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Platform Update

April 30, 2008

ACTION ITEMS

GOVERNOR CORZINE’S FINANCIAL RESTRUCTURING AND DEBT REDUCTION PLAN: All indications are that the Corzine Administration is now focusing on smaller toll hikes to pay for the transportation needs of our state. Governor Corzine is hoping to finalize the fiscal 2009 state budget by June 15 – about two weeks before the constitutional deadline – so that negotiations can begin on a scaled-down toll plan. The Governor has also repeated his opposition to raising the 14.5-cent-per-gallon gasoline tax because of escalating fuel prices.

State Senator Ray Lesniak (D/20) has stated that the Governor would like to address the transportation funding issue while also enacting several measures designed to hold down state spending. He said current options include an immediate toll increase to help finance the New Jersey Turnpike expansion and other improvements, followed by another increase in five years. Senator Lesniak and Assemblyman John Wisniewski (D/19) have also encouraged the Governor to consider imposing new tolls on Routes 78 and 80, which are currently toll-free (see NAIOP proposal below). Assemblyman Wisniewski also reiterated his belief that raising the gas tax has to be part of any funding solution.

To accomplish this and other initiatives in a timely manner, the Senator also proposed a special session focused solely on budget reforms. While Senate President Richard Codey and others have been lukewarm to the idea of a special session, the urgent need for a solution to Transportation Trust Fund funding and the re-occurring budget deficit may force the situation. In addition, the Senate President has said previously that he wants a new transportation plan finalized by the end of June, which is a lofty goal.

The State Chamber, in conjunction with the Platform for Progress Coalition, will continue to reach out to legislative leadership and the Corzine Administration on the critical importance of increasing vitally needed transportation infrastructure investment.

OTHER PROPOSALS – ASSEMBLYMAN WISNIEWSKI: Assembly Transportation Chairman John Wisniewski released his alternative plan which basically adopts the fiscal responsibility portions of Governor Corzine's original plan, proposes alternative funding sources to pay for the state's Transportation Capital Plan and refinance the Transportation Trust Fund, and presents other potential sources of revenue to help reduce state debt. His plan endorses the first three elements of the Governor's fiscal restructuring proposal and it would implement a combination of toll and motor fuels tax increases.

To finance capital improvements to New Jersey’s toll roads, the plan would require the following toll increases along each of the state’s three toll roads:

  • an immediate 25 percent increase in tolls on the New Jersey Turnpike, followed by 25 percent toll increases in 2012 and 2016;
  • an immediate 15 cent increase in tolls, to 50 cents on the Garden State Parkway, followed by a an increase to 75 cents in 2014; and
  • an immediate increase in tolls to 75 cents on the Atlantic City Expressway, followed by an increase to $1.00 in 2014.

To finance the state's Transportation Trust Fund (TTF), Wisniewski's plan would implement an 18-cent gas tax increase at a rate of 6 cents per year over the next three years, constitutionally dedicated to the TTF. Thereafter, the gas tax would be adjusted annually for inflation, based on the Consumer Price Index. His plan also would require increasing the rent for all toll road rest stop gas and concession stations, as well as exploring the possibility of selling or leasing the air rights along all three toll roads. These measures would create a recurring revenue source in excess of $1.6 billion annually, which would allow the TTF to fund projects on a 60/40 split between pay-as-you-go and bonded revenue.

Finally, his plan would create a permanent Commission on Fiscal Oversight, comprised of Executive, Senate, and Assembly members, which would further investigate reforms that have the potential to create continued sound fiscal policies for the future.

OTHER PROPOSALS – NAIOP: The National Association of Industrial and Office Properties (NAIOP) is the nation's leading trade association for developers, owners, investors, asset managers and other professionals in industrial, office and mixed-use commercial real estate. NAIOP believes that reliance on tolls alone, specifically on north-south corridors, would impose a disproportionate burden on one segment of the population and economy. They propose that if toll increases are to be enacted, it is critical to level the playing field by imposing tolls on east-west corridors, such as Routes 78 and 80.

NAIOP contends that 75 million vehicles per year use Routes 78 and 80 at or near the point of entry from Pennsylvania. They believe that if the state were to place tolls on portions of those roads, it would generate sufficient revenue to allow the state to significantly moderate toll increases on the north-south roads. Additionally, non-New Jersey residents would likely pay a significant portion of the east-west tolls. Another direct benefit would be a reduction of the impact of the toll increases in the port district and tolls on east-west roads would make Pennsylvania less attractive to the logistics industry.

OTHER PROPOSALS – NJ POLICY PERSPECTIVE: New Jersey Policy Perspective, headed by Jon Shure (former communications director for Governor Florio), is a nonpartisan, non-profit organization that engages in research, analysis and strategic communications. They are calling for:

  • A 20-cent per gallon gas tax increase to generate $1 billion each year;
  • Applying the sales tax to gasoline to raise $900 million a year, if gas costs $3 per gallon;
  • Doubling registration fees on new, smaller cars and tripling fees on larger cars to increase revenue by $480 million a year;
  • Doubling drivers' license fees to $48 for a four-year license to raise $340 million a year;
  • Increasing a state fee charged to cars costing $45,000 and more to generate about $145 million a year.

Shure said toll increases could still be part of the solution, but his group is offering these ideas as a way to raise money statewide. His organization believes that employing gas taxes and car-related fees as part of an overall solution would produce significant revenue while also calling upon a majority of New Jersey residents, regardless of where in the state they live, to have a role in repairing the state's finances.

OTHER STATES – PENNSYLVANIA: Toll increases on the Pennsylvania Turnpike would be capped under a privatization plan proposed recently by Governor Ed Rendell. Prospective private operators are expected to submit bids soon and it is anticipated that the Pennsylvania Legislature could approve a deal by mid-June.

If a lease of the Pennsylvania Turnpike is approved, a private firm will operate about 500 miles of the system for 75 years. The goal is to raise billions of dollars to repair Pennsylvania’s crumbling roads and structurally deficient bridges and to subsidize mass transit costs. The operator would be allowed to increase tolls by 25 percent in January, and then each year by either 2.5 percent or the consumer price index, whichever is greater. That is designed to replicate the Pennsylvania Turnpike toll increase schedule envisioned by the law passed last summer authorizing I-80 tolls, a plan currently on hold pending federal approval.

CBTF LEGISLATION MOVES: The General Assembly recently passed A-1038 sponsored by Assemblyman Wisniewski that would require the operators of certain disabled vehicles to remove them from the roadway in a safe, but expeditious manner in order to avoid unnecessary traffic congestion and delay. The bill further clarifies that moving a vehicle under these circumstances does not constitute leaving the scene of an accident. The Assembly bill awaits a hearing in the Senate. The Senate version, S-998 sponsored by Senator Fred Madden, also passed the Senate 39-0 and was amended to remove a provision in the bill fining a person $200 for the removal of a vehicle from the roadway that was involved in an accident but not resulting in serious bodily injury or death. This legislation is based on a recommendation contained in the Congestion Buster’s Task Force Report.

ITEMS OF INTEREST

DOT PUTS SEVERAL PROJECTS ON HOLD: The state Department of Transportation (DOT) has released its 2009 capital budget and capital investment strategy. According to DOT Commissioner Kris Kolluri, the capital budget for next year of $3.3 billion falls short of what is needed to address all of the state's highway, bridge and public transportation needs. At the TransAction conference in Atlantic City earlier this month, Commissioner Kolluri said "not every single project in every single district in every single county is going to get built."

Specifically, the plan details the projects the DOT and NJ Transit will build if they receive money expected from state and federal sources over the next decade. In previous years, the DOT's capital strategy covered only five years. The plan assumes that the state TTF will remain solvent for the next 10 years – although it is scheduled to run out of money by 2011. To review the plan, click here.

RUTGERS STUDY – TRANSPORTATION PROJECTS = JOBS: According to a study released last week by the Edward J. Bloustein School of Planning and Policy at Rutgers University, New Jersey’s plan to spend $42.5 billion on transportation projects over the next 10 years would generate nearly 27,000 full-time jobs per year. The Economic Impacts of Planned Transportation Investments in New Jersey report examines projects planned for construction from 2008 to 2018 by the NJ Department of Transportation, NJ Transit, the NJ Turnpike Authority, and the South Jersey Transportation Authority. The projects include widening of the NJ Turnpike, the Garden State Parkway, and other roads; new construction and repair of existing rail lines and bridges; the purchase of train cars and buses; and the construction of the trans-Hudson rail tunnels. The study estimates that over the course of the 10-year period, planned transportation investments will generate: 26,832 jobs lasting 10 years; $15 billion in income; $20.3 billion in gross domestic product; $747 million in state tax revenues; and $797 million in local tax revenues. The full study is available here.

RAND SUPPLY CHAIN PROGRAM MAY 29: The RAND Supply Chain Policy Center (SCPC) conducts research that helps the public and private sectors address critical issues in freight transportation to the U.S., North American, and international economies. The RAND SCPC is member-funded and derives its strength from RAND Corporation's nearly 60 years of experience addressing policy issues of global importance through objective analysis in collaboration with industry partners who are leaders in international freight transportation, manufacturing, and retail.

Recently, the RAND SCPC has embarked on an ambitious research agenda, conducting a system level study of North American freight movement, which is expected to be completed next fall. Center sponsors include the Port of Los Angeles, Dow Chemical Company, the U.S. Chamber of Commerce, Union Pacific Railroad, the Port of Long Beach, and the Port Authority of NY and NJ, with additional support from BNSF Railway, United Parcel Service, and Japan Marine Sciences.

Their next meeting is scheduled for May 29 at RAND's Washington, D.C. offices in Arlington. If you are interested in participating, please contact Kate O'Neal at koneal@rand.org

To learn more about the Center, click here.

NY CONGESTION PRICING FAILS: Congestion pricing is the practice of charging motorists more to use a roadway, bridge or tunnel during periods of the heaviest use. Its purpose is to reduce automobile use during peak hours, thereby easing traffic and encouraging commuters to walk, bike or take mass transit as an alternative.

NY City Mayor Michael Bloomberg's long-term sustainability plan had called for imposing fees of $8 on cars and $21 on trucks that enter Manhattan below 86th Street during the workday. Earlier this month, Albany lawmakers shot down the plan. NY State Assembly Speaker Sheldon Silver said "many Assembly members just don't believe in the concept - many think this proposal is flawed.” NY Assemblyman Michael Gianaris added that "the overwhelming majority saw it for what it was: an unfair tax on the middle class."

Governor Corzine had expressed concerns about how the plan would impact New Jersey commuters. The Governor said New Jersey does not have the capacity to handle dramatic surges in additional riders on its mass transit system, which would be the inevitable result of congestion pricing.

According to NY City DOT Commissioner Janette Sadik-Kahn, there is a growing movement nationally to charge drivers more directly for the use of the roads. Although congestion pricing may be gone for now, Commissioner Sadik-Kahn predicts that it will come back again in the future.

PORT AUTHORITY OFFERS EMISSION CREDITS: The Port Authority of NY and NJ announced plans to become the first tolling agency in the country to set up a web site where drivers and airline passengers can buy credits to offset the carbon emissions created by the trips they take. The money from the carbon-offset credits is typically used to plant new trees, build windmills, install solar panels and initiate other measures that may mitigate the effects of emissions from greenhouse gases. The Port Authority will seek bids from companies that want to build and operate the service on its behalf. Chairman Anthony R. Coscia said that over time, the Port Authority hopes to attract enough customers to its carbon-offset web site to combine that money with the agency’s own credits and invest them together into local renewable energy and environmental cleanup projects.

Click here for the previous update.

Michael Egenton
Vice President , Environment & Transportation
New Jersey Chamber of Commerce
216 West State Street
Trenton, NJ 08608
Phone: (609)989-7888 Ext. 119
Fax: (609)989-9696
Michael.Egenton@njchamber.com