DeCROCE AND BIONDI INTRODUCE NEW PLAN
TO FINANCE NEW JERSEY's TRANSPORTATION NEEDS

Plan Keeps the Transportation Trust Fund Going
Without a Gas Tax Increase and Only Minimal New Bonding

A comprehensive 12-step plan that would infuse the state's Transportation Trust Fund (TTF) with the resources to sustain a $950 million annual capital construction program without raising the gas tax and only minimal bonding was unveiled at a State House news conference today by Assembly Republican Leader Alex DeCroce and Conference Leader Pete Biondi.

The sweeping Republican reform initiative, A-2836, is in response to a five-year TTF stop gap plan advanced by Gov. Jon Corzine and Democrats in the Legislature that is predicated on the restructuring $1.8 billion in existing debt, and borrowing additional funds with a 30-year financing period, as opposed to the current 20-year repayment period. Corzine has not ruled out the possibility of a gas tax increase at some point in the future, and it appears almost certain that commuters will be hit with higher bus and rail fares to repay almost a billion dollars in new debt that would be incurred under his plan.

"Due to the disastrous borrowing policies of the McGreevey administration, this year the state will have to pay $700 million in new debt," noted DeCroce, R-Morris and Passaic. "The Corzine plan would add another $400 million to that figure. We will have to pay about a billion dollars more a year just to stay even. This is not only fiscally irresponsible, it is an unfair financial burden to leave future generations of taxpayers.

"The billion dollars wasted on repaying new debt each year is a billion dollars that could be used for things people really need - a deserve - like property tax relief and the repair or replacement of crumbling bridges."

"To foist so much new debt on current and future taxpayers without first reforming the way the Transportation Trust Fund is administered is not only reckless, it's foolish," added Biondi, R-Morris and Somerset. "And that's just for starters. Moving ahead with Corzine plan without getting public approval for a constitutional dedication of all trust funds will only leave the door open to more skimming and fiscal shenanigans that depleted the TTF in the first place."

The Republican plan, known as the Transportation Trust Fund Renewal and Enhancement Act, would:

Real Reform

1. Limit the Transportation Trust Fund Authority's (TTFA) annual bonding to 50 percent of the maximum authorized statutory amount for proposed projects.

2. Limit the TTFA's ability to carry-forward any unused bonding capacity to three years with a maximum carry-forward limit of $1 billion in any three-year period.

3. Penalize the TTFA for any annual program submitted over the maximum allowed by reducing the authority's bonding capacity in that program year by the amount over-programmed. Likewise, in the event the Legislature seeks to appropriate revenues in an amount above the maximum allowed in programming, the TTFA's bonding capacity will be reduced an equal amount for that program year.

4. Create a Financial Policy Review Committee in, but not of the state Department of Transportation (DOT), to review and certify that the annual proposed program adheres to the limitations and terms established under this renewal.

Real Replenishment

5. Require the Division of Taxation to provide an accurate accounting of all motor fuels tax (MTF) revenue collected annually. The current method crediting the TTFA with an equivalent amount of nine cents of the MFT is not accurate and is lower than the actual revenues collected annually. Based on estimates, a proper accounting might mean the difference between $45 million per penny verses $52 million a penny.

6. Capture the remaining 1.5 cents of the MFT not dedicated to the TTFA. Combined with the full credit of actual revenues collected, this could yield over $130 million in additional MFT revenues.

7. Recapture all revenues that are statutorily dedicated to the TTF but are currently being diverted to the general fund. Annually a total of $114.5 million that should be credited to the TTF is not. This total includes $22 million from the New Jersey Turnpike, $2.5 million from the Atlantic City Expressway, $60 million in MVC surcharges and $30 million from diesel enforcement fees.

8. Dedicate $300 million from the fees and fines collected by the MVC every year to the TTF. At present, the MVC collects roughly $900 million in motor vehicle related fees and fines. It only uses a third of that for its operating budget. Additionally, a small portion is used annually for programs such as head trauma research. The remainder is transferred to the general fund.

9. Cap permitted capitalized maintenance at $250 million for the first year of the renewal. In subsequent years, decrease that cap by $50 annually until it is eliminated (in five years).

10. Cap the amounts used by the DOT and NJ Transit for salaries and operating at 10 percent of the total annual program in the first year of renewal. In each year following, reduce that cap by 2 percent annually until it is eliminated.

11. Require the DOT to lease its airspace rights to private entities to generate additional annual revenues for the TTF. The State of California leases airspace rights to telecommunications entities and on average generates $15 million a year in lease revenues. The DOT does not lease airspace rights currently and this valuable space is underutilized as a revenue generator.

12. Constitutionally dedicate all revenues streams to the TTFA. Allowing voters to truly dedicate these highway and motor vehicle related revenues to the TTF is the only proper guarantee that future administrations and Legislatures will not raid these funds to balance budgets.

Since the inception of the trust fund, the Legislature has increased the size of the program each time it has been renewed. The Corzine plan would increase the annual debt limit from $650 million to $1.6 billion.

DeCroce and Biondi said a strong argument can be made that while the DOT can award $1.6 billion in contracts during a given year, past performances prove that it cannot get every project underway. So the $1.6 billion level proposed by the Democrats is more representative of the value of the DOT's contractual obligations and not the cost of actual construction.

"The expenditures authorized under our program would be less than those permitted under the Democrat plan," DeCroce said. "But our plan does two things the Democrat alternative doesn't. It takes into account what taxpayers want - that government scale back and live within its means - and the reality, which is backed up by past performance, that we do not, and can not, get even $900 million worth of capital construction completed during any given year."

The DeCroce-Biondi bill is also sponsored by all Republican members of the Assembly Transportation Committee.

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STATEMENT BY ASSEMBLY REPUBLICAN LEADER ALEX DeCROCE
- TRANSPORTATION TRUST FUND RENEWAL AND ENHANCEMENT ACT -
MARCH 6, 2006

This afternoon, a Senate committee is going to consider a bill that would restructure the Transportation Trust Fund along the lines of what Governor Jon Corzine proposed on February 24th.

We believe the approach recommended by the Governor and apparently accepted by members of his party in both houses of the Legislature is reckless fiscally and not in the best interests of the state's taxpayers.

New Jersey is already drowning in a sea of debt - nearly $30 billion worth. The Corzine proposal, as embodied in Senator Lesniak's bill, will only make matters worse.

Due to the disastrous borrowing policies of the McGreevey administration, this year the state will have to pay $700 million in new debt. The Corzine plan would add another $400 million to that figure.

We will have to pay about a billion dollars more every year just to stay even.

This is not only fiscally irresponsible, it is an unfair financial burden to leave future generations of taxpayers.

The billion dollars wasted on repaying new debt each year is a billion dollars that could be used for things the people really need - and deserve - like property tax relief and the repair or replacement of crumbling bridges.

It appears the only selling point the Democrats have used to defend this debacle is that it does not require any increase in the gas tax.

Yet the governor himself says he is not ruling out a hike in the gas tax during the five-year life span of his plan, which is a temporary stop-gap at best.

In addition to more debt and the likelihood of higher taxes, people who rely on mass transit to get to work are already bracing for higher bus and rail fares. For commuters, the plan proposed by Corzine and the Majority represents a double hit.

The fact of the matter is there is a smarter way to go ... one that does not require a tax increase or raising the state debt to levels bordering on insanity.

Assemblyman Pete Biondi and I have introduced legislation that outlines a comprehensive 12-step plan that would infuse the Transportation Trust Fund with the resources to sustain a $950 million annual capital construction program without raising the gas tax and only minimal bonding. The process is explained in detail in the press release you received.

But the major revenue replenishment measures include:

* Dedicating the remaining one-and-a-half cent in gas taxes that is not now used for transportation-related purposes;

* Developing a much more accurate accounting procedure to measure gas tax revenues on an annual basis;

* Recapturing all revenues statutorily dedicated to the Transportation Trust Fund that are routinely diverted to the general fund.

* Dedicating $300 million in surplus fees and fines collected by the Motor Vehicles Commission each year that are now skimmed for non-transportation related needs;

* Limiting annual bonding to 50 percent of the maximum amount authorized by statute, and

* Constitutionally dedicating ALL revenue streams.

This will enable us to proceed with a robust $950 million capital program each year without crushing taxpayers now or in the future.

Will this plan leave a hole in the general fund? It sure will. But when you consider the fact that the state budget is bloated with hundreds of millions of dollars in pork and waste, there is no doubt in our minds that prudent spending restraints will be more than sufficient to compensate for any revenue loss.

Will we be criticized for proposing a $950 million annual program rather than the $1.6 billion program proposed by Corzine? I am sure we will. However, the criticism would not be justified.

While the DOT may be able to award $1.6 billion in contracts during any given year, past performances prove it is impossible for the DOT to actually spend that much on projects during any 12-month period.

Our plan does two things the Democrat alternative doesn't. It takes into account what taxpayers want - a sign that government is willing to scale back and live within its means - and the reality that we do not, and can not, get even $900 million worth of capital construction completed during any given year.

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For more information, contact:
Assembly Republican Leader Alex DeCroce/973-984-0922
Assembly Republican Conference Leader Pete Biondi/908-252-0800
Assembly Republican Office/609-292-5339