastrous. Legislators will face terrible
decisions on what programs to reduce or eliminate. Legislators
have not been willing to increase the gasoline tax while borrowing
for transportation has increased from $272 million in 1992 to $900
million in 2000. If not now-when? Next year with a gubernatorial
election and legislative seats on the ballot?
Note: Despite
complimentary words from Transportation Committee members, and
words of assent from the audience to the League's testimony, the
Transportation Committee approved S. 16 and sent it to the Senate
Budget and Appropriations Committee. There, Treasurer Roland
MacHold spoke in favor of Governor Whitman's plan that would not
constitutionally dedicate any money, instead take it from the
General Fund for the next year or two. He spoke against
constitutional dedication. Nevertheless, when directly asked if
this meant he opposed S. 16, he refused to do so. Committee
members approved S. 16 unanimously.
