NJ Transit caught in road funding fight

July 12, 2016 GMT

Many people who took to New Jersey’s roads on Monday witnessed an eerie sight: Hundreds of road construction projects sitting idle, their workers having been sent home by Governor Christie’s executive order suspending $775 million in projects over a budget fight with legislators.

Less visible to the public was the order’s effect on NJ Transit, which halted work on projects worth $2.7 billion, four times the total for roads. Among the work put on hold was preliminary planning for the replacement of the 106-year-old Northeast Corridor rail tunnel under the Hudson River, which U.S. Transportation Secretary Anthony Foxx said last year presents “a major threat to the region and to our nation’s transportation system.”

The list of suspended projects affects every corner of New Jersey. Perhaps most important in the long run, Christie’s executive order pauses work on a $500,000 project to begin studying the environmental impact of rebuilding the train tunnel between New Jersey and New York, and digging a new tunnel beside it. NJ Transit is leading the environmental review, which must win federal approval before construction can begin.

Many transportation experts have said the project must advance quickly. Amtrak estimates the old tunnel has at most 18 years of useful life before one of its two tubes must be closed for safety reasons and completely rebuilt. Officials hope to build a new tunnel before the old one is taken out of service, as part of a mega-project called Gateway. Many experts call that timetable extremely aggressive, however. For comparison, they point to the environmental review for Gateway’s predecessor, the Access to the Region’s Core, or ARC, tunnel, which took six years to complete. Christie canceled that project in 2010, citing the risk that New Jersey taxpayers might find themselves on the hook for any cost overruns.

More immediately, NJ Transit will stop $5.8 million worth of work to rehabilitate or improve train stations in Fair Lawn, Rutherford and Secaucus. In Paterson, it will suspend a $27.4 million contract to refurbish the Market Street Bus Garage and a $2.9 million effort to renovate the Broadway bus terminal.

The governor’s order affects projects of all sizes, and in all stages of development. A contract worth $300,000 to improve the reliability of NJ Transit’s drawbridge in Hackensack is on hold, as is the $8.6 million effort to plan the extension of the Hudson-Bergen Light Rail line north into Bergen County. It also puts a hold on several big-ticket purchases, including $92 million for nine new locomotives and $712.7 million for 772 long-range cruiser buses.

“These are essential projects,” said Veronica Vanterpool, executive director of Tri-State Transportation Campaign, which pushes for better transit. “This is a big deal for NJ Transit customers.”

Christie’s order also appeared to throw NJ Transit into organizational turmoil. The agency’s board canceled its next public meeting, scheduled for Wednesday, when the board was to approve its capital and operating budgets for fiscal year 2017.

The next board meeting is not until Sept. 14. Some observers wondered how the agency will pay its bus drivers and train conductors, buy electricity to power its locomotives, and do everything else it takes to move 930,000 people a day if it spends the first three months of the fiscal year without a budget.

“What are the funding sources that are covering day-to-day operating needs?” Vanterpool said. “I’d love to know the answer to that.”

NJ Transit officials declined on Monday to explain how the agency is paying for its operations, or when the board will meet to ratify a new budget. Staff members are looking for construction projects that can continue despite Christie’s order, said a spokeswoman, Lisa Torbic, using money from sources other than the state Transportation Trust Fund, which is nearly broke.

“NJ Transit will continue to review the capital program to identify which portions may go forward,” Torbic said. “Upon completion of that review, the budget will be brought to the board for their approval.”

That explanation raises more questions than it answers, said Martin Robins, a former NJ Transit executive and the founding director of the Alan M. Voorhees Transportation Center at Rutgers University.

“I mean, the trains are running. So what legal authority do they have to operate today, if they don’t have an operating budget?” Robins said. “They need to clear this up.”

While the status of NJ Transit’s budget remained unclear, more details emerged Monday about the Transportation Trust Fund.

The fund had a balance of $158 million as of July 1, said Steve Schapiro, a spokesman for the state Transportation Department. But $109 million of that is dedicated to pay bills for work completed through the first week of July, “before the shutdown took effect,” Schapiro said. Another $20 million is reserved for emergency work by the Transportation Department and NJ Transit during the shutdown.

The $29 million that remains is enough to fund construction projects only until early to mid-August, Schapiro said.

Another reason for concern among longtime NJ Transit observers is the fact that for decades, the agency has paid for its day-to-day operations partly by dipping into funds originally intended for construction projects. Such transfers have totaled $5.1 billion since 2001, according to the agency. Such diversions are legal if the money goes to fund large-scale maintenance projects like overhauling locomotives, said Robert Lavell, NJ Transit’s vice president of rail operations.

NJ Transit had planned to transfer $401 million this year from its capital budget to pay for operations, according to its proposed 2017 budget.

The list of projects suspended by Christie’s order does not delineate which ones are actual construction projects and which are for operations and major maintenance.

Either way, NJ Transit’s long history of comingling construction money with its operating budget could leave its day-to-day functions especially vulnerable to Christie’s order, Robins said, since shutting down projects funded by the Transportation Trust Fund could cut deep into NJ Transit’s operations. For example, NJ Transit uses money from the trust fund to pay the $4.9 million lease on its headquarters in downtown Newark.

“One of the ongoing issues in New Jersey is the operating budget crisis,” Robins said. “It becomes evident once the capital budget gets into big trouble.”

Email: maag@northjersey.com