Experts Sending ARC funds to roads doesn’t address long-term challenges

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The New Jersey Turnpike Authority’s decision to divert $1.25 billion of canceled tunnel funds to local road and other projects doesn’t address long-term challenges faced by the state’s Transportation Trust Fund, according to some experts.

The New Jersey Turnpike Authority’s decision to divert $1.25 billion of canceled tunnel funds to local road and other projects doesn’t address long-term challenges faced by the state’s Transportation Trust Fund, according to some experts.

The agency’s formal vote to take money earmarked for the Access to the Region’s Core train tunnel between New Jersey and New York — which Gov. Chris Christie scrapped in 2010 over concerns of cost overruns — and use it to help the state’s Transportation Trust Fund pay for local projects, was “not a surprise, since the governor was pretty clear that this is where the funds would go,” said Robert Freudenberg, New Jersey director of the Regional Plan Association. “But it demonstrates the need for a stable source of funding, since the next time the Transportation Trust Fund reaches a crisis point, there won’t be a source like this to divert.”

The agency’s move was likely legal, but may be morally questionable, added Martin E. Robins, director emeritus of the Voorhees Transportation Center at Rutgers University.

A statutory provision lets the Turnpike Authority make limited contributions to the TTF, “but previously, they were limited to no more than $24 million a year,” Robins said. “Historically, roadway toll increases were premised on the funding going to the Turnpike Authority’s own needs,” and then later to the ARC project.

“But now the Turnpike Authority is spending more money all over the state,” he said. “This is a significant, though partial, change in purpose, and they should hold a hearing to see what motorists have to say.”

Robins was also worried about the independence of the agency.

“This is developing new practices that are threatening the Turnpike Authority’s financial independence and well being,” he said. “Where do you stop?”

Those kinds of concerns were highlighted in a December 2010 ratings services agency report that downgraded the Turnpike Authority’s credit outlook.

Moody’s Investors Service revised the agency’s rating outlook to negative from stable “due to the budgeted transfers for state payments and non-Turnpike-system purposes, which Moody’s believes are likely to increase over the near term due to the state’s budgetary pressures and the expected protracted economic recovery in New Jersey,” the report read. The authority’s level of autonomy and the siphoning of enterprise revenues for non-turnpike system purposes are areas of increasing credit concern.”

But the Turnpike Authority’s executive director, Ronnie Hakim, downplayed any concerns.

“The Turnpike Authority recognizes the need and the challenges of maintaining New Jersey’s roads and bridges,” Hakim said. “While this is a significant level of investment for the Turnpike Authority, these payments are made from revenues remaining in NJTA’s general fund after commitments to bondholders and its own needs are met.”