New Jersey s Transportation Trust Fund Crisis and Resolution

Transcription

1 New Jersey s Transportation Trust Fund Crisis and Resolution Lessons Learned from the Trenches By Anthony Attanasio, Executive Director Utility & Transportation Contractors Association of New Jersey

2 The TTF Crisis-Decades in the Making New Jersey s Transportation Trust Fund (TTF) was scheduled to become insolvent at the end of fiscal year 2017(June 30, 2016) and would have zero dollars for future infrastructure investment. The constitutionally dedicated revenues generated annually for the TTF average $915 million. As of July 1st, NJ s debt service payment for past TTF projects will be $1.3 BILLION for FY17 and grow to as much as $1.4 billion annually for many years to come. NJ s total TTF debt at the end of this fiscal year will be $16 billion. With interest this will cost $30 billion to pay back and that is without spending a single dollar on any new projects. When the NJ TTF was created, the intention was to have a majority of the program paid for with pay as you go funding and a responsible amount of debt funded by 10-year bond notes. The first TTF was 70%-30% pay-go vs. debt. Governors from both parties over the years chose to refinance debt, utilize one time funding gimmicks and sought longer term bonds rather than increase funding. Today, NJ utilizes 30-year bonds to pay for not just roads and bridges, but for equipment and salaries too! As a result of this fiscal mismanagement of our infrastructure dollars, the 5 year capital program that comes to a close on June 30th spent approximately $6 billion state dollars with only $66 million in pay as you go funding. So in essence, there was 0% pay-go

3 Coalitions Matter! Forward NJ and Road to Repair Are Born Chaired by the State Chamber of Commerce CEO, a coalition of business groups, contractors, labor groups, engineers, county & municipal associations, think tanks, and transportation advocacy groups among many others form in 2014 to create Forward NJ. Operating Engineers 825 through their Employer-Labor Education Cooperative NJ ELEC (which includes UTCA) forms Road to Repair to fund it s own media campaign to compliment Forward NJ. Several of the diverse and prominent members of Forward NJ included: AAA, ACECNJ, ACC NJ, NY Shipping Association, NJ Assoc. of Counties, NJ Bankers Assoc., NJ State Chamber, NJ League of Municipalities, Tri-State Transportation Campaign, Verizon, NJ Commerce & Industry Assoc., NJ Food Council, NJ Business & Industry Assoc., along with dozens of labor locals, regional Chambers of Commerce and many more. Forward NJ embarks on an education and advocacy campaign to educate legislators and the public to the real crisis facing not only the funding of our roads, rail and bridges but the safety of the actual infrastructure itself.

4 Waging the Campaign ForwardNJ launches paid and earned media campaign via social media, newspapers, trade publications, radio and cable. Forward NJ commissions Dr. Alison Premo-Black of ARTBA to produce an economic study of the NJ TTF and its benefits to the region s economy. Utilizing the ARTBA report and the TTF s impending insolvency, coalition members testify at over half a dozen legislative hearings, hold press conferences, present on educational panels and more to generate hundreds of press hits across every major media outlet as they educate the public to the TTF crisis. Legislative leadership recognizes the need to address the issue and agrees to craft legislation to address the funding crisis. Governor Christie insists that there be tax fairness before he will consider raising the gas tax. The Governor does not define what tax fairness means.

5 Crisis What Crisis

6 Mixed Signals from the Front Office In February 2015, Christie said firmly the lack of a funding plan didn't amount to "a crisis at the moment, because we're funded pretty well now. The governor's comment came about a month after Christie tapped former state transportation commissioner Jamie Fox, to once again run the DOT. "Are we waiting for a crisis? We are in crisis," Fox said at the time. "The money has run out and the projects are accumulating. "The fact that there's this crisis is ridiculous," Christie said at a public event in New Jersey in September "It's a media-created crisis.

7 Oh That Crisis Post Presidential Campaign-Spring of 2016 "We're out of money. I cannot borrow any more money to try to do roads because all of the money that I collect in gas tax now, starting on July 1 is spent to pay for the debt that we've run up to pay for the roads over the last 25 years," Chris Christie.

8 Legislative Compromise is Reached Bi-Partisan Legislation is introduced to fund the TTF and provide tremendous tax relief (fairness) -23-Cent Gas Tax Increase to fund an 8-Year Capital Program. NJ has never had longer than a 5-year program. $2 Billion annual state capital spending ($4 Billion with Federal Matching) 25% Pay-as-you-go funding. Of the $2 billion, $400 million is in the form of additional Local Aid to all 21 Counties through formula funds and competitive grants and to municipalities through competitive municipal aid grants. -UTCA s Transportation Infrastructure Bank (Which could produce up to an additional $200m annually in local aid projects) Significant Tax Fairness -Eliminate the Estate Tax: Phase out the estate tax over the next 15 months, replacing the current $675,000 threshold with a $2 million exclusion after January 1, 2017 and eliminating the estate tax altogether as of January 1, Tax Savings for the Working Poor: Increase the Earned Income Tax Credit for the working poor to 35 percent of the federal benefit amount beginning in Tax Year Tax Savings for Retirees: Increase the New Jersey gross income tax exclusion on pension and retirement income over four years to $100,000 for joint filers, $75,000 for individuals and $50,000 for married/filing separately. -Tax Savings for Veterans: Provide a personal exemption on state income taxes for all New Jersey veterans honorably discharged from active service in the military or the National Guard.

9 Don t Spike the Football Just Yet Governor Christie rejects the TTF package claiming it doesn t have enough tax fairness. Demands that the legislature also cut 1% from the State Sales Tax, a move that would create a $1.7 Billion hit to the State s General Fund (along with the already proposed tax cuts in the package). Legislative leadership becomes split on the issue. The Assembly passes a version that includes part of the Governor s demand. The Senate can t agree and the fiscal year ends with no resolution.

10 The Shutdown NOW, THEREFORE, I, CHRIS CHRISTIE, Governor of the State of New Jersey, by virtue of the authority vested in me by the Constitution and by the Statutes of this State, DO DECLARE and PROCLAIM that a State of Emergency exists in the State of New Jersey Language from Executive Order 210 Something that wasn t a crisis several months earlier had now become a state of emergency. Governor issues Executive Order 210 which shuts down all non-essential TTF funded projects.

11 Shutdown of TTF Projects Rocks the Construction Community Hundreds of Projects Stopped: NJDOT, NJ TRANSIT, and Local Aid All State Funded Engineering Halted More Than 3000 People Lose Their Jobs New Jersey Komatsu Dealer Files for Bankruptcy

12 Compromise Reached-TTF Renewed and the Shutdown Ends After 4 months of devastation to the construction industry, Legislative Leaders and the Governor reach a deal on the TTF. Sales Tax Cut of.375%: on January 1, 2017, the sales tax will decrease from 7% to 6.875%. On January 1, 2018, it will reduce to 6.625%. This was the only major change to the original proposal leaving many to wonder why there was a need for a shutdown.

13 Fighting for the Dedication After more than 2 years fighting to renew the TTF, advocates are caught completely off guard when the sitting Lieutenant Governor opposes the Constitutional Amendment to dedicate all of the new revenue to the TTF. The LG spreads misinformation about the TTF, how it is funded and what will happen if the ballot initiative fails. The LG put all of her political capital into defeating the amendment at the ballot box and failed. Forward NJ, Road to Repair, every major state newspaper editorial board and more or less EVERYONE else pushed back on the LG s campaign of misinformation and the ballot initiative passed 55%-45%.