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Governor Wins Key Vote on Transit: A Senate Panel Easily Passed His Borrowing Plan to Save the Trust Fund

Posted on: Tuesday, 7 March 2006, 09:01 CST

By Jennifer Moroz, The Philadelphia Inquirer

Mar. 7--TRENTON -- Despite criticism from Republican lawmakers, Gov. Corzine's plan to borrow billions to resuscitate the state's near-bankrupt Transportation Trust Fund sailed through a key vote yesterday.

The Senate Budget and Appropriations Committee approved the bonding proposal, which would almost double the fund's debt to pay for road and transit projects over the next five years, by a vote of 13-1.

Senate Minority Leader Leonard Lance (R., Hunterdon) voted against the plan, which would avert an increase in the gas tax but which critics say is a short-term fix with heavy long-term costs.

But the bill's sponsor, Sen. Raymond Lesniak (D., Union), called the plan "fiscally responsible and prudent," especially given the more than $4 billion budget shortfall facing lawmakers.

"This state has very severe financial problems," he told the commitee. "It is not practical -- and it is, in fact, impossible -- to solve all our problems in one year, all at once."

Acting Transportation Commissioner Kris Kolluri said officials would use the five-year "breather" afforded by the plan to come up with a long-term solution.

But opponents say a permanent fix is needed now. Corzine's plan, they argue, would continue the poor financial practices that got the fund into trouble in the first place.

Officials over the years have borrowed heavily against the account, used to pay for all major road and mass-transit projects, without identifying new revenue to pay off the debt. As a result, debt payments are expected to cancel revenue by the start of the new budget year July 1.

Under Corzine's plan, officials would refinance $1.8 billion of the fund's $7.4 billion debt to free up about $105 million a year. An additional $90 million in new revenue would come from dedicating the full 10.5 cents of the state gas tax to the fund and redirecting some toll revenue and motor-vehicle fees to the account.

That $195 million would be used to issue more than $6 billion in bonds over the next five years, enough to support $1.6 billion in annual state-transportation capital spending -- about 25 percent more than the current level -- and ensure federal matching funds.

Lance questioned how much the plan, which would stretch debt payments to as many as 30 years, ultimately would cost. Corzine officials could not give him an answer, even when asked for a "ballpark" figure.

"I think people deserve a full financial picture of what this will cost," Lance said.

Administration officials stressed that the plan was about more than borrowing money. They pointed out that the legislation contained important changes, including ensuring that fees that are supposed to be funneled into the fund are not siphoned off into the general fund.

Another part of the plan, one that the entire Senate committee backed in a separate vote, would ask voters to constitutionally dedicate all 10.5 cents of the gas tax to the fund. Currently, just 9 cents of the tax go to pay for transportation projects.

That provision is also part of a rival plan introduced yesterday by Assembly Republicans, who urged Corzine to find a way to pay for transportation projects without incurring too much more debt.

At a news conference announcing the GOP plan, Assemblyman Joseph Malone (R., Burlington) called Corzine's proposal "same old, same old."

"We cannot continue to operate this state on a credit-card mentality," he said.

The GOP plan would provide for $950 million in annual state transportation spending, which bill sponsors called plenty. The program would be supported by several sources, including $300 million in fees and fines collected by the state Motor Vehicle Commission that now fund other programs.

The bill's supporters would not suggest what programs should be cut as a result. But Assembly Minority Leader Alex DeCroce (R., Morris), who cosponsored the legislation, said, "I don't think that's a problem."

The state budget "is $30 billion," he said. "There has to be at least 3 percent that's fat."

Kolluri, the acting transportation commissioner, countered: "They're assuming they can find the money. We've got a plan."

Contact staff writer Jennifer Moroz at 609-989-8990 or jmoroz@phillynews.com.

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Source: The Philadelphia Inquirer

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