Hike Jersey’s Gas Tax? Not So Fast
New Jersey's transportation trust fund will run out of money early next year.
Facing the prospect of having to bring road maintenance and construction projects to a halt, Gov. Chris Christie is under pressure to raise the state's gas tax, or other taxes, to finance more road spending.
But before Gov. Christie rushes into any new taxes, he ought to also consider sweeping reforms to the way Jersey builds, maintains and manages its roads and bridges. Over the years, the Garden State has consistently been rated one of the least efficient and most spendthrift state governments on transportation matters, and its legislature has consistently misused the money available to it for roads and bridges.
The standard argument in Jersey for raising the state's gas tax is that it's among the lowest in the nation, and that's the reason the state is short of transportation funding. But that's not the whole story, by any means.
The Federal Highway Administration tracks all revenues collected by states for use on transportation. The two main sources are the gas tax and tolls. While New Jersey's tax receipts are low, the state's toll collections are stratospheric, ranking second in the nation behind only much larger New York.
The result is that Jersey actually has, according to the feds, the eighth highest annual revenues to devote to roads and bridges of any state.
Why then is the transportation trust fund broke? One reason is Jersey is the most profligate state when it comes to building and maintaining its transport infrastructure. According to a 2013 study by the Reason Foundation, Jersey spends a whopping 8.4 times the national average for every mile of road it maintains or builds.
Among its problems is a top-heavy, expensive administrative structure supervising roads and bridges. A 2014 follow-up study by Reason, for instance, found the state spent nearly $45,000 per every mile of roads on highway administration. The national average is just $10,500.
The state's transportation agencies have typically dismissed such studies by noting that Jersey is a dense state and hence projects here are “complex” compared to other places. But other states with similarly dense metro areas and high costs of living spend far less than Jersey.New York, for instance, spends on average 2.6 times more per mile on roads than the nation — a hefty premium but nowhere near Jersey's spending. California, another state with incredibly dense metro areas, spends 4.6 times the national average.
Another problem is New Jersey's legislature has consistently mishandled its transportation funding. Prudent management would demand the state spend some money directly out of its budget every year to finance some projects on what's known as a pay-as-you-go basis. Instead, Jersey's legislature has consistently relied only on debt to finance its roads and bridges, until the state got to the point where it used up the transportation trust fund just on paying off borrowed money.
Despite having drained its trust fund, Trenton has resisted reforms that might save the state money. New Jersey still requires, for instance, that contractors pay prevailing wage, which often sets wages artificially high and minimizes competition among contractors for jobs. Studies have shown that prevailing-wage laws boost wages 10 percent to 20 percent.
Jersey has also made little use of public-private partnerships to finance and execute transportation projects. These partnerships, in which large investors like pension funds provide financing and private companies do the work, are employed by about 30 states now to help carry out road and bridge work.
Operating under state guidelines, these partnerships bid for work competitively and have incentives to complete their jobs on time, and under budget.
New Jersey also continues to maintain a complex and large bureaucracy for its transportation systems, including separate administrations for the New Jersey Turnpike and Garden State Parkway, the South Jersey Transportation Authority (which manages the Atlantic City Expressway) and NJ Transit.
Polls consistently show that Jersey residents oppose a rise in the gas tax. The standard line in Trenton is that drivers have become too used to low gas rates and need to be disciplined to pay more.
But Jersey drivers know the real cost of driving in the Garden State is higher than the gas tax, and that Trenton has betrayed them by mismanaging the money provided to it for roads and bridges.
This piece originally appeared in New York Post
This piece originally appeared in New York Post