Last week, Governor McGreevey floated a proposal to borrow $900 million to pay for road and transit projects in the next year.

The state’s Transportation Trust Fund will be empty next fiscal year (starting July 2004) — all of the $805 million that will be left in the fund is needed for debt payments from existing bond issues. Without new revenue, road and transit projects and maintenance will have to be severely cut. Even with the bonding proposal, the state says it will have to put off certain projects.

The proposal would use "Garvee" bonds ("grant anticipation revenue vehicle" allowed by the federal government since 1995), which are secured by future federal transportation allocations. Debt payments would start in 2007 and would be about $90-$100 million per year that the state would have to plan for in its transportation operating budget for 12 years, according to the Star-Ledger. 22 states currently use Garvee bonds for transportation projects.

The governor’s proposal was met with strong opposition. State legislators and officials called it "irresponsible" and a "total mistake," saying previous borrowing plans landed NJ in its current situation. They also noted that the next administration would be deeper in debt. The up-side is that New Jersey would see fewer potholes and less deterioration at NJ Transit in the next few years.

McGreevey’s proposal is at odds with the recommendations of his own Blue Ribbon Commission. Along with a 12-15 cent increase in the gas tax, the commission called for "adherence to strict financial standards," including requiring a 50/50 "pay-as-you-go" to bonding ratio for the state-funded capital program to reduce soaring debt. Recommendations also included a cap on capital spending so it does not surpass Transportation Trust Fund resources. The commission’s report said NJ’s transportation system "has been jeopardized by poor fiscal policy and growing financial constraints." Calling transportation needs "staggering," it bluntly stated "without a significant influx of new revenues it [the trust fund] will cease to fund any capital projects…eliminating any possibility of improving transportation in New Jersey."

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