New jersey transportation trust fund act

The original Transportation Trust Fund Act (N.J.S.A. 27:1B-1, et seq.) was passed into law on July 10, 1984. Major amendments occurred in 1988, 1991, 1995, 2000, 2006, 2016. Article VIII, Taxation and Finance, Section II, Paragraph 4, of the New Jersey State Constitution was amended effective December 6, 1984 to dedicate 2.5 cents of the motor fuels tax to transportation purposes. Effective December 7, 2000, it was amended to dedicate 9 cents of the motor fuel tax, petroleum products gross receipts taxes, and a portion of the Sales and Use Tax to transportation purposes. Effective December 7, 2006, it was amended to dedicate all 10.5 cents of the existing motor fuel tax for transportation purposes. Effective December 8, 2016, it was amended to dedicate all the revenue derived from the collection of the tax imposed on the sale of motor fuels and all the revenue derived from the collection of the tax on the gross receipts of the sale of petroleum products to transportation purposes.

A summary of the major financial changes that occurred throughout the history of the Transportation Trust Fund is outlined below.

Original 1984 Legislation

The original Transportation Trust Fund (TTF) staute was signed into law by Governor Thomas Kean in July 1984 to provide a stable and predictable funding source for transportation system improvements in New Jersey. The legislation created a new Special Transportation Fund, otherwise known as the "Trust Fund," which could be used to fund transportation capital improvements for highways, public transportation and State aid to counties and municipalities. The Trust Fund legislation was created to replace a highly unpredictable level of General Fund support that characterized state transportation funding in the 1970s and early 1980s.

Expenditures from the Trust Fund were to be financed by a new independent financing agency entitled the Transportation Trust Fund Authority ( "Authority"). The Authority was designed to finance Trust Fund expenditures using both state appropriations and its own authority to issue bonds. State appropriations were backed by dedicating a portion of the existing motor fuel tax revenues, contributions from the highway toll road authorities, and fees imposed on heavy trucks.

The Authority was authorized to issue its own bonds with up to 10-year maturities. However, unlike general obligation bonds issued by the State of New Jersey that require voter approval, the Authority was allowed to issue its own bonds without voter approval by only pledging State appropriations received by the Authority.

The Transportation Trust Fund Act provides authorization for the State Treasurer, the Commissioner of Transportation and the Authority to enter into one or more contracts to facilitate the implementation of the Act. In the original legislation, the Authority and the State Treasurer were to enter into a contract that would require the State Treasurer to transfer to the Authority certain amounts credited to the Transportation Trust Fund Account in the General Fund, if appropriated by the Legislature and available. For this reason, Authority bonds are typically referred to as "State contract debt."

The statute specified that the Authority would consist of the Commissioner of Transportation, the State Treasurer and three public members chosen by the Governor and Legislature. The Authority’s sole purpose was to provide the payment for and financing of all, or a portion of, the costs incurred by the Department of Transportation for the planning, acquisition, engineering, construction, reconstruction, repair and rehabilitation of the State’s transportation system. The legislation included a sunset provision for the Authority to expire in 21 years without reauthorizing legislation.

The legislation, as amended in 1987, also authorized an initial four-year capital improvement program which was to run from FY 1985-1988. The program was to be supported by an annual appropriation of $143 million from the State’s General Fund. The State’s General Fund appropriation was to be backed by several revenue sources. From the existing 8 cents per gallon gas tax, the revenue equivalent of 2.5 cents of the gasoline tax ($88 million) was to be dedicated for appropriation. Contributions from (1) the toll road authorities ($24.5 million); (2) the increase of fees for commercial motor vehicle registrations collected pursuant to N.J.S.A. 39:3-20; (3) the increase of fees for motor fuels user identification markers collected pursuant to N.J.S.A. 54:39A-10; and (4) the increase in the tax on diesel fuels were also used to support the appropriation.

As designed, the Authority would leverage those dedicated revenues with bonds to support a four-year program averaging $250 million annually. The actual appropriation in each year varied. The Department of Transportation obligated much of its authorized funding during the first three years of the program and requested a new capital program authorization program beginning with FY 1988. The Legislature chose to change the appropriation ceiling for FY 1988 rather than authorize a new program.

Trust Fund Renewal I (1988)

The Legislature "renewed" the transportation program in January 1988 when it authorized a seven-year capital program for FY 1989-1995. The program assumed a $365 million annual State funded capital improvement program. To pay for the larger capital program, the renewal legislation included a planned $331 million dollar annual appropriation into the TTFA.

The new level of appropriation to the TTFA was to be supported by increasing the dedication of the existing motor fuels tax by 2 cents, from 2.5 cents to 4.5 cents. In addition, another 2.5 cents was to be earmarked from an increase in the motor fuel tax (see Motor Fuels Taxes table in the hyperlink). The gasoline tax was increased from 8 cents to 10.5 cents and the diesel tax from 11 cents to 13.5 cents. A total of 7 cents was earmarked for transportation purposes.

Cap Lift (1991 and 1992)

In February 1991, the Legislature approved an NJDOT request to increase the capital program authorization to $565 million from $365 million for FY 1991 and FY 1992. In May 1992, the cap lift program was legislatively extended at the $565 million level for FY 1993-1995. New statutory restrictions were introduced regarding the use of Authority monies for NJDOT and NJ TRANSIT in-house costs. The restrictions were generally modeled after Federal Highway Administration regulations. Under the revised statute, only NJDOT/TTF payroll costs could be charged to the Authority and only for specifically defined engineering and planning functions related to capital project advancement.

Trust Fund Renewal II (1995)

1. Capital program authority to the Department of Transportation was increased to $700 million from $565 million annually.
2. The planned length of the new program was five years, FY 1996-FY 2000.
3. The Local Aid Program could be disbursed as grants rather than solely on a cost reimbursement basis.
4. The Authority could issue grant anticipation notes and other debt related to anticipated Federal funds.
5. The Authority could use a variety of modern financial instruments to minimize debt and maximize investment
6. Planned constitutional dedication of motor fuel tax revenues changed from 2.5 cents to 7 cents in FY 1997 and 1998, 8 cents in FY 1999, and 9 cents in FY 2000 and thereafter. (A referendum for the constitutional dedication of the motor fuels taxes was approved in November 1995).
7. The previous bonding cap of $1.7 billion in aggregate outstanding debt was replaced with a $700 million annual cap on bonds issued.
8. All expiration dates regarding the Trust Fund were eliminated, making it a permanent financing mechanism for transportation investment in New Jersey.
9. The maximum bond maturity from date of sale was changed from 11 years to 21 years.
   

Cap Lift (FY 1998)

In FY 1998, the Legislature approved NJDOT's request to increase the Capital Program Authorization from $700 million to $900 million for a one-year period. The increase was authorized in the annual Appropriation Act. The Department of Transportation indicated this was a one-year adjustment and that the capital program request would revert back to $700 million in FY 1999.

Cap Lift (FY 2000)

The FY 2000 Appropriations Act provided $900 million from the TTFA for the NJDOT capital program. An amendment to the Act raising the annual debt issuance ceiling for FY 2000 from $700 million to $900 million was also adopted by the Legislature.

Trust Fund Renewal III (2000)

1. Capital program authority to the Department of Transportation was increased from $700 million to $900 million annually in FY 2001 and $950 million thereafter.
   
2. Although there was no specific termination date for the new program, financing projections for the program were based on a four-year period ending in FY 2004.
   
3. The previous $700 million annual cap on bond issuance was reduced to $650 million, following a one year exemption that allowed for $900 million in bond issuances in FY 2000.
4. The constitutionally dedicated revenues that were appropriated to the Authority were increased by adding the existing petroleum products gross receipts tax and a portion of the existing Sales and Use Tax. Dedication of the petroleum gross receipts tax was set at $100 million in FY 2001 and $200 million in each FY thereafter. Dedication of the general Sales Tax was set at $80 million for FY 2002, $140 million for FY 2003, and $200 million for each FY thereafter.
5. The size of the Authority's board was increased from five members to seven members in order to add one representative of the transportation trade unions and one representative of the transportation construction industry.
6. A new seven member TTFA Advisory Board was established to review the Department's plans and programs and make recommendations to the Governor and Legislature.

Legislation enacted in 2001 (L. 2001, c. 258) added language that was in the original 1984 legislation back into the statute, indicating that in computing the annual $650 million limitation as to the amount of debt the Authority may incur, the Authority may exclude any bonds, notes or other obligations, including subordinated obligations of the Authority, issued for refunding purposes.

Trust Fund Renewal IV (2006)

1. The annual capital program authorization was increased to $1.6 billion.
   
2. Constitutional dedication of motor fuel taxes for transportation capital purposes was increased from 9 cents to 10.5 cents with a revenue appropriation no less than $483 million annually.
   
3. The annual bonding cap was increased to $1.6 billion. The cap was to be reduced by any revenue appropriations in excess of $895 million.
   
4. No refunding bonds may be issued unless the Authority first determines that the present value of the aggregate principal and interest on the refunding bonds is less than the present value of the aggregate principal of an interest on the outstanding bonds to be financed. Present value is computed using a discount rate equal to the yield of those refunding bonds, and yield shall be computed using an actuarial method based upon a 360-day year with semiannual compounding and upon the prices paid to the Authority by the initial purchasers of those refunding bonds.
5. Prohibited the use of Transportation Trust Fund appropriations for emergency response operations, access permit review, or TRANSCOM.
6. Required the Commissioner to submit a Transportation Master Plan, a Statewide Capital Investment Strategy, an Annual Transportation Capital Program, a Transportation Trust Fund Authority Financial Plan, and a Five Year Capital plan.
7. Established a Financial Policy Review Board in but not of the Department of Transportation to monitor and certify that the Transportation Trust Fund Authority has adhered to its bonding limitation, that amounts spent on permitted maintenance did not exceed the amount spent during FY 2007, and that total, annual capital appropriations have not exceeded $1.6 billion.
8. The minimum State aid program was increased to $175 million.
9. The maximum bond maturity from date of sale to maturity was changed from 21 years to 31 years.

Trust Fund Renewal V (2012)

In June 2012, the Legislature enacted legislation reauthorizing the Transportation Trust Fund (TTF) program for five years, from FY 2012 through FY 2016. Highlights of the important provisions and changes authorized in that legislation are noted below:

1. Transportation Capital Program

The legislation established a transportation capital program in an amount not to exceed $1.6 billion annually from FY 2013 through FY 2016. In each year, that amount includes a TTF component and a portion funded by the Port Authority of New York and New Jersey for specific highway projects that relate to Port Authority facilities (i.e. Lincoln Tunnel Access Program), as outlined below:

Of the total $8.0 billion program authorized over the five years, the TTF provided spending authority of $6.2 billion and the Port Authority provided $1.8 billion.

2. Transportation Trust Fund Authority (TTFA) Debt Issuance

In support of the TTF component of the program, the legislation set the following annual caps on debt issuance by the Authority, which total $3.5 billion over the four year period:

(The balance of the TTF program was to be funded primarily from pay-as-you-go appropriations.)

3. TTFA Bonds

Established separate Transportation Trust Fund sub-accounts to discretely track the debt service payments for (1) Transportation Program Bonds and (2) Prior Bonds (commonly known as “Transportation System Bonds”). Transportation Program Bonds were defined in the Act to be bonds issued under the 2012 reauthorization and any bonds issued to refund such Transportation Program Bonds. Prior Bonds were defined as bonds issued pursuant to the 1995 and 2006 authorization and any bonds issued to refund such bonds.

4. Flexibility in Bond Issuance

Allows up to 30% of the permitted Transportation Program Bonds for a FY to be issued in the FY preceeding such FY provided certain conditions are met.

5. Carryforward of Unused Bond Cap

Maintains the provision authorizing the carryforward of unused bond cap from one fiscal year to the next.

6. Joint Budget Oversight Committee

Maintains the pre-existing requirement for approval by the Joint Budget Oversight Committee (JBOC) of refunding bonds but no longer requires JBOC approval of statutorily authorized bonds that are carried forward to subsequent FYs.

7. Dedicated Revenues

Subject to appropriation by the Legislature, the law retained the statutory and constitutional dedications of revenue, as highlighted below:

• Motor Fuels Tax - amount equivalent to 10.5 cents per gallon of tax imposed, but not less than $483 million per year;
• Petroleum Products Gross Receipts Tax - not less than $200 million during any FY;
• Sales and Use Tax - not less than $200 million during any FY Statutorily-Dedicated Revenues (Additional Fund Sources)
  • Toll Road Authorities - monies received pursuant to the Toll Road Authority Contracts of not less than $24.5 million per FY;
  • Motor Vehicle Registrations - amount equivalent to the sum of revenues generated from the increase of motor vehicle registration fees pursuant to R.S. 39:3-20 and the increase in the diesel fuel tax pursuant to R.S. 54:39-27 (as amended by P.L.1984, c.73 and by P.L. 1987, c.460), but not less than $30 million per FY;
  • Additional Motor Vehicle Registration fees - collected pursuant to subsection a. of section 68 of P.L. 1990, c.8 (C.17:33B-63), but not less than $60 million per FY.

  Trust Fund Renewal VI (2016)

  On October 14, 2016, the Legislature enacted legislation reauthorizing the Transportation Trust Fund Authority program for eight years, from FY 2017 to FY 2024. Highlights of the important provisions and changes authorized in that legislation are noted below:

  An accompanying piece of Legislation, P.L. 2016, Chapter 57, increased the Petroleum Products Gross Receipts Tax. Beginning on November 1, 2016, the Petroleum Products Gross Receipts Tax increased: (i) on highway fuel and aviation fuel from 2.75% to 12.85% of gross receipts; (ii) on petroleum products other than highway fuel and aviation fuel from 2.75% to 7% of gross receipts; and (iii) by July 1, 2017, on diesel fuel from 4 cents per gallon to 8 cents per gallon. In accordance with Chapter 57, the Petroleum Products Gross Receipts Tax on highway fuel and on petroleum products other than highway fuel and aviation fuel are converted to a cents-per-gallon. For petroleum products, gross receipt taxes on highway fuel converted to a rate of 23 cents per gallon. The existing Motor Fuel Tax is 10.5 cents-per-gallon and the existing Petroleum Products Gross Receipts Tax imposed on gasoline, blended fuel that contains gasoline, liquefied petroleum gas and aviation fuel is 4 cents-per-gallon. As of November 1, 2016, the tax paid by the motorists at the pump was 37.5 cents per gallon.

  Additionally, voters approved the constitutional amendment referenced in (1) above on November 8, 2016.

  • Motor Fuels and Petroleum Products Gross Receipts Taxes - All revenue derived from collection of tax imposed on the sale of motor fuels and all revenue derived from the collection of the tax on the gross receipts of the sale of petroleum products are now constitutionally dedicated.
  • Sales and Use Tax - an amount not less than $200 million from revenues collected from the State tax imposed under the Sales and Use Tax Act during any FY. In FY 2021, the Legislature appropriated a total of $1,495.6 million to the Authority, representing a $23.8 million increase from FY 2020, comprised of the following sources:

  Motor Fuels Tax

  Petroleum Gross Receipts Tax

  Sales and Use Tax

  Toll Road Authority Contributions

  New Jersey State Constitution
  Article VIII, Section II, Paragraph 4

  There shall be credited to a special account in the General Fund:

  (a) for each State fiscal year commencing on and after July 1, 2007 through the State fiscal year commencing on July 1, 2015 an amount equivalent to the revenue derived from $0.105 per gallon from the tax imposed on the sale of motor fuels pursuant to chapter 39 of Title 54 of the Revised Statutes, and for each State fiscal year thereafter, an amount equivalent to all revenue derived from the collection of the tax imposed on the sale of motor fuels pursuant to chapter 39 of Title 54 of the Revised Statutes or any other subsequent law of similar effect;

  (b) for the State fiscal year 2001 an amount not less than $100,000,000 derived from the State revenues collected from the tax on the gross receipts of the sale of petroleum products imposed pursuant to P.L.1990, c.42 (C.54:15B-1 et seq.) as amended and supplemented, or any other subsequent law of similar effect, for each State fiscal year from State fiscal year 2002 through State fiscal year 2016 an amount not less than $200,000,000 derived from those revenues, and for each State fiscal year thereafter, an amount equivalent to all revenue derived from the collection of the tax on the gross receipts of the sale of petroleum products imposed pursuant to P.L.1990, c.42 (C.54:15B-1 et seq.) as amended and supplemented, or any other subsequent law of similar effect; and

  (c) for the State fiscal year 2002 an amount not less than $80,000,000 from the State revenue collected from the State tax imposed under the "Sales and Use Tax Act," pursuant to P.L.1966, c.30 (C.54:32B-1 et seq.), as amended and supplemented, or any other subsequent law of similar effect, for the State fiscal year 2003 an amount not less than $140,000,000 from those revenues, and for each State fiscal year thereafter an amount not less than $200,000,000 from those revenues; provided, however, the dedication and use of such revenues as provided in this paragraph shall be subject and subordinate to (a) all appropriations of revenues from such taxes made by laws enacted on or before December 7, 2006 in accordance with Article VIII, Section II, paragraph 3 of the New Jersey State Constitution in order to provide the ways and means to pay the principal and interest on bonds of the State presently outstanding or authorized to be issued under such laws or (b) any other use of those revenues enacted into law on or before December 7, 2006. These amounts shall be appropriated from time to time by the Legislature, only for the purposes of paying or financing the cost of planning, acquisition, engineering, construction, reconstruction, repair and rehabilitation of the transportation system in this State and it shall not be competent for the Legislature to borrow, appropriate or use these amounts or any part thereof for any other purpose, under any pretense whatever.

  Article VIII, Section II, paragraph 4 added effective December 6, 1984; amended effective December 7, 2000; amended effective December 7, 2006; amended effective December 8, 2016.