Transportation Trust Funds in Spotlight as New Jersey, Connecticut Face Challenges
New Jersey policymakers face a July 1 deadline to come up with a way to avert the impending insolvency of the state’s Transportation Trust Fund. Meanwhile, Connecticut Gov. Dannel Malloy agreed last month to divert $50 million in sales tax revenues intended for his state’s Special Transportation Fund to help close a $1 billion budget deficit for the 2017 fiscal year. Such diversions have become commonplace in Connecticut and other states. Last December, Malloy called for a constitutional “lockbox” to prevent future diversions as a number of states have employed, but lawmakers could not agree this spring to put the measure on the November ballot. These stories return the spotlight to trust funds and lockboxes, which were the subject of a CSG Capitol Research brief last year.
New Jersey’s Trust Fund Challenges
If New Jersey lawmakers and Gov. Chris Christie aren’t able to reach agreement this month, all revenues coming into the state’s Transportation Trust Fund will be devoted to paying off current debt after July 1. By August, there would be no money left to pay for either existing or new projects, The Burlington County Times reported this week.
But there appears to be widespread disagreement in Trenton over how to avert this scenario. While some have argued the state’s comparatively low 14.5 cents-per-gallon gas tax needs to be raised, Christie and others say such a tax hike would need to be packaged with tax decreases elsewhere. Democratic lawmakers for their part have put forward several tax decreases that could be packaged with a gas tax but some worry those cuts would cost the state hundreds of millions in revenues needed to keep the budget in balance.
Republican State Sen. Steve Oroho has offered a plan that would increase the gas tax by 20 cents and phase out New Jersey’s estate tax, lift income tax exemptions on retirement income sources, and create a new state income tax deduction for charitable contributions. Oroho also wants to offer in-state motorists a state tax credit for gasoline purchases to help reduce the burden of a gas tax increase, according to NJ Spotlight.
Another Republican, State Sen. Jennifer Beck, has offered a plan that relies on revenues from projected budget growth, some additional borrowing and savings from public employee benefit reform and the merger of three state transportation agencies. Her plan also proposes boosting traffic fines and diverting additional funds from the state’s Clean Energy Fund. Some Democrats have criticized Beck’s plan because it seeks to cut back on providing health insurance to state government employees, The Sparta Independent noted.
Senate President Stephen Sweeney, a Democrat, said this week that rescuing the trust fund may make it necessary for the Legislature to override a veto from Christie if the governor is unable to support a gas tax increase, whether or not it is accompanied by off-setting tax cuts, NJ.com reported.
But the clock is ticking toward that July 1 deadline.
Connecticut Budget Deal Diverts Transportation Revenues
Facing a nearly $1 billion deficit for the 2017 fiscal year, Connecticut lawmakers last month passed a budget that closes the deficit with measures including a diversion of $50 million in sales tax revenues originally intended for the state’s Special Transportation Fund.
The deal reached with Gov. Dannel Malloy put a dent in the governor’s transportation plans and put the fund on a path to deficit in two years, just 18 months after he unveiled a 30-year, $100 billion transportation investment program. A spokesman for the governor said the commitment to transportation remains despite the setback, The CT Mirror reported. But the governor’s quick decision to cut a deal left some questioning that commitment, The CT Post said.
The diversion is just the latest raid of the special fund, which lawmakers have tapped often over the years to pay for various needs.
Malloy has proposed a constitutional lockbox to prevent future raids but has yet to win legislative approval to put the measure before voters.
As I noted in a Capitol Research brief last year, voters in Maryland and Wisconsin approved constitutional amendments in 2014 to protect transportation trust funds. They joined 28 other states that have constitutional restrictions. Forty-seven states have at least one transportation-dedicated trust fund.
InfraAmericas U.S. P3 Conference Next Week
Next week I head to New York City for the InfraAmericas U.S. P3 Infrastructure Forum 2016. CSG is serving as a supporting organization for the conference, which takes place June 15-16 at the Grand Hyatt. The conference focuses on the state of the industry around public-private partnerships for transportation and other sectors. Registration is still open for the event.
InfraAmericas has announced that U.S. Secretary of Transportation Anthony Foxx will give a keynote presentation at the conference. Conference organizers note that “Foxx has been among the major supporters of P3s in the United States and has championed a more streamlined, effective, and comprehensive approach to innovative project finance and delivery. The Secretary has focused on the need to develop, expand and fund the nation’s infrastructure since his appointment in 2013. In addition, he led the creation of the Build America Transportation Investment Center (BATIC), which acts as a point of contact for states and municipalities looking to access private capital for P3 projects. Later this summer, the Secretary will establish the Build America Bureau, which expands upon on the foundation of customer-oriented infrastructure development support initiated by BATIC.”
Attendees at the InfraAmericas conference will hear the Secretary discuss how the USDOT is helping to influence the U.S. P3 pipeline, what the department is doing to facilitate closer cooperation between the public and private sectors, and how the election will impact existing infrastructure policy.
Foxx joins previously announced speakers including:
- Mitch Daniels, President of Purdue University & Former Governor of Indiana
- Seth Miller Gabriel, Director, Washington D.C. Office of Public Private Partnerships
- Shailen Bhatt, Executive Director, Colorado Department of Transportation
- Gail Lewis, Director of the Office of P3 Initiatives & International Affairs, Arizona Department of Transportation
- Duane Callender, Director of the TIFIA credit program, Federal Highway Administration
- Joshua Schank, Chief Innovation Officer, LA Metro
- Doug Koelemay, Director, Virginia Office of Transportation Public-Private Partnerships
- State Rep. Leslie Combs (D-Kentucky), sponsor of Kentucky’s recently approved P3 legislation
Panels will focus on the state of the U.S. P3 market, how state departments of transportation are preparing for the next generation of P3s, social infrastructure P3s, water infrastructure P3s, airports, rail and value for money in P3 deals.