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State Offers $2.8B in Bonds to Help Top off Depleted Transportation Trust Fund

Thursday, October 27, 2016   (0 Comments)
Share | 10/27/16

The state is offering $2.8 billion in bonds that Department of Treasury officials say will provide new revenue for TTF-funded construction work over the next two years as the trust fund is replenished through an 8-year, $16 billion finance plan recently approved by Christie and lawmakers along with the gas-tax hike. It’s also finalizing a $500 million private bank loan to finance transportation projects, according to Moody’s Investors Service, a Wall Street credit-rating agency. While it’s the looming gas-tax increase that’s drawn much of the attention since the TTF deal was first announced, the state’s readying of a new borrowing issue before the tax hike even goes into effect also drives home the fact that a significant portion of the TTF reauthorization involves the issuance of more debt.

The gas-tax increase, which is the state’s first since 1988, will bring in more than $1.2 billion in new revenue annually, but only about $500 million will be available each year to pay for new transportation projects due to the trust fund’s significant debt. The rest of the $2 billion in annual TTF spending is expected to come from new borrowing issues. New Jersey will qualify for matching federal transportation funds as well, and Treasury officials said yesterday that the bonds that are being offered this week, known as GARVEE bonds, will be backed solely by federal transportation dollars. The transaction is expected to close on November 3, said treasury spokesman Willem Rijksen. “The bond sale will provide two years worth of construction funding for the TTFA while the recently enacted funding agreement replenishes the Trust Fund,” he said. But Rijksen did not comment when asked about the terms of the $500 million bank loan that was outlined by Moody’s.

Part of the legislation to renew the TTF creates the Transportation Capital Program Approval Committee, which will annually review and wield veto power over all state transportation projects paid for by the TTF. The panel is made up of the state transportation commissioner and three "public members," recommended by the speaker of the house, the senate president, and the governor. “This is going to take participation, it's going to take a sense of urgency, though we haven't seen this yet from the administration,” Robins said. “I think the role of the state Senate is going to be to make sure this project is pursued vigorously.” But several Republican senators who opposed the gas-tax increase issued a statement yesterday that said revenue from the increased gas tax should not be used to pay for “pork spending” and “pet projects.”

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