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Could NJ’s Depleted Trust Fund Jeopardize Federal Funding for ARC?

June 9th, 2010 by


That is the question posed by Phillip Barbara in a guest column in yesterday’s Star-Ledger. With New Jersey’s Transportation Trust Fund nearly broke, and no solution on the horizon, Barbara suggests that the federal government may be leery of committing to a “full funding agreement” of nearly $3 billion that had been expected. In all, the project, which will relieve a major bottleneck by doubling passenger rail capacity under the Hudson River between Secaucus and Midtown, is projected to cost $8.7 billion, making it the largest mass transit project in the nation.

While there is near universal support for the project among New Jersey officials, there is little agreement, or even discussion, about how to address the larger issue of how to replenish the Transportation Trust Fund, which provides nearly $1.6 billion a year to fund the state’s transportation capital plan. The fund is projected to become insolvent by July 2011, the victim of years of mismanagement, short-term fixes and an over-reliance on debt. At that point, all of the nearly $900 million the state takes in annually for the fund through the gas tax and other sources will be needed to service existing bonds, and some combination of new revenue and/or debt will be needed to replenish the fund. Though the Christie administration has said it intends to present a plan for addressing the trust fund after the FY 2011 budget is passed, it has given no indication of how it intends to raise the substantial new revenue that will be needed to address the problem.

Still, a bankrupt Transportation Trust Fund would not necessarily derail the tunnel project. Of the project’s $8.7 billion price tag, $3 billion is expected to come from the Port Authority of New York and New Jersey; $2.7 billion from several New Jersey sources, including revenue from the Turnpike; and the balance from the federal government. The worry among federal officials, according to Barbara, is that “without a credible fix to the state’s Transportation Trust Fund, New Jersey won’t be able to maintain its infrastructure and enable NJ Transit to expand its rail system to make efficient use of the tunnel.” DOT Secretary Ray Lahood also has reportedly stressed to Governor Christie the importance of having reliable local funding in place, in keeping with Washington’s recent emphasis on local matching funds when awarding grants for transportation projects.

When officials, including then-Federal Transit Administrator and current state Transportation Commissioner Jim Simpson, were looking at how to pay for ARC, they wisely avoided linking the project to the fate of the beleaguered Transportation Trust Fund. But that prescience could be rendered moot if New Jersey’s uncertain transportation funding situation undermines Washington’s confidence in the state to make the investments necessary to support the tunnel. Qualms about its terminus notwithstanding, the ARC tunnel project enjoys wide support in New Jersey, and if lawmakers needed any more reason to address the looming trust fund crisis, the prospect of losing federal funds for the project should certainly get their attention.

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One Response to “Could NJ’s Depleted Trust Fund Jeopardize Federal Funding for ARC?”

  1. […] Blog Post: Could NJ’s Depleted Trust Fund Jeopardize Federal Funding for ARC? (Garden State Smart Growth) […]

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