The abandonment, for now, of a hike in New Jersey’s gas tax – as Governor Jim McGreevey announced last Tuesday in a speech to a business group — may dramatically alter the outlook for transportation projects in New Jersey over the next several years.

McGreevey’s blue ribbon transportation commission proposed a 12.5-15 cent per gallon tax increase to bring new revenue to the state’s transportation trust fund — the principal source of state-level funding for road and mass transit infrastructure. Without additional revenue, the Transportation Trust Fund will run out of funding for new projects within the next two years. To stretch the remaining money, McGreevey and NJ DOT commissioner Jack Lettiere told reporters they would be reducing capital and operating budgets significantly.

Although some hold out the possibility that the gas tax increase could be revisited early in 2004, there are strong indications that the issue will remain off the table until after the state’s next gubernatorial race in 2005.

The transportation budget crunch comes at a time of heightened needs, according the blue ribbon commission report. One billion dollars alone is needed next year to improve New Jersey’s pavement condition, the ninth worst in the country. Seven billion dollars is needed to reduce the backlog of structurally deficient bridges, or else 17 percent will fall into unacceptable condition over the next ten years.

According to news reports, many big-ticket projects could go on the chopping block, including repairs to the Pulaski Skyway, building next phases of the Hudson-Bergen light rail line and ordering more bi-level train cars for NJ Transit.

NJ Transit is likely to be the hardest hit by budget stringency, because the agency is already suffering from inadequate operating subsidies from Trenton. This has led its managers to use part of its capital budget for day-to-day operations, and this practice may only deepen without additional revenue. The commission says Transit needs $490 million over ten years to restore its bus and rail system and will face an $85 million operating deficit in fiscal year 2005 without new revenue. Transit chief George Warrington said he may consider raising fares again soon, though this will prove controversial if a gas tax rise has been ruled out.

The abrupt end to the gas tax drama also for now ends McGreevey’s plan to use part of the new revenue to abolish Garden State Parkway tolls. Many, including the Tri-State Campaign, objected strenuously to the idea of using new revenue to replace old after the commission had spelled out such an extensive array of transportation needs. With new open-road, high speed toll facilities scheduled to open on the Parkway and Turnpike in early January, we hope that the toll removal issue begins to recede for good.

The tax-for-tolls plan obscured the more substantive issues. The next time the state house and lawmakers seek to raise the gas tax – which they will have to do sooner or later – they must show that additional money would be well spent. Rather than merely discussing a tax hike, as happened this time around, they should articulate a broad plan to spend it where it is most needed to build public support early on. Tying new revenue to roadway and transit repair and other critical areas via the constitutional amendment that dedicates the money to the transportation trust fund would be a winning strategy.

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